Document:

renewalfuels_8k-ex1001.htm

     

    EXHIBIT
10.1

     

    FORBEARANCE
AGREEMENT

     

    FORBEARANCE AGREEMENT, dated
of as April 28, 2008, by and between RENEWAL FUELS, INC.
(formerly, Tech Laboratories, Inc.) (the “Company”), MONTGOMERY EQUITY PARTNERS, LTD.
(“Montgomery”) and
YA GLOBAL INVESTMENTS, L.P.
(formerly, CORNELL CAPITAL PARTNERS, LP) (“YA Global” and
together with Montgomery, the “Holders”).  All
capitalized terms used herein shall have the respective meanings assigned
thereto in the Transaction Documents (as defined below) unless otherwise defined
herein.

     

     

    W I T N E S S E T
H:

     

    WHEREAS, the Company and the
Holders have entered into certain financing arrangements set forth on Schedule A attached
hereto and referred to herein as the “Transaction
Documents”  pursuant to which, YA Global or Montgomery hold the
following secured convertible debentures (collectively, the “Debentures”) issued
by the Company:

     

    
      	
              Debenture
      Description

            	
              Principal

              Outstanding

            	
              Accrued
      and Unpaid 

              Interest

            
	
              Amended
      and Restated Secured Convertible Debenture due December 28, 2006 (No.
      MEP-2) originally issued on April 22, 2005 and amended and restated on
      December 28, 2005 and further amended pursuant to Amendment No. 1 in the
      original principal amount of $537,220.00 (“Debenture MEP 2”)

            	
              $249,720.00

            	 	
              $165,113.38

            	 
	
              Secured
      Convertible Debenture due December 28, 2006 (No. MEP-3) issued on December
      28, 2005 in the original principal amount of $300,000.00 (“Debenture MEP 3”)

            	
              $300,000.00

            	 	
              $102,082.19

            	 
	
              Amended
      and Restated Secured Convertible Debenture due April 20, 2009 (No.
      TCHL-1-2) originally issued on April 20, 2007 and amended and restated on
      May 31, 2007 in the original principal amount of $1,000,000.00 (“Debenture 1-2”)

            	
              $1,000,000.00

            	 	
              $100,897.26

            	 
	
              Secured
      Convertible Debenture due May 31, 2009 (No. TCHL-1-1) issued on May 31,
      2007 in the original principal amount of $1,000,000.00 (“Debenture 1-1”)

            	
              $400,000.00

            	 	
              $35,416.44

            	 
	
              Secured
      Convertible Debenture due June 29, 2009 (No. TLBT-5-1) issued on June 29,
      2007 in the original principal amount of  $2,000,000.00 (“Debenture 5-1”)

            	
              $2,000,000.00

            	 	
              $151,767.12

            	 
	
              Secured
      Convertible Debenture due December 31, 2009 (No. TLBT-5-2) issued on
      December 31, 2007 in the original principal amount of $300,000.00 (“Debenture 5-2”)

            	
              $300,000.00

            	 	
              $7,643.84

            	 

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
amounts referenced in this chart above are as of April 21, 2008 and do not
include any additional costs, charges, expenses, or liquidated
damages.

     

    WHEREAS, the Company has
breached the terms of the Transaction Documents due to the actions or
occurrences set forth in Section 1 below;

     

    WHEREAS, the Company has
requested that the Holders forbear from exercising their rights as a result of
the Existing Defaults, which are continuing, before September 30, 2008;
and

     

    WHEREAS, the Holders are
willing to agree to forbear from exercising certain of its rights and remedies
before September 30, 2008 on the terms and conditions specified
herein.

     

    NOW, THEREFORE, in
consideration of the foregoing, and the respective agreements, warranties and
covenants contained herein, the parties hereto agree, covenant and warrant as
follows:

     

    
      	
              1.   
        

            	
              EVENTS OF
      DEFAULT.  The Holders are hereby providing the Company
      with formal notice of the actions and inactions set forth below, each of
      which can trigger an Event of Default under the Debentures and the
      Transaction Documents (referred to herein as the “Existing
      Defaults”).

            

    

     

    
      	
              a.   
        

            	
              The
      Company has failed to unconditionally book and receive at least a 50%
      deposit for the sale of at least one BioDieselMaster Unit by the Condition
      Deadline as required by Section 4(d) of the Securities Purchase Agreement
      dated June 29, 2007 between the Company and YA Global, as amended by the
      letter agreement dated December 31, 2007 between the Company and YA
      Global.  This failure constitutes an Event of Default under
      Debenture 5-1 and Debenture 5-2.

            

    

     

    
      	
              b.   
        

            	
              The
      Company’s default under Debenture 5-1 and Debenture 5-2, constitutes an
      Event of Default with respect to Debenture 1-2, Debenture 1-1, Debenture
      MEP 2 and Debenture MEP 3.

            

    

     

    
      	
              c.   
        

            	
              The
      Company has failed to make payment with respect to Debenture MEP 2 and
      Debenture MEP 3 on the Maturity
Date.

            

    

     

    
      	
              2.    
       

            	
              ACKNOWLEDGMENTS.

            

    

     

    
      	
              a.   
        

            	
              Acknowledgement of
      Obligations.  The Company hereby acknowledges, confirms
      and agrees that as of the date hereof, the Company is indebted to the
      Holders under the Debentures and the Transaction Documents in the
      outstanding principal amount plus accrued and unpaid interest thereon set
      forth in the first Whereas clause above.  In addition to the
      principal and interest set forth herein, all interest accrued and accruing
      hereafter and all liquidated damages, fees, costs, expenses and other
      charges now or hereafter payable by the Company to the Holders under the
      Transaction Documents (collectively, the “Obligations”),
      are unconditionally owing by the Company to the Holders, without offset,
      defense or counterclaim of any kind, nature or description
      whatsoever.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              b.   
        

            	
              Acknowledgement of
      Security Interests.  The Company hereby acknowledges,
      confirms and agrees that the Holders have and shall continue to have
      valid, enforceable and perfected first-priority liens upon and security
      interests in:

            

    

     

    
      	
              i.    
        

            	
              the
      Pledged Property heretofore granted to Montgomery pursuant to the Security
      Agreement between the World Rental & Sales Management Co., a wholly
      owned subsidiary of Tech Laboratories, Inc., and Montgomery dated December
      28, 2005;

            

    

     

    
      	
              ii.   
        

            	
              the
      Pledged Shares heretofore granted to Montgomery pursuant to the Amended
      and Restated Pledge and Escrow Agreement among Tech Laboratories, Inc.,
      David Gonzalez, Esq. and Montgomery dated December 28,
    2005;

            

    

     

    
      	
              iii.  
        

            	
              the
      Pledged Shares heretofore granted to YA Global pursuant to the Pledge and
      Escrow Agreement among Tech Laboratories, Inc., David Gonzalez, Esq. and
      YA Global dated April 20, 2007;

            

    

     

    
      	
              iv.  
        

            	
              the
      Pledged Property heretofore granted to YA Global pursuant to the Restated
      Security Agreement between Tech Laboratories, Inc., Renewal Fuels, Inc.
      and YA Global dated April 20, 2007;

            

    

     

    
      	
              v.   
        

            	
              the
      Patent Collateral heretofore granted to YA Global pursuant to the Patent
      Security Agreement between Tech Laboratories, Inc., Renewal Fuels, Inc.
      and YA Global, dated April 20,
2007;

            

    

     

    
      	
              vi.  
        

            	
              the
      Pledged Property heretofore granted to YA Global pursuant to the Security
      Agreement between Renewal Fuels, Inc., Biodiesel Solutions, Inc. and YA
      Global dated June 29, 2007;

            

    

     

    
      	
              vii.    

            	
              the
      Patent Collateral heretofore granted to YA Global pursuant to the Patent
      Security Agreement between Renewal Fuels, Inc., Tech Laboratories, Inc.
      and YA Global, dated June 29, 2007;
and

            

    

     

    
      	
              viii.
        

            	
              any
      other collateral otherwise granted to or held by the Holders (together
      with the Pledged Property, Pledged Shares and Patent Collateral identified
      in clauses (i) – (vii) of this Section 2(b), the “Pledged
      Property”).

            

    

     

    
      	
              c.    
       

            	
              Binding Effect of
      Documents.  The Company hereto acknowledges, confirms and
      agrees that:  (a) each of the Transaction Documents to
      which it is a party has been duly executed and delivered to YA Global or
      Montgomery, as applicable, by the Company, and each is in full force and
      effect as of the date hereof, (b) the agreements and obligations of
      the Company contained in such documents and in this Agreement constitute
      the legal, valid and binding obligations of the Company, enforceable
      against each in accordance with their respective terms, and the Company
      has no valid defense to the enforcement of such obligations, and
      (c) YA Global and Montgomery are and shall be entitled to the rights,
      remedies and benefits provided for in the Transaction Documents and
      applicable law, without setoff, defense or counterclaim of any kind,
      nature or descriptions whatsoever.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              3.   
        

            	
              FORBEARANCE IN RESPECT
      OF CERTAIN EVENTS OF
DEFAULT.

            

    

     

    
      	
              a.   
        

            	
              Acknowledgement of
      Default.  The Company hereby acknowledges and agrees that
      the Existing Defaults have occurred and are continuing, and each
      constitutes an Event of Default and entitles the Holders to exercise their
      rights and remedies under the Transaction Documents, applicable law or
      otherwise.  The Company further represents and warrants that as
      of the date hereof no other Event of Default under the Transaction
      Documents exists.  The Holders have not waived, presently do not
      intend to waive and may never waive such Existing Defaults and nothing
      contained herein or the transactions contemplated hereby shall be deemed
      to constitute any such waiver.  The Company hereby acknowledges
      and agrees that the Holders have the presently exercisable right to
      declare the Obligations to be immediately due and payable under the terms
      of the Transaction Documents.

            

    

     

    
      	
              b.   
        

            	
              Forbearance.

            

    

     

    
      	
              i.   
        

            	
              In
      reliance upon the representations, warranties and covenants of the Company
      contained in this Agreement, and subject to the terms and conditions of
      this Agreement and any documents or instruments executed in connection
      herewith, the Holders agree to forbear from exercising their rights and
      remedies under the Transaction Documents or applicable law in respect of
      or arising out of the Existing Defaults, subject to the conditions,
      amendments and modifications contained herein for the period (the “Forbearance
      Period”) commencing on the date hereof and ending on September 30,
      2008 (the “Forbearance Termination Date”), so long as the following
      conditions are met: (i) the Company strictly complies with the terms of
      this Agreement, and (ii) there is no occurrence or existence of any Event
      of Default, other than the Existing Defaults (a “New
      Default”).

            

    

     

    
      	
              ii.   
        

            	
              Upon
      the termination or expiration of the Forbearance Period, the agreement of
      the Holders to forbear shall automatically and without further action
      terminate and be of no force and effect, it being expressly agreed that
      the effect of such termination will be to permit the Holders to exercise
      such rights and remedies immediately, including, but not limited to, the
      acceleration of all of the Obligations without any further notice, passage
      of time or forbearance of any kind.  This Agreement shall be
      deemed to satisfy any and all requirements by the Holders to notify the
      Company of the occurrence of the Existing Defaults and satisfies any
      obligation by the Holders to give the Company an opportunity to cure the
      Existing Defaults.

            

    

     

    
      	
              c.   
        

            	
              No Other Waivers;
      Reservation of Rights.

            

    

     

    
      	
              i.   
        

            	
              The
      Holders have not waived, are not by this Agreement waiving, and have no
      intentions of waiving, any Events of Default which may be continuing on
      the date hereof or any Events of Default which may occur after the date
      hereof (whether the same or similar to the Existing Defaults or
      otherwise), and the Holders have not agreed to forbear with respect to any
      of their rights or remedies concerning any Events of Default (other than,
      during the Forbearance Period, the Existing Defaults to the extent
      expressly set forth herein), which may have occurred or are continuing as
      of the date hereof or which may occur after the date
    hereof.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              ii.   
        

            	
              Subject
      to Section 3(b) above (solely with respect to the Existing Defaults),
      the Holders reserve the right, in their discretion, to exercise any or all
      of their rights and remedies under the Transaction Documents as a result
      of any Events of Default which may be continuing on the date hereof or any
      Event of Default which may occur after the date hereof, and the Holders
      have not waived any of such rights or remedies, and nothing in this
      Agreement, and no delay on its part in exercising any such rights or
      remedies, should be construed as a waiver of any such rights or
      remedies.

            

    

     

    
      	
              4.   
        

            	
              WARRANTS.  Pursuant
      to the terms and conditions of this Agreement, contemporaneously with the
      execution and delivery of this Agreement, the Company will amend the
      Amended and Restated Warrant to Purchase Common Stock, (No. RNWF-5-1(b))
      originally issued on June 29, 2007, by executing an amendment in
      substantially the form attached hereto as Exhibit A
      pursuant to which the Warrant Exercise Price will be reduced to
      $0.001.

            

    

     

    
      	
              5.   
        

            	
              AMENDMENT OF
      DEBENTURES.  Pursuant to the terms and conditions of this
      Agreement, contemporaneously with the execution and delivery of this
      Agreement, the Company will amend each of the Debentures by executing an
      amendment (the “Amendments”) in
      substantially the form attached hereto as Exhibit B for
      each Debenture.

            

    

     

    
      	
              a.   
        

            	
              Pursuant
      to the Amendments, each Debenture will be amended so that interest will
      accrue on the outstanding principal balance of the Debenture at an annual
      rate equal to thirteen percent (13%) effective as of the date
      hereof.

            

    

     

    
      	
              b.   
        

            	
              Pursuant
      to the Amendments, each Debenture will be amended so that, prior to
      September 30, 2008, each Debenture may be redeemed by the Company for cash
      without the Company incurring a Redemption
  Premium.

            

    

     

    
      	
              c.   
        

            	
              Pursuant
      to the Amendments, the Maturity Date of Debenture MEP-2 and Debenture
      MEP-3 will be September 30, 2008.

            

    

     

    
      	
              6.   
        

            	
              DEPOSIT ACCOUNT
      AGREEMENT.

            

    

     

    
      	
              a.   
        

            	
              Within
      five (5) days of the date hereof, the Company and YA Global, and each
      applicable bank or other depository institution shall enter into a deposit
      account agreement (“Deposit Account
      Agreement”) in the form of Exhibit C with
      respect to each of the Company’s Deposit Accounts, including, without
      limitation, all savings, passbook, money market or other depository
      accounts, and all certificates of deposit, maintained by the Company with
      any bank, savings and loan association, credit union or other depository
      institution maintained or used by the Company providing dominion and
      control over such accounts to YA Global such that upon notice by YA Global
      to such bank or other depository institution all actions under such
      account shall be taken solely at YA Global’s
  direction.

            

    

     

    
      	
              b.   
        

            	
              The
      Company shall cause all cash, all collections and proceeds from accounts
      receivable, all receipts from credit card payments, and all proceeds from
      the sale of any Pledged Property to be deposited only into its Deposit
      Accounts in the ordinary course of business and consistent with past
      practices.

            

    

     

    
      	
              c.   
        

            	
              The
      Company shall have valid and effective Deposit Account Agreements in place
      at all times after the date which is five (5) days after the date hereof
      with respect to all of its Deposit Accounts.  No Deposit Account
      shall be established, used or maintained by the Company unless it first
      enters into a Deposit Account
Agreement.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              d.   
        

            	
              With
      respect to each Deposit Account, upon notice from YA Global, which may be
      given no earlier than the earlier to occur of (x) the Forbearance
      Termination Date, or (y) the occurrence of a New Default, YA Global shall
      have the right, at any time and from time to time, to exercise its rights
      under such Deposit Account Agreement, including, for the avoidance of any
      doubt, the exclusive right to give instructions to the financial
      institution at which such Deposit Account is maintained as to the
      disposition of funds or other property on deposit therein or credited
      thereto.

            

    

     

    
      	
              e.   
        

            	
              In
      connection with the foregoing, the Company hereby authorizes and directs
      each bank or other depository institution which maintains any Deposit
      Account to pay or deliver to YA Global upon YA Global’s written demand
      thereof, which may be given no earlier than the earlier to occur of (x)
      the Forbearance Termination Date, or (y) the occurrence of a New Default,
      all balances in each Deposit Account with such depository for application
      to the Obligations.

            

    

     

    
      	
              7.   
        

            	
              COVENANTS

            

    

     

    
      	
              a.   
        

            	
              FURTHER
      ASSURANCES. The Company shall, from and after the execution of this
      Agreement, execute and deliver to the Holders whatever additional
      documents, instruments, and agreements that the Holders may require in
      order to correct any document deficiencies, or to vest or perfect the
      Transaction Documents and the collateral granted therein more securely in
      the Holders and/or to otherwise give effect to the terms and conditions of
      this Agreement, and hereby authorize the Holders to file any financing
      statements (including financing statements with a generic description of
      the collateral such as “all assets”), and take any other normal and
      customary steps, the Holders deem necessary to perfect or evidence their
      security interests and liens in any such
  collateral.

            

    

     

    
      	
              b.   
        

            	
              NON-INTERFERENCE. 
      From and after the termination of the Forbearance Period, the Company
      agrees not to interfere with the exercise by the Holders of any of their
      rights and remedies.  The Company further agrees that it shall not
      seek to restrain or otherwise hinder, delay, or impair the Holder’s
      efforts to realize upon any collateral granted to the Holders, or
      otherwise to enforce its rights and remedies pursuant to the Transaction
      Documents.  The provisions of this Paragraph shall be specifically
      enforceable by the Holders.

            

    

     

    
      	
              c.   
        

            	
              CROSS
      DEFAULT.  The Company hereby acknowledges and agrees that any
      default or Event of Default under this Agreement or under any Transaction
      Document shall constitute an Event of Default under each other Transaction
      Document.

            

    

     

    
      	
              8.   
        

            	
              RELEASE.  In
      exchange for the accommodations made by the Holders herein, the Company
      does hereby, on behalf of itself and its agents, representatives,
      attorneys, assigns, heirs, subsidiaries, executors and administrators
      (collectively, “Company
      Parties”) RELEASE AND FOREVER DISCHARGE the Holders and their
      subsidiaries and their respective affiliates, parents, joint ventures,
      officers, directors, shareholders, interest holders, members, managers,
      employees, consultants, representatives, successors and assigns, heirs,
      executors and administrators (collectively, “Buyer Parties”)
      from all causes of action, suits, debts, claims and demands whatsoever
      known or unknown, at law, in equity or otherwise, which the Company
      Parties ever had, now has, or hereafter may have on or prior to the date
      hereof, and any claims for reasonable attorneys’ fees and costs, and
      including, without limitation, any claims relating to fees, penalties,
      liquidated damages, and indemnification for losses, liabilities and
      expenses.  The release contained in this Section is effective
      without regard to the legal nature of the claims raised and without regard
      to whether any such claims are based upon tort, equity, or implied or
      express contract.  It is expressly understood and agreed that
      this release shall operate as a clear and unequivocal waiver by the
      Company Parties of any such claim
whatsoever.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              9.   
        

            	
              PROVISIONS OF GENERAL
      APPLICATION

            

    

     

    
      	
              a.   
        

            	
              Effect of this
      Agreement.  Except as modified pursuant hereto, no other
      changes or modifications to the Transaction Documents are intended or
      implied and in all other respects the Transaction Documents are hereby
      specifically ratified, restated and confirmed by all parties hereto as of
      the effective date hereof.  To the extent of conflict between
      the terms of this Agreement and the other Transaction Documents, the terms
      of this Agreement shall control.  The Transaction Documents and
      this Agreement shall be read and construed as one
    agreement.

            

    

     

    
      	
              b.   
        

            	
              Governing
      Law.  This Agreement shall be interpreted according to
      the laws of the State of New Jersey and shall inure to the benefit of and
      be binding upon the parties hereto and their respective successors and
      assigns.  Any notices, demands, consents, other writings or
      communications permitted or required by this Agreement shall be given in
      the manner and to the address as set forth in the Transaction
      Documents.

            

    

     

    
      	
              c.   
        

            	
              Mutual Waiver of Jury
      Trial.  BECAUSE DISPUTES ARISING IN CONNECTION WITH
      COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
      BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE
      AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
      DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE
      LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
      BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
      WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING
      BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT OR
      OTHERWISE BETWEEN FACTOR AND CLIENT ARISING OUT OF, CONNECTED WITH,
      RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
      CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER FACTORING DOCUMENTS OR
      THE TRANSACTIONS RELATED THERETO.

            

    

     

    [SIGNATURE
PAGE IMMEDIATELY TO FOLLOW]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, this
Agreement is executed and delivered as of the day and year first above
written.

     

    
      	 
      	
              Renewal
      Fuels, Inc.

            
	 
      	 
      
	 
      	
              By:
      /s/ Bryan M.
      Chance                                    
      

            
	 
      	
              Name:  Bryan
      M. Chance

            
	 
      	
              Title:    Chief
      Executive Officer

            
	 
      	 
      
	 
      	
              YA
      Global Investments, L.P.

            
	 
      	 
      
	 
      	
              By:      Yorkville
      Advisors, LLC

            
	 
      	
              Its:       Investment
      Manager

            
	 
      	 
      
	 
      	
              By:
      /s/ David
      Gonzalez                                          

            
	 
      	
              Name:  David
      Gonzalez

            
	 
      	
              Title:    Member

            

    

    
       

      
        	 
      	
                

                  Montgomery
      Equity Partners, ltd.

                

              
	 
      	 
      
	 
      	
                By:      Yorkville
      Advisors, LLC

              
	 
      	
                Its:       Investment
      Manager

              
	 
      	 
      
	 
      	
                By:
      /s/ David
      Gonzalez                                          

              
	 
      	
                Name:  David
      Gonzalez

              
	 
      	
                Title:    Member

              

      

      

      
      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    SCHEDULE
A

    

    TRANSACTION
DOCUMENTS

    

     

    Securities
Purchase Agreement dated December 28, 2005, between Tech Laboratories, Inc. and
Montgomery Equity Partners, Ltd.

     

    Amended
and Restated Investor Registration Rights Agreement dated December 28, 2005,
between Tech Laboratories, Inc. and Montgomery Equity Partners,
Ltd.

     

    Security
Agreement dated December 28, 2005, between World Rental & Sales Management
Co., a Florida corporation and wholly owned subsidiary of Tech Laboratories,
Inc., and Montgomery Equity Partners, Ltd.

     

    Amended
and Restated Pledge and Escrow Agreement dated December 28, 2005, between
Montgomery Equity Partners, Ltd., Tech Laboratories, Inc. and David
Gonzalez

     

    Amended
and Restated Secured Convertible Debenture (No. MEP-2) issued to Montgomery
Equity Partners, Ltd. on December 28, 2005 in the original principal amount of
Five Hundred Thirty-Seven Thousand Two Hundred Twenty Dollars ($537,220) as
amended pursuant to Amendment No. 1 thereto

     

    Secured
Convertible Debenture (No. MEP-3) issued to Montgomery Equity Partners, Ltd. on
December 28, 2005 in the original principal amount of Three Hundred Thousand
Dollars ($300,000) as amended pursuant to Amendment No. 1 thereto

     

    Securities
Purchase Agreement dated June 29, 2007, between Tech Laboratories, Inc. and
Cornell Capital Partners, L.P.

     

    Registration
Rights Agreement dated April 20, 2007, between Tech Laboratories, Inc. and
Cornell Capital Partners, L.P as amended by Amendment No. 1 thereto

     

    Security
Agreement dated June 29, 2007, between Tech Laboratories, Inc. and Cornell
Capital Partners, L.P.

     

    Patent
Security Agreement dated April 20, 2007, between Tech Laboratories, Inc. and
Cornell Capital Partners, L.P.

     

    Secured
Convertible Debenture (No. TLBT-5-1) issued to Cornell Capital Partners, L.P. on
June 29, 2007 in the original principal amount of Two Million Dollars
($2,000,000)

     

    Secured
Convertible Debenture (No. TLBT-5-2) issued to Cornell Capital Partners, L.P. on
December 31, 2007 in the original principal amount of Three Hundred Thousand
Dollars ($300,000)

     

    Securities
Purchase Agreement dated April 20, 2007, between Tech Laboratories, Inc. and
Cornell Capital Partners, L.P.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Registration
Rights Agreement, dated April 20 2007, between Tech Laboratories, Inc. and
Cornell Capital Partners, L.P.

     

    Pledge
and Escrow Agreement dated April 20, 2007, between Tech Laboratories, Inc.,
Cornell Capital Partners, L.P. and David Gonzalez

     

    Restated
Security Agreement dated April 20, 2007, between Tech Laboratories, Inc.,
certain subsidiaries thereof and Cornell Capital Partners, L.P.

     

    Amended
and Restated Secured Convertible Debenture (No. TCHL-1-2) issued to Cornell
Capital Partners, L.P. on May 31, 2007 in the original principal amount of One
Million Dollars ($1,000,000)

     

    Secured
Convertible Debenture (No. TCHL-1-1) issued to Cornell Capital Partners, L.P. on
May 31, 2007 in the original principal amount of One Million Dollars
($1,000,000)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
A

    

    RENEWAL
FUELS, INC.

    

    AMENDMENT
NO. 1

    to

    AMENDED
AND RESTATED WARRANT TO PURCHASE COMMON STOCK

    

    THIS
WARRANT AMENDMENT SHOULD BE ATTACHED TO THE

    ORIGINAL
WARRANT CERTIFICATE

    

    This
Amendment No. 1 to Amended and Restated Warrant to Purchase Common Stock (this
“Amendment”) is
issued in connection with the Amended and Restated Warrant to Purchase Common
Stock (No. RNWF-5-1(b)) (the “Warrant”) issued by
Renewal Fuels, Inc. (the “Company”) to YA
Global Investments, L.P. (the “Holder”) to purchase
one million fifty thousand (1,050,000) shares of Common
Stock.  Capitalized terms used but not defined herein have the meaning
given thereto in the Warrant.

     

    THIS CERTIFIES THAT, the
following amendment is hereby made to the Warrant:

     

    
      	
              ·     
        

            	
              The
      Warrant Exercise Price is $0.001.

            

    

     

    IN WITNESS WHEREOF, the
Company has caused this Amendment to be signed by its duly authorized
officer.

     

    
      	 	Renewal Fuels,
      Inc. 
	 	 
	 	

              By:
      /s/ Bryan M.
      Chance                                    
      

            
	 	

              Name:  Bryan
      M. Chance

            
	 	Title:    CEO 

    

     

    Dated:  April
__, 2008

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Exhibit
B

    RENEWAL
FUELS, INC.

    

    AMENDMENT
NO. [_]

    to

    SECURED
CONVERTIBLE DEBENTURE DUE [___________]

    

    THIS
DEBENTURE AMENDMENT SHOULD BE ATTACHED TO THE

    ORIGINAL
DEBENTURE CERTIFICATE

    

    This
Amendment No. [__] to Secured Convertible Debenture (this “Amendment”) is issued
in connection with Secured Convertible Debenture (No. ______) (the “Debenture”) issued by
Renewal Fuels, Inc. (the “Company”) to
[____________] (the “Holder”) in the
original principal amount of [______________
($_____________)].  Capitalized terms used but not defined herein have
the meaning given thereto in the Debenture.

     

    THIS CERTIFIES THAT, the
following amendments are hereby made to the Debenture:

     

    
      	
              ·     
        

            	
              Interest
      shall accrue on the outstanding principal balance of the Debenture at an
      annual rate equal to thirteen percent (13%) effective as of April __,
      2008.

            

    

     

    
      	
              ·     
        

            	
              The
      following sentences will be added to the end of Section 3(a) of the
      Debenture (“REDEMPTION.
      Company’s Cash
      Redemption.”):

            

    

     

    “Notwithstanding
this Section 3(a), the Company may redeem all amounts outstanding under this
Debenture at any time prior to September 30, 2008 (an “Early Total
Redemption”).  In the event of an Early Total Redemption, the
Company will not be required to pay the Redemption Premium.”

     

    
      	
              ·     
        

            	
              [The
      Maturity Date is September 30,
2008.]

            

    

     

    IN WITNESS WHEREOF, the
Company has caused this Amendment to be signed by its duly authorized
officer.

    
       

      
        	 	Renewal Fuels,
      Inc. 
	 	 
	 	

                By:
      /s/ Bryan M.
      Chance                                    
      

              
	 	

                Name:  Bryan
      M. Chance

              
	 	Title:    CEO 

      

       

      Dated:  April
__, 2008

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
C

     

    DEPOSIT
ACCOUNT CONTROL AGREEMENT

     

    This
Deposit Account Control Agreement (the “Agreement”), dated as
of the _____ day of April, 2008, by and among YA Global Investment, L.P., a
Cayman Islands exempt limited partnership, with an address at 101 Hudson Street,
Suite 3700, Jersey City, NJ  07303 (“Secured Party”);
Renewal Fuels, Inc., a ___________ corporation, with an address
at  ________________, (___) ___-____fax (“Borrower”); and
[___________] (“Bank”).

     

    Agreements

     

    In
consideration of the terms, covenants, provisions and conditions set forth in
this Agreement, Secured Party, Borrower and Bank agree as follows:

     

    Section
1.   The
Account.  Bank maintains deposit accounts for Borrower,
currently numbered ___________, __________, and ___________, and titled
[_________________] (as such accounts may be renumbered or retitled,
collectively called the “Account”). All
parties agree that the Account is a “deposit account” within the meaning of
Article 9 of the Uniform Commercial Code of the State of ________ (the “UCC”).

     

    Section
2.   Control.  Bank
will comply with instructions originated by Secured Party directing disposition
of the funds in the Account without further consent by Borrower.  Bank
may also comply with instructions directing the disposition of funds in the
Account originated by Borrower or its authorized representatives until such time
as Secured Party delivers a written notice to Bank that Secured Party is thereby
exercising exclusive control over the Account. Such notice is referred to herein
as the “Notice of
Exclusive Control.”  After Bank receives a Notice of Exclusive
Control and has had reasonable opportunity to comply, it will cease complying
with instructions concerning the Account or funds on deposit therein originated
by Borrower or its representatives.  Bank has not and will not agree
with any third party to comply with instructions or other directions concerning
the Account or the disposition of funds in the Account originated by such third
party without the prior written consent of Secured Party and
Borrower.  Notwithstanding the foregoing, Bank is authorized to comply
with any duly issued order, garnishment, subpoena and writ of possession or
other such directions concerning the Account which it may receive from any court
of proper jurisdiction or governmental agency or other appropriate
party.

     

    Section
3.   Subordination of Bank’s
Security Interest.  Bank hereby subordinates all security
interests, encumbrances, claims and rights of setoff it may have, now or in the
future, against the Account or any funds in the Account other than in connection
with the payment of Bank’s customary fees and charges for routine operation and
maintenance of the Account, including overdraft fees, and for payment of the
face amount of any checks or other items which have been credited to the Account
but are subsequently unpaid because of uncollected or insufficient funds, or are
recalled, reversed or returned for any reason, pursuant to its agreement with
Borrower and for the reversal of provisional credits and for any amounts due
Bank under Section 6 of this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    Section
4.   Statements, Confirmations
and Notices of Adverse Claims.  Bank will send copies of all
statements concerning the Account to each of Borrower and Secured Party at the
address set forth in the heading of this Agreement. Upon receipt of written
notice of any lien, encumbrance or adverse claim against the Account or any
funds credited thereto, Bank will make reasonable efforts promptly to notify
Secured Party and Borrower thereof.

     

    Section
5.   Bank’s
Responsibility.  Bank shall have no responsibility or liability
to Secured Party for complying with instructions concerning the Account from
Borrower or Borrower’s authorized representatives which are received by Bank
before Bank receives a Notice of Exclusive Control and has had reasonable
opportunity to act on it.  Bank shall have no responsibility or
liability to Borrower for complying with a Notice of Exclusive Control or
complying with instructions concerning the Account originated by Secured Party,
and shall have no responsibility to investigate the appropriateness or
genuineness of any purported such instruction or Notice of Exclusive Control,
even if Borrower notifies Bank that Secured Party is not legally entitled to
originate any such instruction or Notice of Exclusive Control.  Bank
shall not be charged with knowledge of, and shall have no duty to inquire
regarding, the contents of any document or any facts other than the contents of
this Agreement and notices, if any, received by Bank from Secured
Party.

     

    Section
6.   Indemnity and
Reimbursement.

     

    (a)        Borrower
agrees to indemnify and hold harmless Bank, its directors, officers, agents and
employees (collectively, the “Bank Indemnitees”)
against any and all claims, causes of action, liabilities, lawsuits, demands and
damages (collectively, “Claims”), including
without limitation, any and all court costs and reasonable attorney’s fees, in
any way related to or arising out of or in connection with this Agreement or any
action taken or not taken pursuant hereto, except to the extent caused by Bank’s
gross negligence or willful misconduct or Bank’s knowing and intentional breach
of Section 2 hereof.

     

    (b)        Secured
Party agrees to reimburse Bank for any returned item against the Account for
which there were insufficient funds in the Account to satisfy such returned
item.  Such reimbursement will be limited to the aggregate amount
transferred from the Account as a result of Bank’s acting upon instructions
originated by Secured Party pursuant to Section 2.  Bank may not
make a claim for reimbursement under this Section to the extent that the amount
of any loss incurred by Bank was directly caused by Bank’s gross negligence or
willful misconduct.  If Bank satisfies any such claim by charging the
Account, the amount of Secured Party’s maximum liability for reimbursement
obligations under this Section will be reduced by the amount of the claim
so satisfied.

     

    Section
7.   Customer
Agreement.  In the event of a conflict between this Agreement
and any other agreement between the Bank and the Borrower relating to the
Account, the terms of this Agreement will prevail; provided, however, that this
Agreement shall not alter or affect any mandatory arbitration provision
currently in effect between Bank and Borrower pursuant to a separate
agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    Section
8.   Termination.  Unless
earlier terminated by Bank pursuant to this section, this Agreement shall
continue in effect until Secured Party has notified Bank in writing that this
Agreement, or its security interest in the Account, is terminated. Upon receipt
of such notice the obligations of Bank hereunder with respect to the operation
and maintenance of the Account after the receipt of such notice shall terminate,
Secured Party shall have no further right to originate instructions concerning
the Account and any previous Notice of Exclusive Control delivered by Secured
Party shall be deemed to be of no further force and effect. Bank reserves the
right, unilaterally, to terminate this Agreement, such termination to be
effective ten (10) business days after written notice thereof is given to
Borrower and Secured Party.

     

    Section
9.   Complete Agreement;
Amendments.  This Agreement and the instructions and notices
required or permitted to be executed and delivered hereunder set forth the
entire agreement of the parties with respect to the subject matter hereof, and,
subject to Section
7 above supersede any prior agreement and contemporaneous oral agreements
of the parties concerning its subject matter. No amendment, modification or
(except as otherwise specified in Section 8 above)
termination of this Agreement, nor any assignment of any rights hereunder
(except to the extent contemplated under Section 12 below),
shall be binding on any party hereto unless it is in writing and is signed by
each of the parties hereto, and any attempt to so amend, modify, terminate or
assign except pursuant to such a writing shall be null and void. No waiver of
any rights hereunder shall be binding on any party hereto unless such waiver is
in writing and signed by the party against whom enforcement is
sought.

     

    Section
10.   Governing
Law.  This Agreement shall be governed by and construed in
accordance with the law of the State of ___________.

     

    Section
11.   Severability.  To
the extent a provision of this Agreement is unenforceable; this Agreement will
be construed as if the unenforceable provision were omitted.

     

    Section
12.   Successors and
Assigns.  The terms of this Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto and their respective
successors or heirs, assigns and personal representatives. This Agreement may be
assigned by Secured Party to any successor of Secured Party under its security
agreement with Borrower, provided that written notice thereof is given by
Secured Party to Bank.

     

    Section
13.   Notices.  Except
as otherwise expressly provided herein, any notice, order, instruction, request
or other communication required or permitted to be given under this Agreement
shall be in writing and deemed to have been properly given when delivered in
person, or when sent by telecopy or other electronic means and electronic
confirmation of error-free receipt is received or upon receipt of notice sent by
certified or registered United States mail, return receipt requested, postage
prepaid, addressed to the party at the address set forth next to such party’s
name at the heading of this Agreement. Any party may change its address for
notices in the manner set forth above.

     

    Section
14.   Jury
Waiver.  BORROWER WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT
TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT, ANY RIGHTS, REMEDIES, OBLIGATIONS, OR DUTIES HEREUNDER, OR THE
PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    Section
15.   Counterparts.  This
Agreement may be executed in any number of counterparts, all of which shall
constitute one and the same instrument, and any party hereto may execute this
Agreement by signing and delivering one or more counterparts.

     

    Section 16. Conflicts,
etc. In case conflicting demands are made upon Bank for any
situation not addressed in this Agreement, Bank may, in its sole discretion,
either (i) withhold performance of this Agreement until such time as said
conflicting demands have been withdrawn or the rights of the respective parties
shall have been settled by court adjudication, arbitration, joint order or
otherwise, or (ii) commence a civil interpleader or similar action, in a court
of competent jurisdiction, for purposes of adjudicating the rights of the
parties, the cost and expenses of which, including reasonable fees and
disbursements of attorneys of Bank, shall be the joint responsibility of both
Borrower and Secured Party.

     

    Section
17.  Bank’s Jurisdiction. Bank’s jurisdiction for purposes of
Article 9 of the Uniform Commercial Code in effect in the State
of  ________ and this Agreement is the State of
_________.  This provision shall prevail, in the event of any
inconsistency with any other agreement between Bank and Borrower governing the
Deposit Account.

    

     

    [Signatures
begin on the following page(s)]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as
of the ______ day of April, 2008.

    
    

     

    
      	 	Borrower: 
	 	 
	 	
              Renewal
      Fuels, Inc. 

              a _________ Corporation

            
	 	 
	 	 
	 	

              By:
      /s/ Bryan M.
      Chance                                      

            
	 	 
	 	 
	 	Bank: 
	 	 
	 	 
	 	By:     
      _____________________________
	 	Name: _____________________________ 
	 	Title:  
      _____________________________ 
	 	 
	 	Secured Party: 
	 	 
	 	YA Global
      Investments, L.P 
	 	 
	 	By:    Yorkville
      Advisors, LLC 
	 	Its:     Investment
      Manager 
	 	 
	 	By:     ______________________________  
	 	           Mark
      Angelo, Portfolio ManagerFiled by Bowne Pure Compliance

 

EXECUTION COPY

Exhibit 10.1

$300,000,000

DELAYED DRAW TERM LOAN AGREEMENT

among

PUBLIC SERVICE COMPANY OF NEW MEXICO

as Borrower,

THE LENDERS IDENTIFIED HEREIN,

MERRILL LYNCH CAPITAL CORPORATION,

as Administrative Agent

MORGAN STANLEY SENIOR FUNDING, INC.

and

WACHOVIA BANK, NATIONAL ASSOCIATION

as Co-Syndication Agents

DATED AS OF MAY 5, 2008

MERRILL LYNCH, PIERCE, FENNER & SMITH

INCORPORATED,

MORGAN STANLEY SENIOR FUNDING, INC.

and

WACHOVIA CAPITAL MARKETS, LLC,

as Joint Lead Arrangers and Joint Bookrunners

 

 

 

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
	 	 	19	 
	1.3 Accounting Terms/Calculation of Financial Covenants
	 	 	20	 
	1.4 Time
	 	 	20	 
	1.5 Rounding of Financial Covenants
	 	 	20	 
	1.6 References to Agreements and Requirement of Laws
	 	 	20	 
	 
	 	 	 	 
	SECTION 2 FACILITY
	 	 	21	 
	2.1 Loans
	 	 	21	 
	2.2 Continuations and Conversions
	 	 	22	 
	2.3 Minimum Amounts
	 	 	22	 
	2.4 Evidence of Debt
	 	 	23	 
	 
	 	 	 	 
	SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS
	 	 	23	 
	3.1 Interest
	 	 	23	 
	3.2 Payments Generally
	 	 	24	 
	3.3 Prepayments
	 	 	25	 
	3.4 Fees
	 	 	26	 
	3.5 Payment in full at Maturity
	 	 	27	 
	3.6 Computations of Interest and Fees
	 	 	27	 
	3.7 Pro Rata Treatment
	 	 	28	 
	3.8 Sharing of Payments
	 	 	29	 
	3.9 Capital Adequacy
	 	 	29	 
	3.10 Eurodollar Provisions
	 	 	30	 
	3.11 Illegality
	 	 	30	 
	3.12 Requirements of Law; Reserves on Eurodollar Loans
	 	 	30	 
	3.13 Taxes
	 	 	31	 
	3.14 Compensation
	 	 	34	 
	3.15 Determination and Survival of Provisions
	 	 	34	 
	 
	 	 	 	 
	SECTION 4 CONDITIONS PRECEDENT TO CLOSING
	 	 	35	 
	4.1 Closing Conditions
	 	 	35	 
	 
	 	 	 	 
	SECTION 5 CONDITIONS TO ALL EXTENSIONS OF CREDIT
	 	 	37	 
	5.1 Funding Requirements
	 	 	37	 
	 
	 	 	 	 
	SECTION 6 REPRESENTATIONS AND WARRANTIES
	 	 	38	 
	6.1 Organization and Good Standing
	 	 	38	 
	6.2 Due Authorization
	 	 	38	 
	6.3 No Conflicts
	 	 	38	 
	6.4 Consents
	 	 	39	 
	6.5 Enforceable Obligations
	 	 	39	 

 

-i-

 

	 	 	 	 	 
	 	 	Page	 
	6.6 Financial Condition
	 	 	39	 
	6.7 No Material Adverse Effect
	 	 	39	 
	6.8 No Default
	 	 	39	 
	6.9 Litigation
	 	 	39	 
	6.10 Taxes
	 	 	40	 
	6.11 Compliance with Law
	 	 	40	 
	6.12 ERISA
	 	 	40	 
	6.13 Use of Proceeds; Margin Stock
	 	 	41	 
	6.14 Government Regulation
	 	 	41	 
	6.15 Solvency
	 	 	42	 
	6.16 Disclosure
	 	 	42	 
	6.17 Environmental Matters
	 	 	42	 
	6.18 Material Leases
	 	 	42	 
	6.19 Material Lease Interest Payments and Discount Rate
	 	 	42	 
	 
	 	 	 	 
	SECTION 7 AFFIRMATIVE COVENANTS
	 	 	43	 
	7.1 Information Covenants
	 	 	43	 
	7.2 Financial Covenant
	 	 	45	 
	7.3 Preservation of Existence and Franchises
	 	 	46	 
	7.4 Books and Records
	 	 	46	 
	7.5 Compliance with Law
	 	 	46	 
	7.6 Payment of Taxes and Other Indebtedness
	 	 	46	 
	7.7 Insurance
	 	 	46	 
	7.8 Performance of Obligations
	 	 	47	 
	7.9 Use of Proceeds
	 	 	47	 
	7.10 Audits/Inspections
	 	 	47	 
	7.11 Letter of Credit Facility
	 	 	47	 
	7.12 Required Debt Offerings
	 	 	47	 
	7.13 Security
	 	 	48	 
	 
	 	 	 	 
	SECTION 8 NEGATIVE COVENANTS
	 	 	49	 
	8.1 Nature of Business
	 	 	49	 
	8.2 Consolidation and Merger
	 	 	49	 
	8.3 Sale or Lease of Assets
	 	 	49	 
	8.4 Affiliate Transactions
	 	 	49	 
	8.5 Liens
	 	 	50	 
	8.6 Accounting Changes
	 	 	51	 
	8.7 Negative Pledge Clause
	 	 	51	 
	8.8 Indebtedness
	 	 	51	 
	 
	 	 	 	 
	SECTION 9 EVENTS OF DEFAULT
	 	 	52	 
	9.1 Events of Default
	 	 	52	 
	9.2 Acceleration; Remedies
	 	 	54	 
	9.3 Allocation of Payments After Event of Default
	 	 	55	 
	 
	 	 	 	 
	SECTION 10 AGENCY PROVISIONS
	 	 	56	 
	10.1 Appointment and Authority
	 	 	56	 

 

-ii-

 

	 	 	 	 	 
	 	 	Page	 
	10.2 Rights as a Lender
	 	 	56	 
	10.3 Exculpatory Provisions
	 	 	56	 
	10.4 Reliance by Administrative Agent
	 	 	57	 
	10.5 Delegation of Duties
	 	 	57	 
	10.6 Resignation of Administrative Agent
	 	 	58	 
	10.7 Non-Reliance on Administrative Agent and Other Lenders
	 	 	58	 
	10.8 No Other Duties, Etc
	 	 	59	 
	10.9 Administrative Agent May File Proofs of Claim
	 	 	59	 
	 
	 	 	 	 
	SECTION 11 MISCELLANEOUS
	 	 	60	 
	11.1 Notices; Effectiveness; Electronic Communication
	 	 	60	 
	11.2 Right of Set-Off
	 	 	62	 
	11.3 Successors and Assigns
	 	 	62	 
	11.4 No Waiver; Remedies Cumulative
	 	 	65	 
	11.5 Attorney Costs, Expenses, Taxes and Indemnification by Borrower
	 	 	66	 
	11.6 Amendments, Etc
	 	 	67	 
	11.7 Most Favored Nation
	 	 	69	 
	11.8 Counterparts
	 	 	69	 
	11.9 Headings
	 	 	69	 
	11.10 Survival of Indemnification and Representations and Warranties
	 	 	69	 
	11.11 Governing Law; Venue; Service
	 	 	69	 
	11.12 Waiver of Jury Trial; Waiver of Consequential Damages
	 	 	70	 
	11.13 Severability
	 	 	70	 
	11.14 Further Assurances
	 	 	70	 
	11.15 Confidentiality
	 	 	70	 
	11.16 Entirety
	 	 	71	 
	11.17 Binding Effect; Continuing Agreement
	 	 	71	 
	11.18 Regulatory Statement
	 	 	72	 
	11.19 USA Patriot Act Notice
	 	 	72	 
	11.20 Acknowledgment
	 	 	72	 
	11.21 Replacement of Lenders
	 	 	73	 

	 	 	 
	SCHEDULES
	 	 
	 
	 	 
	Schedule 1.1(a)
Schedule 6.18

	 	Commitments

Material Leases
	Schedule 6.19

	 	Material Lease Interest Payments and Discount Rate
	Schedule 11.1

	 	Notices
	 
	 	 
	EXHIBITS
	 	 
	 
	 	 
	Exhibit 2.1(b)

	 	Form of Notice of Borrowing
	Exhibit 2.1(e)

	 	Form of Note
	Exhibit 2.2

	 	Form of Notice of Continuation/Conversion
	Exhibit 3.3(b)(iii)

	 	Form of Prepayment Option Notice
	Exhibit 7.1(c)

	 	Form of Compliance Certificate
	Exhibit 11.3(b)

	 	Form of Assignment and Assumption

 

-iii-

 

DELAYED DRAW TERM LOAN AGREEMENT

THIS DELAYED DRAW TERM LOAN AGREEMENT (this “Agreement”) is entered into as of May 5,
2008, among PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, as Borrower, the
Lenders, MORGAN STANLEY SENIOR FUNDING, INC. and WACHOVIA BANK, NATIONAL ASSOCIATION, as
Co-Syndication Agents, MERRILL LYNCH CAPITAL CORPORATION, as Administrative Agent, and the
Arrangers.

RECITALS

WHEREAS, the Borrower has requested the Lenders to provide a senior term loan facility to the
Borrower in an aggregate principal amount of up to $300,000,000; and

WHEREAS, the Lenders party hereto have agreed to make the requested senior 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 (including the preamble and
recitals hereto) unless the context otherwise requires. Defined terms herein shall include in the
singular number the plural and in the plural the singular:

“Act” has the meaning set forth in Section 11.19.

“Administrative Agent” means Merrill Lynch Capital Corporation (in its capacity
as administrative agent for the Lenders hereunder, together with its Affiliates) or any
successor administrative agent appointed pursuant to Section 10.6 in such capacity.

“Administrative Agent’s Office” means the Administrative Agent’s address and,
as appropriate, account as set forth on Schedule 11.1 or such other address or
account as the Administrative Agent may from time to time notify the Borrower and the
Lenders.

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling (including but not limited to all directors and officers of such
Person), controlled by or under direct or indirect common control with such Person. A
Person shall be deemed to control a corporation if such Person possesses, directly or
indirectly, the power (a) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such corporation or (b) to direct or cause
direction of the management and policies of such corporation, whether through the ownership
of voting securities, by contract or otherwise.

 

 

 

“Agent Parties” has the meaning set forth in Section 11.1(c).

“Agent-Related Parties” means the Agents, together with their respective
Affiliates and the officers, directors, employees, agents and attorneys-in-fact of the
Agents and their respective Affiliates.

“Agents” means collectively, the Administrative Agent, the Co-Syndication
Agents and the Arrangers.

“Agreement” has the meaning set forth in the preamble hereto.

“Applicable Percentage” means, for Eurodollar Loans, Base Rate Loans,
commitment fees, funding fees and duration fees, the appropriate applicable percentages, in
each case (subject to the exception indicated below), corresponding to the Debt Rating in
effect as of the most recent Calculation Date as shown below:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Applicable	 	Applicable	 	Applicable
	 	 	 	 	Applicable	 	Applicable	 	Percentage	 	Percentage	 	Percentage
	 	 	 	 	Percentage for	 	Percentage for	 	for	 	for	 	for
	Pricing	 	 	 	Eurodollar	 	Base Rate	 	Commitment	 	Funding	 	Duration
	Level	 	Debt Rating	 	Loans	 	Loans	 	Fees	 	 Fees	 	Fees
	I

	 	At least Baa3 or

BBB-, but in any

event not lower

than Ba1 or BB+
	 	Greater of (i)
4.00% and (ii) the
LCD Index Yield
(expressed as a
percentage, with
each basis point
equaling to 0.01%)
less 0.50%.
	 	Greater of (i)
3.00% and (ii) the
LCD Index Yield
(expressed as a
percentage, with
each basis point
equaling to 0.01%)
less 1.50%.
	 	 	0.50	%	 	 	1.25	%	 	 	0.50	%
	II

	 	Otherwise
	 	Greater of (i)
5.00% and (ii) the
LCD Index Yield
(expressed as a
percentage, with
each basis point
equaling to 0.01%)
plus 0.50%.
	 	Greater of (i)
4.00% and (ii) the
LCD Index Yield
(expressed as a
percentage, with
each basis point
equaling to 0.01%)
less 0.50%.
	 	 	0.75	%	 	 	01.50	%	 	 	0.75	%

 

2

 

Except as set forth in the second sentence of this paragraph, on the Closing Date the
Applicable Percentage shall be determined by reference to the then applicable Pricing Level
determined by reference to the Borrower’s Debt Rating on such date. On the initial Borrowing
Date, the Applicable Percentage for Eurodollar Loans and the Applicable
Percentage for Base Rate Loans shall be determined hereunder by reference to both the then
applicable Pricing Level determined by reference to the Borrower’s Debt Rating on such date,
and within any such Pricing Level to the greater of the rate set forth under clause (i) or
the rate set forth under clause (ii), each as set forth under the applicable columns in the
table above, as calculated on such initial Borrowing Date by the Administrative Agent (whose
determination shall be conclusive and binding on the Borrower and the Lenders absent
manifest error); provided that, (A) if on such initial Borrowing Date the applicable
Pricing Level is Pricing Level I, then the Applicable Percentage for Pricing Level I for the
term of this Agreement shall be the greater of the rate determined pursuant to clause (i) or
clause (ii), each as set forth under the applicable columns in the table above, as
determined on the initial Borrowing Date, and the Applicable Percentage for Pricing Level II
for the term of this Agreement shall be determined on each Calculation Date by adding 1.00%
to such greater rate without recalculating the greater of clause (i) or clause (ii) or (B)
if on the such initial Borrowing Date the applicable Pricing Level is Pricing Level II, then
the Applicable Percentage for Pricing Level II for the term of this Agreement shall be the
greater of the rate determined pursuant to clause (i) or clause (ii), each as set forth
under the applicable columns in the table above, as determined on the initial Borrowing
Date, and the Applicable Percentage for Pricing Level I for the term of this Agreement shall
be determined on each Calculation Date by subtracting 1.00% from such greater rate without
recalculating the greater of clause (i) or clause (ii). The Applicable Percentage shall be
adjusted on the date (each a “Calculation Date”) one Business Day after the date on
which the Borrower’s Debt Rating is upgraded or downgraded in a manner which requires a
change in the then applicable Pricing Level set forth above, but in no event shall any
determination of the Applicable Percentage on any Calculation Date require any new
calculation to determine whether clause (i) or clause (ii) under the applicable columns for
Eurodollar Loans and Base Rate Loans would result in a higher rate. If the Borrower does
not have a Debt Rating from either S&P or Moody’s, then, with respect to the Debt Rating,
Pricing Level II shall apply. Each Applicable Percentage shall be effective from one
Calculation Date until the next Calculation Date. Any adjustment in the Applicable
Percentage shall be applicable to all existing Eurodollar Loans and Base Rate Loans as well
as any new Eurodollar Loans or Base Rate Loans made. The applicable Pricing Level for
Applicable Percentage, as of the Closing Date, is Pricing Level I.

“Approved Fund” means any Fund that is administered or managed by (a) a Lender.
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers
or manages a Lender.

“Arrangers” means collectively, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley Senior Funding, Inc. and Wachovia Capital Markets, LLC, in
their capacity as joint lead arrangers and joint bookrunners for the Facility, together with
their respective Affiliates in such capacity.

 

3

 

“Asset Sale Prepayment Event” means a sale, lease or sub-lease (as lessor or
sublessor), sale and leaseback, assignment, conveyance, transfer or other disposition to, or
any exchange of Property with, any Person (other than Borrower) (including any sale
or issuance of any Capital Stock of any Subsidiary of the Borrower) (any such event, a
“Disposition”), in one transaction or a series of related transactions, of all or
any part of Borrower’s or any of its Subsidiaries’ businesses or Properties of any kind,
whether now owned or hereafter acquired, other than (i) inventory Disposed of in the
ordinary course of business (excluding any such Dispositions by operations or divisions
discontinued or to be discontinued), and (ii) Dispositions in one transaction or a series of
related transactions that yield Net Cash Proceeds to the Borrower and its Subsidiaries of
less than $25,000,000.

“Assignment and Assumption” means an Assignment and Assumption substantially in
the form of Exhibit 11.3(b).

“Authorized Officer” means any of the president, chief executive officer, chief
financial officer or treasurer of the Borrower.

“Availability Period” means the period commencing on the Closing Date until the
date that is 45 days prior to the Maturity Date (or such earlier date if the Commitments
have been terminated prior to such date as provided herein).

“Available Commitments” means, as to any Lender at any time, an amount equal to
the excess, if any, of (i) such Lender’s Commitment then in effect (taking into account any
reductions pursuant to Section 2.1(d) and 3.3(b)) over (ii) the aggregate principal amount
of Loans made by such Lender to the Borrower pursuant to Section 2.1.

“Average Life Amount” means the quotient obtained by dividing (i) the Discount
to Par by (ii) 4.

“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 higher
of (a) the Federal Funds Rate plus 1/2 of 1% and (b)  the rate of interest in effect for
such day as publicly announced from time to time by the Administrative Agent as its “prime
rate” (the “Prime Rate”). The Prime Rate is a rate set by the Administrative Agent
based upon various factors including the Administrative Agent’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
rate announced by the Administrative Agent shall take effect at the opening of business on
the day specified in the public announcement of such change.

“Base Rate Loan” means any Loan bearing interest at a rate determined by
reference to the Base Rate.

“Borrower” means Public Service Company of New Mexico, a New Mexico
corporation, together with its successors and permitted assigns.

“Borrower Materials” has the meaning set forth in Section 11.1(c).

 

4

 

“Borrower Obligations” means, without duplication, all of the obligations of
the Borrower to the Lenders, the Agents or the Agent-Related Parties, whenever arising,
under this Agreement, the Notes or any of the other Credit Documents.

“Borrowing” means a borrowing consisting of Loans of the same Type and, in the
case of Eurodollar Loans, having the same Interest Period made by each of the Lenders
pursuant to Section 2.1.

“Borrowing Date” means any Business Day specified by the Borrower, or in the
case of a Mandatory Borrowing, any Arranger, as a date on which the Borrower, or such
Arranger, as the case may be, requests the Lenders to make Loans hereunder.

“Businesses” has the meaning set forth in Section 6.17.

“Business Day” means any day other than a Saturday, a Sunday, a legal holiday
or a day on which banking institutions are authorized or required by Law or other
governmental action to close in New York, New York; provided that in the case of
Eurodollar Loans such day is also a day on which dealings are conducted by and between banks
in the London interbank market.

“Calculation Date” has the meaning set forth in the definition of Applicable
Percentage in this Section 1.1.

“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.

“Cash” means money, currency or a credit balance in any demand or deposit
account.

“Change of Control” means the failure of PNM Resources, Inc., a New Mexico
corporation, to own and control 100% of the Voting Stock of the Borrower.

“Claims” has the meaning set forth in the definition of Environmental Claims in
this Section 1.1.

“Closing Date” means the date of this Agreement, which is the first date all
the conditions precedent in Section 4.1 are satisfied or waived in accordance with Section
11.6.

“Co-Syndication Agents” means Morgan Stanley Senior Funding, Inc. and Wachovia
Bank, National Association, each in its capacity as co-syndication agents for the Facility,
together with their respective Affiliates in such capacity.

 

5

 

“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 each Lender, its obligation to make Loans to the
Borrower pursuant to Section 2.1, in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule
1.1(a) or in the Assignment and Assumption pursuant to which such Lender becomes a party
hereto, as applicable, as such amount may be reduced from time to time in accordance with
this Agreement.

“Commitment Letter” means that certain commitment letter, dated as of April 27,
2008, among the Borrower, Merrill Lynch Bank USA, Merrill Lynch Capital Corporation, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley Senior Funding, Inc., Wachovia
Bank, National Association, and Wachovia Capital Markets, LLC, as the same shall be amended,
modified, supplemented or restated from time to time.

“Committed Amount” means $300,000,000.

“Compensation Period” has the meaning set forth in Section 3.2(c)(ii).

“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.

“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 all
Indebtedness of the Borrower and its Subsidiaries as of such date.

“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).

 

6

 

“Covenant Compliance Worksheet” shall mean a fully completed worksheet in the
form of Schedule I to Exhibit 7.1(c).

“Credit Documents” means this Agreement, the Notes, any Notice of Borrowing,
any Notice of Continuation/Conversion, the Fee Letter, any security agreement, mortgage,
deed of trust or other security document or intercreditor agreement entered into or executed
by the Borrower or any of its Subsidiaries in connection with their obligations under
Section 7.13, and any other document, agreement or instrument entered into or executed in
connection with the foregoing.

“Debt Incurrence Prepayment Event” means any incurrence or issuance of any
Indebtedness for borrowed money by the Borrower or any of its Subsidiaries (including
pursuant to Section 7.12), other than (i) borrowings under the Existing Credit Agreement,
(ii) issuances of letters of credit under the Letter of Credit Facility (or drawings under
the letters of credit issued thereunder) and (iii) issuances or incurrences of Indebtedness,
in one or in a series of related issuances or incurrences in a principal amount of less than
$25,000,000.

“Debt Rating” means the long term unsecured senior non-credit enhanced debt
rating of the Borrower by each of S&P and Moody’s.

“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of
the United States or other applicable jurisdictions from time to time in effect and
affecting the rights of creditors generally.

“Default” means any event, act or condition which with notice or lapse of time,
or both, would constitute an Event of Default.

“Default Rate” means an interest rate equal to two percent (2%) plus
the rate that otherwise would be applicable (or if no rate is applicable, the Base Rate
plus two percent (2%) per annum).

“Defaulting Lender” means, at any time, any Lender that, (a) has failed to make
a Loan or purchase or fund a Participation Interest (but only for so long as such Loan is
not made or such Participation Interest is not purchased or funded), (b) has failed to pay
to the Administrative Agent or any Lender an amount owed by such Lender pursuant to the
terms of this Agreement (but only for so long as such amount has not been repaid) or (c) has
been deemed insolvent or has become subject to a bankruptcy or insolvency proceeding or to a
receiver, trustee or similar official.

 

7

 

“Discount to Par” means the difference obtained by subtracting (i) the LCD
Index Average Bid (expressed as percentage of par) from (ii) 1.

“Disposition” has the meaning set forth in the definition of Asset Sale
Prepayment Event in this Section 1.1. The terms “Dispose” and “Disposed of”
shall have correlating meanings.

“Dollars” and “$” means dollars in lawful currency of the United States of
America.

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund and (d) any other Person (other than a natural person) approved by the
Administrative Agent and the Borrower (such approval not to be unreasonably withheld or
delayed); provided that (i) the Borrower’s consent is not required during the
existence and continuation of a Default or an Event of Default, (ii) approval by the
Borrower shall be deemed given if no objection is received by the assigning Lender and the
Administrative Agent from the Borrower within five Business Days after notice of such
proposed assignment has been delivered to the Borrower and (iii) neither the Borrower nor
any Subsidiary or Affiliate of the Borrower shall qualify as an Eligible Assignee.

“Environmental Claims” means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, accusations, allegations, notices of
noncompliance or violation, investigations (other than internal reports prepared by any
Person in the ordinary course of its business and not in response to any third party action
or request of any kind) or proceedings relating in any way to any actual or alleged
violation of or liability under any Environmental Law or relating to any permit issued, or
any approval given, under any such Environmental Law (collectively, “Claims”),
including, without limitation, (a) any and all Claims by Governmental Authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to
any applicable Environmental Law and (b) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Substances or arising from alleged injury or threat of injury to
human health or the environment.

“Environmental Laws” shall mean any and all federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals, rules of common law
and orders of courts or Governmental Authorities, relating to the protection of human health
or occupational safety or the environment, now or hereafter in effect and in each case as
amended from time to time including, without limitation, requirements pertaining to the
manufacture, processing, distribution, use, treatment, storage, disposal, transportation,
handling, reporting, licensing, permitting, investigation or remediation of Hazardous
Substances.

“Equity Issuance Prepayment Event” means the issuance of any Capital Stock by
the Borrower or any of its Subsidiaries in any public offering (other than a public offering
pursuant to a registration statement on Form S-8) or in any private placement, and
including, in any event any capital contribution or other investment in, the Borrower
by any Person, including the Parent.

 

8

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any successor statute, and all rules and regulations from time to
time promulgated thereunder.

“ERISA Affiliate” means any Person (including any trade or business, whether or
not incorporated) that would be deemed to be under “common control” with, or a member of the
same “controlled group” as, the Borrower or any of its Subsidiaries, within the meaning of
Sections 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.

“ERISA Event” means: (a) a Reportable Event with respect to a Plan or a
Multiemployer Plan; (b) a complete or partial withdrawal by the Borrower, any of its
Subsidiaries or any ERISA Affiliate from a Multiemployer Plan, or the receipt by the
Borrower, any of its Subsidiaries or any ERISA Affiliate of notice from a Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or
that it is in endangered or critical status within the meaning of Section 432 of the Code or
Section 305 or Title IV of ERISA, or that it intends to terminate or has terminated under
Section 4041A of ERISA; (c) the distribution by the Borrower, any of its Subsidiaries or any
ERISA Affiliate under Section 4041 or 4041A of ERISA of a notice of intent to terminate any
Plan or the taking of any action to terminate any Plan; (d) the commencement of proceedings
by the PBGC under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Borrower, any of its Subsidiaries or
any ERISA Affiliate of a notice from any Multiemployer Plan that such action has been taken
by the PBGC with respect to such Multiemployer Plan; (e) the failure by Borrower, any of its
Subsidiaries or any ERISA Affiliate to make any required contribution to a Multiemployer
Plan, or the institution of a proceeding by any fiduciary of any Multiemployer Plan against
the Borrower, any of its Subsidiaries or any ERISA Affiliate to enforce Section 515 of
ERISA, which is not dismissed within thirty (30) days; (f) the imposition upon the Borrower,
any of its Subsidiaries or any ERISA Affiliate of any liability under Title IV of ERISA,
other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, or the
imposition or threatened imposition of any Lien upon any assets of the Borrower, any of its
Subsidiaries or any ERISA Affiliate as a result of any alleged failure to comply with the
Code or ERISA in respect of any Plan; (g) the engaging in or otherwise becoming liable for a
nonexempt Prohibited Transaction by the Borrower, any of its Subsidiaries or any ERISA
Affiliate; (h) a violation of the applicable requirements of Section 404 or 405 of ERISA or
the exclusive benefit rule under Section 401(a) of the Code by any fiduciary of any Plan for
which the Borrower, any of its Subsidiaries or any ERISA Affiliate may be directly or
indirectly liable; (i) the adoption of an amendment to any Plan that, pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of tax-exempt
status of the trust of which such Plan is a part if the Borrower, any of its Subsidiaries or
any ERISA Affiliate fails to timely provide security to such Plan in accordance with the
provisions of such sections or (j) the withdrawal of the Borrower, any of its Subsidiaries
or any ERISA Affiliate from a Multiple Employer Plan during a
plan year in which it was a substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan; (k) the failure to
make by its due date a required installment under Section 430(j) of the Code with respect to
any Plan; or (l) a determination that any Plan is, or is expected to be, in “at risk” status
(within the meaning of Title IV of ERISA.

 

9

 

“Eurodollar Loan” means a Loan bearing interest based at a rate determined by
reference to the Eurodollar Rate.

“Eurodollar Rate” means, for any Interest Period with respect to a Eurodollar
Loan, the greater of (i) the rate per annum equal to the British Bankers Association LIBOR
Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as designated by the Administrative Agent from time to
time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement
of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period and (ii) 3.00% per annum;
provided that if on the initial Borrowing Date the Applicable Percentage for
Eurodollar Loans is determined by reference to the rate set forth in clause (ii) under the
applicable column in the table set forth in the definition of “Applicable Percentage”, then
the “Eurodollar Rate” shall always be determined by reference to the rate per annum referred
to in clause (i) above. If such rate referred to in clause (i) above is not available at
such time for any reason, then the “Eurodollar Rate” referred to in clause (i) above for
such Interest Period shall be the rate per annum determined by the Administrative Agent to
be the rate at which deposits in Dollars for delivery on the first day of such Interest
Period in same day funds in the approximate amount of the Eurodollar Loan being made,
continued or converted by the Administrative Agent and with a term equivalent to such
Interest Period would be offered by the Administrative Agent’s London Branch to major banks
in the London interbank eurodollar market at their request at approximately 4:00 p.m.
(London time) two Business Days prior to the commencement of such Interest Period.

“Event of Default” has the meaning set forth in Section 9.1.

“Existing Credit Agreement” means that certain Credit Agreement, dated as of
August 17, 2005, among the Borrower, the lenders party thereto, Wachovia Bank, National
Association, as administrative agent, Union Bank of California, N.A., as syndication agent,
and Bank of America, N.A., Citibank, N.A. and JPMorgan Chase Bank, N.A., as co-documentation
agents, as the same may have been previously amended, modified or supplemented prior to the
Closing Date.

“Facility” means the credit facility constituting the Loans and the Commitments
hereunder.

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank on the Business Day next succeeding such day; provided that (a) if
such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on the next succeeding
Business Day, and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary,
to a whole multiple of 1/100 of 1%) charged to the Administrative Agent on such day on such
transactions as determined by the Administrative Agent.

 

10

 

“Fee Letter” means that certain fee letter, dated as of April 27, 2008, among
the Borrower, Merrill Lynch Bank USA, Merrill Lynch Capital Corporation, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Morgan Stanley Senior Funding, Inc., Wachovia Bank,
National Association, and Wachovia Capital Markets, LLC, as the same shall be amended,
modified, supplemented or restated from time to time.

“Financial Officer” means the chief financial officer, vice president-finance,
principal accounting officer or treasurer of the Borrower.

“First Mortgage Bonds” means those first mortgage bonds issued pursuant to the
FMB Indenture.

“Fiscal Quarter” means each of the calendar quarters ending as of the last day
of each March, June, September and December.

“Fiscal Year” means the calendar year ending December 31.

“FMB Indenture” means the Indenture of Mortgage and Deed of Trust, dated as of
June 1, 1947, between the Borrower and The Bank of New York (formerly Irving Trust Company),
as trustee thereunder, as supplemented and amended.

“Foreign Lender” has the meaning set forth in Section 3.13(f).

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding, or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its business.

“Funding Fees” has the meaning set forth in Section 3.4(b).

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession) or that are promulgated by any Governmental
Authority having appropriate jurisdiction.

“Governmental Authority” means any domestic or foreign nation or government,
any state or other political subdivision thereof and any central bank thereof, any
municipal, local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining to government
and any corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.

 

11

 

“Granting Lender” has the meaning specified in Section 11.3(h).

“Hazardous Substances” means any substances or materials (a) that are or become
defined as hazardous wastes, hazardous substances, pollutants, contaminants or toxic
substances under any Environmental Law, (b) that are defined by any Environmental Law as
toxic, explosive, corrosive, ignitable, infectious, radioactive, mutagenic or otherwise
hazardous, (c) the presence of which require investigation or response under any
Environmental Law, (d) that constitute a nuisance, trespass or health or safety hazard to
Persons or neighboring properties, (e) that consist of underground or aboveground storage
tanks, whether empty, filled or partially filled with any substance, or (f) that contain,
without limitation, asbestos, polychlorinated biphenyls, urea formaldehyde foam insulation,
petroleum hydrocarbons, petroleum derived substances or wastes, crude oil, nuclear fuel,
natural gas or synthetic gas.

“Hedging Agreements” means, collectively, interest rate protection agreements,
equity index agreements, foreign currency exchange agreements, option agreements or other
interest or exchange rate or commodity price hedging agreements (other than forward
contracts for the delivery of power or gas written by the Borrower to its jurisdictional and
wholesale customers in the ordinary course of business).

“Indebtedness” means, with respect to any Person (without duplication), (a) all
indebtedness and obligations of such Person for borrowed money or in respect of loans or
advances of any kind, (b) all obligations of such Person evidenced by notes, bonds,
debentures or similar instruments, (c) all reimbursement obligations of such Person with
respect to surety bonds, letters of credit and bankers’ acceptances (in each case, whether
or not drawn or matured and in the stated amount thereof), (d) all obligations of such
Person to pay the deferred purchase price of property or services, (e) all indebtedness
created or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person, (f) all obligations of such Person as lessee
under leases that are or are required to be, in accordance with GAAP, recorded as capital
leases, to the extent such obligations are required to be so recorded, (g) the net
termination obligations of such Person under any Hedging Agreements, calculated as of any
date as if such agreement or arrangement were terminated as of such date in accordance with
the applicable rules under GAAP, (h) all Contingent Obligations of such Person, (i) all
obligations and liabilities of such Person incurred in connection with any transaction or
series of transactions providing for the financing of assets through one or more
securitizations or in connection with, or pursuant to, any synthetic lease or similar
off-balance sheet financing, (j) the aggregate amount of uncollected accounts receivable of
such Person subject at the time of determination to a sale of receivables (or similar
transaction) to the extent such transaction is effected with recourse to such Person
(whether or not such transaction would be reflected on the balance sheet of such Person in
accordance with GAAP), (k) all obligations, contingent or otherwise, under the Material
Leases 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.

 

12

 

“Indemnified Liabilities” has the meaning set forth in Section 11.5(b).

“Indemnitees” has the meaning set forth in Section 11.5(b).

“Insured Series First Mortgage Bonds” means First Mortgage Bonds in the
aggregate principal amount of $65,000,000 pledged by the Borrower to secure guarantees of
$65,000,000 principal amount of pollution control revenue bonds issued by the City of
Farmington, New Mexico, for the benefit of the Borrower, which pollution control revenue
bonds are also supported by a municipal bond insurance policy issued by AMBAC Indemnity
Corporation.

“Information” has the meaning set forth in Section 11.15.

“Interest Payment Date” means, (a) as to any Eurodollar Loan, the last day of
each Interest Period applicable to such Loan and the Maturity Date; provided,
however, that if any Interest Period for a Eurodollar Loan exceeds three months, the
respective dates that fall every three months after the beginning of such Interest Period
shall also be Interest Payment Dates and (b) as to any Base Rate Loan, the last Business Day
of each Fiscal Quarter and the Maturity Date.

“Interest Period” means, as to each Eurodollar Loan, the period commencing on
the date such Eurodollar Loan is disbursed or converted to or continued as a Eurodollar Loan
and ending on the date one, two, three or six months thereafter, as selected by the Borrower
in its Notice of Borrowing or Notice of Continuation/Conversion; provided that:

(a) any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day;

(b) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last Business
Day of the calendar month at the end of such Interest Period; and

(c) no Interest Period shall extend beyond the Maturity Date.

“Laws” means, collectively, all international, foreign, federal, state and
local statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the interpretation or
administration thereof by any Governmental Authority charged with the enforcement,
interpretation or administration thereof, and all applicable administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements with, any
Governmental Authority, in each case whether or not having the force of law.

 

13

 

“LCD” has the meaning set forth in the definition of LCD Flow Name Index in
this Section 1.1.

“LCD Flow Name Index” means the index of fifteen institutional borrower names
published on a twice-weekly basis by the Leveraged Commentary & Data division of S&P
(“LCD”) in the “LCD News” section of its website www.lcdcomps.com. Schedule 1.1(b)
sets forth the fifteen institutional borrower names comprising such index as to the Closing
Date; it being understood that the LCD may add or subtract names from such index from time
to time and the LCD Flow Name Index shall be determined by reference to the institutional
borrower names comprising such index on or immediately prior to the initial Borrowing Date.

“LCD Index Average Bid” means the average of all of the latest opening bid
price data related to the term loans of each of the institutional borrower names comprising
the LCD Flow Name Index and provided by the Markit Group Limited or one of its affiliates
(“Markit”) to the LCD on or immediately prior to the initial Borrowing Date;
provided that, if Markit ceases to exist and/or fails to provide any or all of such
opening bid price data to the LCD for any or all of the institutional borrower names
comprising the LCD Flow Name Index, the LCD Index Average Bid shall be determined by the
Administrative Agent based on the latest average bid price obtained by the Administrative
Agent from the Arrangers on or immediately prior to the initial Borrowing Date for any or
all of the term loans that are not provided by Markit to the LCD (any such determination by
the Administrative Agent shall be conclusive and binding on the Borrower and the Lenders
absent manifest error).

“LCD Index Average Coupon” means the average of all of the latest interest rate
margins related to the term loans of each of the institutional borrower names comprising the
LCD Flow Name Index on or immediately prior to the initial Borrowing Date.

“LCD Index Yield” means the sum, expressed in basis points and rounded to the
nearest whole basis point (with one basis point being equal to 0.01%), of (i) the quotient
obtained by dividing (x) the LCD Index Average Coupon by (y) the LCD Index Average Bid
(expressed as percentage of par) and (ii) the product obtained by multiplying (A) the
quotient obtained by dividing (x) the Average Life Amount by (y) the LCD Index Average Bid
(expressed as percentage of par) by (B) 100.

“Lender” means any of the Persons identified as a “Lender” on the signature
pages hereto, and any Eligible Assignee which may become a Lender by way of assignment in
accordance with the terms hereof, together with their successors and permitted assigns.

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other office or
offices as a Lender may from time to time notify the Borrower and the Administrative Agent.

 

14

 

“Letter of Credit Facility” means the $100,000,000 letter of credit facility of
the Borrower available pursuant to that certain Reimbursement Agreement, to be executed on
or about May 5, 2008, among the Borrower, the lenders identified therein, and Deutsche Bank
AG New York Branch, as administrative agent thereunder.

“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.

“Loans” or “Loans” has the meaning set forth in Section 2.1(a).

“Lordsburg Facility” means the 72 megawatt gas fired combustion turbine
generator in Lordsburg, New Mexico.

“Luna Facility” means the combined cycle power generation facility located near
Deming, New Mexico, 33.3% of which is owned by the Borrower.

“Mandatory Borrowing” has the meaning set forth in Section 2.1(f).

“Mandatory Prepayment Date” has the meaning set forth in Section 3.3(b).

“Margin Stock” has the meaning ascribed to such term in Regulation U.

“Markit” has the meaning provided in the definition of LCD Index Average Bid in
this Section 1.1.

“Material Adverse Change” has the meaning set forth in the Commitment Letter.

“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 Agreement or any of the other
Credit Documents or (c) the legality, validity or enforceability of this Agreement or any of
the other Credit Documents or the rights and remedies of the Administrative Agent and the
Lenders hereunder and thereunder.

“Material Lease” means any lease to the Borrower of its leasehold interests in
(i) Unit 1 or Unit 2, and related common facilities, of the Palo Verde Nuclear Generating
Station or (ii) the electric transmission line, and related facilities, known as the Eastern
Interconnection Project, including, without limitation, any lease set forth on Schedule
6.18 hereto.

“Maturity Date” means the earlier of (i) April 30, 2009 and (ii) 45 days prior
to such date if no Borrowing has been made hereunder pursuant to Section 2.1(a).

 

15

 

“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.

“Multiple Employer Plan” means a Single Employer Plan to which the Borrower,
any of its Subsidiaries or any ERISA Affiliate and at least one employer other than the
Borrower, any of its Subsidiaries or any ERISA Affiliate are contributing sponsors.

“Net Cash Proceeds” means (a) in connection with any Asset Sale Prepayment
Event or any Recovery Event, the proceeds thereof in the form of Cash (including any such
proceeds received by way of deferred payment of principal pursuant to a note or installment
receivable or purchase price adjustment receivable or otherwise, but only as and when
received), net of attorneys’ fees, accountants’ fees, investment banking fees, amounts
required to be applied to the repayment of Indebtedness secured by a Lien expressly
permitted hereunder on any asset that is the subject of such Asset Sale Prepayment Event or
Recovery Event and other customary fees and expenses actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable as a result thereof
(after taking into account any available tax credits or deductions and any tax sharing
arrangements), (b) in connection with any Debt Incurrence Prepayment Event the cash proceeds
received from such issuance or incurrence, net of attorneys’ fees, investment banking fees,
accountants’ fees, underwriting discounts, commissions and other customary fees and expenses
actually incurred in connection therewith, and (c) in connection with any Equity Issuance
Prepayment Event, the cash proceeds received from such issuance, net of attorneys’ fees,
investment banking fees, accountants’ fees, underwriting discounts and commissions and other
customary fees and expenses actually incurred in connection therewith.

“Non-Consenting Lender” has the meaning set forth in Section 11.21.

“Notes” means the promissory notes of the Borrower in favor of each of the
Lenders evidencing the Loans provided pursuant to Section 2.1, individually or collectively,
as appropriate, as such promissory notes may be amended, modified, supplemented, extended,
renewed or replaced from time to time and as evidenced in the form of Exhibit
2.1(e).

“Notice of Borrowing” means a request by the Borrower for a Loan in the form of
Exhibit 2.1(b).

“Notice of Continuation/Conversion” means a request by the Borrower to continue
an existing Eurodollar Loan to a new Interest Period or to convert a Eurodollar Loan to a
Base Rate Loan or a Base Rate Loan to a Eurodollar Loan, in the form of Exhibit 2.2.

“Other Taxes” has the meaning set forth in Section 3.13(b).

“Parent” has the meaning set forth in Section 11.18(a).

 

16

 

“Participant” has the meaning set forth in Section 11.3(d).

“Participation Interest” means the purchase by a Lender of a participation in
any Loan as provided in Section 3.8.

“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.

“Plan” means any “employee benefit plan” (within the meaning of Section 3(3) of
ERISA) and with respect to which the Borrower, any of its Subsidiaries or any ERISA
Affiliate is (or, if such plan were terminated at such time, would under Section 4062 or
4069 of ERISA be deemed to be) an “employer” within the meaning of Section 3(5) of ERISA.

“PSNM Accounts Receivable Securitization” means the electric and gas accounts
receivable securitization program that was approved by the New Mexico Public Regulation
Commission in Case 3838 and was executed by the Borrower and Bank of America, N.A.
(successor by merger to Fleet National Bank), or an Affiliate thereof, on April 8, 2003, and
any amendments, replacements or extensions thereof (so long as such amendments, replacements
or extensions are not materially less favorable to the Borrower and its Subsidiaries).

“Platform” has the meaning set forth in Section 11.1(c).

“Prepayment Amount” has the meaning set forth in Section 3.3(b).

“Prepayment Option Notice” has the meaning set forth in Section 3.3(b).

“Prime Rate” has the meaning set forth in the definition of Base Rate in this
Section 1.1.

“Prohibited Transaction” means any transaction described in (a) Section 406 of
ERISA that is not exempt by reason of Section 408 of ERISA or by reason of a Department of
Labor prohibited transaction individual or class exemption or (b) Section 4975(c) of the
Code that is not exempt by reason of Section 4975(c)(2) or 4975(d) of the Code.

“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.

“Register” has the meaning set forth in Section 11.3(c).

“Regulations T, U and X” means Regulations T, U and X, respectively, of the
Federal Reserve Board, and any successor regulations.

 

17

 

“Reportable Event” means (a) any “reportable event” within the meaning of
Section 4043(c) of ERISA for which the notice under Section 4043(a) of ERISA has not been
waived by the PBGC (including any failure to meet the minimum funding standard of, or timely
make any required installment under, Section 412 of the Code or Section 302 of ERISA,
regardless of the issuance of any waivers in accordance with Section 412(d) of the Code),
(b) any such “reportable event” subject to advance notice to the PBGC under Section
4043(b)(3) of ERISA, (c) any application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code, and (d) a cessation of operations
described in Section 4062(e) of ERISA.

“Required Lenders” means the holders of more than 50% of the sum of (i) the
aggregate unpaid principal amount of the Loans then outstanding and (ii) the aggregate
Available Commitments of all Lenders then in effect.

“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 Agreement and the other Credit
Documents.

“Responsible Officer” means the president, the chief executive officer, the
co-chief executive officer, the chief financial officer, any executive officer, vice
president-finance, principal accounting officer or 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 Agreement and the other Credit Documents.

“Sale of the Gas Assets” means the sale of the Borrower’s natural gas
transmission and distribution systems to New Mexico Gas Company, Inc. pursuant to the terms
of that certain Asset Purchase Agreement, dated as of January 12, 2008, by and among the
Borrower, Continental Energy Systems LLC and New Mexico Gas Company, Inc.

“S&P” means Standard & Poor’s Rating Service, a division of The McGraw-Hill
Companies, Inc. and its successors.

“SEC” means the Securities and Exchange Commission or any successor thereto.

“Single Employer Plan” means any Plan which is covered by Title IV of ERISA or
Section 412 of the Code, but which is not a Multiemployer Plan or Multiple Employer Plan.

“Special Debt Incurrence Prepayment Event” has the meaning set forth in Section
3.3(b).

 

18

 

“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.

“SPC” has the meaning set forth in Section 11.3(h).

“Subsidiary” means, as to any Person, (a) any corporation more than 50% of
whose stock of any class or classes having by the terms thereof ordinary voting power to
elect a majority of the directors of such corporation (irrespective of whether or not at the
time, any class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries, and (b) any partnership, association, joint venture or
other entity in which such person directly or indirectly through Subsidiaries has more than
a 50% equity interest at any time. Any reference to Subsidiary herein, unless otherwise
identified, shall mean a Subsidiary, direct or indirect, of the Borrower. Any reference to
a Subsidiary of the Borrower herein shall not include any Subsidiary that is inactive, has
minimal or no assets and does not generate revenues.

“Taxes” has the meaning set forth in Section 3.13(a).

“Total Assets” means all assets of the Borrower 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.

“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).

“Withdrawal Liability” means liability to a Multiemployer Plan or a Multiple
Employer Plan as a result of a complete or partial withdrawal from such Plan, as such terms
are defined in Title IV of ERISA.

1.2 Computation of Time Periods and Other Definitional Provisions.

For purposes of computation of periods of time hereunder, the word “from” means “from and
including” and the words “to” and “until” each mean “to but excluding.” References in this
Agreement to “Articles”, “Sections”, “Schedules” or “Exhibits” shall be to Articles, Sections,
Schedules or Exhibits of or to this Agreement unless otherwise specifically provided.

 

19

 

1.3 Accounting Terms/Calculation of Financial Covenants.

Except as otherwise expressly provided herein, all accounting terms used herein or
incorporated herein by reference shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the Administrative
Agent or the Lenders hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. Notwithstanding anything to the contrary in this Agreement, for purposes of calculation of
the financial covenants 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 Agreement
applied on a basis consistent with the application used in preparing the most recent financial
statements of the Borrower. In the event that any changes in GAAP after such date are required to
be applied to the Borrower and would affect the computation of the financial covenants contained in
Section 7.2, such changes shall be followed only from and after the date this Agreement shall have
been amended to take into account any such changes.

1.4 Time.

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

1.5 Rounding of Financial Covenants.

Any financial ratios required to be maintained by the Borrower pursuant to this Agreement
shall be calculated by dividing the appropriate component by the other component, carrying the
result to one place more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if there is no nearest
number).

1.6 References to Agreements and Requirement of Laws.

Unless otherwise expressly provided herein: (a) references to organization documents,
agreements (including the Credit Documents) and other contractual instruments shall be deemed to
include all subsequent amendments, restatements, extensions, supplements and other modifications
thereto, but only to the extent that such amendments, restatements, extensions, supplements and
other modifications are not prohibited by any Credit Document and (b) references to any Requirement
of Law shall include all statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting such Requirement of Law.

 

20

 

SECTION 2

FACILITY

2.1 Loans.

(a) Commitment. Subject to the terms and conditions set forth herein, each
Lender severally agrees to make term loans (each a “Loan” and, collectively, the
“Loans”) in Dollars to the Borrower, at any time and from time to time during the
Availability Period, but in any event, except with respect to Mandatory Borrowings, on
no more than two occasions, in an amount not to exceed the amount of the Available
Commitment of such Lender. The Loans may from time to time be Eurodollar Loans or Base Rate
Loans, as determined by the Borrower and notified to the Administrative Agent in accordance
with Sections 2.1(b) and 2.2. To the extent that, on the last day of the Availability
Period, there remains any Available Commitments, all Commitments shall terminate on such
date and the Lenders shall no longer be obligated to make Loans to the Borrower thereafter.
Loans that are repaid or prepaid may not be reborrowed.

(b) Method of Borrowing for Loans. Other than with respect to Mandatory
Borrowings, by no later than 11:00 a.m. (i) on the date of the requested Borrowing of Loans
that will be Base Rate Loans and (ii) three Business Days prior to the date of the requested
Borrowing of Loans that will be Eurodollar Loans, the Borrower shall telephone the
Administrative Agent as well as submit a written Notice of Borrowing in the form of
Exhibit 2.1(b) to the Administrative Agent setting forth (A) the amount requested,
(B) the Borrowing Date, (C) the Type of Loan, (D) with respect to Loans that will be
Eurodollar Loans, the Interest Period applicable thereto, and (E) certification that the
Borrower has complied in all respects with Section 5. 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 receipt of a Notice of Borrowing (or in the case of
any Mandatory Borrowing, receipt of written notice from the Arrangers), the Administrative
Agent shall promptly inform the Lenders as to the terms thereof. Each such Lender shall
make its pro rata share of the requested Borrowing available to the Administrative Agent in
immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on
the Business Day specified in the applicable Notice of Borrowing. Upon satisfaction of the
conditions set forth in Section 5 (except with respect to any Mandatory Borrowing), the
amount of the requested Borrowing will then be made available to the Borrower by the
Administrative Agent either by (i) crediting the account of the Borrower on the books of the
Administrative Agent with the amount of such funds or (ii) wire transfer of such funds, in
each case in accordance with instructions provided to (and reasonably acceptable to) the
Administrative Agent by the Borrower.

(d) Voluntary Reductions of Commitments. Upon at least three Business Days’
notice, the Borrower shall have the right to permanently terminate or reduce the Commitments
of the Lenders at any time or from time to time; provided that each partial
reduction shall be in an aggregate amount at least equal to $5,000,000 and in integral
multiples of $1,000,000 above such amount.

(e) Notes. At the request of any Lender, the Loans made by such Lender shall
be evidenced by a duly executed promissory note of the Borrower to such Lender in
substantially the form of Exhibit 2.1(e).

 

21

 

(f) Mandatory Borrowings. At any time on or after the occurrence of either (i)
any downgrade of the Debt Ratings of the Borrower by S&P to a Debt Rating below the Debt
Rating of the Borrower on the Closing Date or (ii) a downgrade of the Debt Rating
of the Borrower by Moody’s below Baa3, any Arranger may require that the Borrower make
a Borrowing of Loans hereunder (any such borrowing, a “Mandatory Borrowing”) by such
Arranger providing written notice to the Administrative Agent and the Borrower by no later
than 11:00 a.m. on the date of the requested Mandatory Borrowing, which notice shall set
forth the amount of the Borrowing and the Borrowing Date. Mandatory Borrowings shall be made
in accordance with Section 2.1(c) and notwithstanding (A) the amount of Mandatory
Borrowing may not comply with the minimum amount for borrowings of Loans otherwise required
hereunder, (B) the failure of any conditions specified in Section 5.1 to have been satisfied
or (C) the existence of a Default or an Event of Default. All Loans made pursuant to any
Mandatory Borrowing shall initially be Base Rate Loans, however, thereafter all or any
portion of such Loans may be converted to Eurodollar Loans in accordance with the terms of
Section 2.2.

2.2 Continuations and Conversions.

Subject to the terms below, the Borrower shall have the option, on any Business Day prior to
the Maturity Date, to continue existing Eurodollar Loans for a subsequent Interest Period, to
convert Base Rate Loans into Eurodollar Loans or to convert Eurodollar Loans into Base Rate Loans.
By no later than 11:00 a.m. (a) on the date of the requested conversion of a Eurodollar Loan to a
Base Rate Loan and (b) three Business Days prior to the date of the requested continuation of a
Eurodollar Loan or conversion of a Base Rate Loan to a Eurodollar Loan, the Borrower shall provide
telephonic notice to the Administrative Agent, followed promptly by a written Notice of
Continuation/Conversion in the form of Exhibit 2.2, setting 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.

2.3 Minimum Amounts.

Each request for a borrowing, conversion or continuation shall be subject to the requirements
that (a) each Eurodollar Loan shall be in a minimum amount of $5,000,000 and in integral multiples
of $1,000,000 in excess thereof, (b) except with respect to Mandatory Borrowings, each Base Rate
Loan shall be in a minimum amount of $3,000,000 and in integral multiples of $100,000 in excess
thereof (or the remaining amount of outstanding Loans) and (c) no more than three Eurodollar Loans
shall be outstanding hereunder at any one time. For the purposes of this Section 2.3, separate
Eurodollar Loans that begin and end on the same date, as well as Eurodollar Loans that begin and
end on different dates, shall all be considered as separate Eurodollar Loans.

 

22

 

2.4 Evidence of Debt.

The Loans made by each Lender shall be evidenced by one or more accounts or records maintained
by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or
records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest
error of the amount of the Loans made by the Lenders to the Borrower and the interest and payments
thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise
affect the obligation of the Borrower hereunder to pay any amount owing with respect to its
Borrower Obligations. In the event of any conflict between the accounts and records maintained by
any Lender and the accounts and records of the Administrative Agent in respect of such matters, the
accounts and records of the Administrative Agent shall control in the absence of manifest error.

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 a rate per annum equal to the Base Rate plus the Applicable
Percentage and (ii) all Eurodollar Loans shall accrue interest at a rate per annum equal to
the Eurodollar Rate plus the Applicable Percentage.

(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
Credit Documents (including, without limitation, fees and expenses) shall bear
interest, payable on demand, at the Default Rate.

(ii) After the occurrence, and during the continuation, of an Event of Default
(other than an Event of Default pursuant to Section 9.1(a)), at the request of the
Required Lenders, the principal of and, to the extent permitted by Law, interest on
the Loan and any other amounts owing hereunder or under the other Credit Documents
(including, without limitation, fees and expenses) shall bear interest, payable on
demand, at the Default Rate.

(c) Interest Payments. Interest on Loans shall be due and payable in arrears
on each Interest Payment Date.

 

23

 

3.2 Payments Generally.

(a) No Deductions; Place and Time of Payments. All payments to be made by the
Borrower shall be made without condition or deduction for any counterclaim, defense,
recoupment or setoff. Except as otherwise expressly provided herein, all
payments by the Borrower hereunder shall be made to the Administrative Agent, for the
account of the respective Lenders to which such payment is owed, at the Administrative
Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the
date specified herein. The Administrative Agent will promptly distribute to each Lender its
pro rata share (or other applicable share as provided herein) of such payment in like funds
as received by wire transfer to such Lender’s Lending Office. All payments received by the
Administrative Agent after 2:00 p.m. shall deemed received on the next succeeding Business
Day and any applicable interest or fee shall continue to accrue.

(b) Payment Dates. Subject to the definition of “Interest Period,” if
any payment to be made by the Borrower shall come due on a day other than a Business Day,
payment shall be made on the next following Business Day, and such extension of time shall
be reflected in computing interest or fees, as the case may be.

(c) Advances by Administrative Agent. Unless the Borrower or any Lender has
notified the Administrative Agent, prior to the time any payment is required to be made by
it to the Administrative Agent hereunder, that the Borrower or such Lender, as the case may
be, will not make such payment, the Administrative Agent may assume that the Borrower or
such Lender, as the case may be, has timely made such payment and may (but shall not be so
required to), in reliance thereon, make available a corresponding amount to the Person
entitled thereto. If and to the extent that such payment was not in fact made to the
Administrative Agent in immediately available funds, then:

(i) if the Borrower failed to make such payment, each Lender shall forthwith on
demand repay to the Administrative Agent the portion of such assumed payment that
was made available to such Lender in immediately available funds, together with
interest thereon in respect of each day from and including the date such amount was
made available by the Administrative Agent to such Lender to the date such amount is
repaid to the Administrative Agent in immediately available funds at the Federal
Funds Rate from time to time in effect; and

(ii) if any Lender failed to make such payment, such Lender shall forthwith on
demand pay to the Administrative Agent the amount thereof in immediately available
funds, together with interest thereon for the period from the date such amount was
made available by the Administrative Agent to the Borrower to the date such amount
is recovered by the Administrative Agent (the “Compensation Period”) at a
rate per annum equal to the Federal Funds Rate from time to time in effect. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender’s Loan included in the applicable Borrowing. If such Lender
does not pay such amount forthwith upon the Administrative Agent’s demand therefor,
the Administrative Agent may make a demand therefor upon the Borrower, and the
Borrower shall pay such amount to the Administrative Agent, together with interest
thereon for the Compensation Period at a rate per annum equal to the rate of
interest applicable to such Borrowing. Nothing herein shall be deemed to relieve
any Lender from its obligation to fulfill its Commitment or to prejudice any rights
which the
Administrative Agent or the Borrower may have against any Lender as a result of
any default by such Lender hereunder.

 

24

 

A notice of the Administrative Agent to any Lender or the Borrower with respect to any
amount owing under this subsection (c) shall be conclusive, absent manifest error.

(d) Several Obligations. The obligations of the Lenders hereunder to make
Loans and to fund or purchase Participation Interests are several and not joint. The
failure of any Lender to make any Loan or to fund or purchase any Participation Interest on
any date required hereunder shall not relieve any other Lender of its corresponding
obligation to do so on such date, and no Lender shall be responsible for the failure of any
other Lender to so make its Loan or fund or purchase its Participation Interest.

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

3.3 Prepayments.

(a) 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 Business Days’ prior
written notice to the Administrative Agent and (iii) each such partial prepayment shall be
in the minimum principal amount of $5,000,000 and integral multiples of $1,000,000 or, 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 Administrative Agent, subject to Section 3.7, in such manner as it deems
reasonably appropriate. Amounts prepaid pursuant to this Section 3.3(a) may not be
reborrowed.

(b) Mandatory Prepayments.

(i) If on any date the Borrower or any of its Subsidiaries shall receive any Net Cash
Proceeds from any Asset Sale Prepayment Event or Equity Issuance Prepayment Event, then an
amount equal to 100% of such Net Cash Proceeds shall be applied on such date toward the
prepayment of the Loans and the reduction of the Commitments as set forth in Section
3.3(b)(iii). If on any date the Borrower or any of its Subsidiaries shall receive any Net
Cash Proceeds from any Debt Incurrence Prepayment Event, then within 5 Business Days after
receipt of such Net Cash Proceeds, the Borrower shall prepay the Loans and/or reduce the
amount of the Commitments in an amount equal to 100% of such Net Cash Proceeds as set forth
in Section 3.3(b)(iii); provided, however, that with respect to the first
$350,000,000 of Indebtedness issued or incurred by the Borrower or any of its Subsidiaries
after the Closing Date (the “Special Debt Incurrence Prepayment Event”), the
Borrower shall only be required to prepay the
Loans and/or reduce the Commitments in an amount equal to 43% of such Net Cash Proceeds
as set forth in Section 3.3(b)(iii).

 

25

 

(ii) Amounts to be applied in connection with prepayments and Commitment reductions
made pursuant to this Section 3.3(b) shall be applied, first, to the prepayment of
the Loans in accordance with Section 3.7 and, second, to reduce permanently the
Commitments. The application of any prepayment pursuant to this Section 3.3(b) shall be
made, first, to Base Rate Loans and, second, to Eurodollar Loans. Each
prepayment of the Loans under this Section 3.3(b) shall be accompanied by accrued interest
to the date of such prepayment on the amount prepaid.

(iii) Notwithstanding anything to the contrary in Section 3.3(b)(iii) or in Section
3.7, with respect to the amount of Net Cash Proceeds received in connection with any Special
Debt Incurrence Prepayment Event (the “Prepayment Amount”), the Borrower will, in
lieu of applying such amount to the prepayment of the Loans and the reduction of Commitments
as provided in clause (ii) above, on the date specified in Section 3.3(b)(i) for such
prepayment, give the Administrative Agent telephonic notice (promptly confirmed in writing)
requesting that the Administrative Agent prepare and provide to each Lender a notice (each,
a “Prepayment Option Notice”) as described below. As promptly as practicable after
receiving such notice from the Borrower, the Administrative Agent will send to each Lender a
Prepayment Option Notice, which shall be in the form of Exhibit 3.3(b)(iii), and
shall include an offer by the Borrower to prepay and/or reduce on the date (each a
“Mandatory Prepayment Date”) that is 10 Business Days after the date of the
Prepayment Option Notice, the relevant Loans and/or relevant Commitments of such Lender by
an amount equal to the portion of the Prepayment Amount indicated in such Lender’s
Prepayment Option Notice as being applicable to such Lender’s Loans and Commitments. On the
Mandatory Prepayment Date, the Borrower shall pay to the relevant Lenders the aggregate
amount necessary to prepay that portion of the outstanding relevant Loans and/or to reduce
that portion of the outstanding relevant Commitments in respect of which such Lenders have
accepted prepayment as described above and the Borrower shall be entitled to retain the
remaining portion of the Prepayment Amount not accepted by the relevant Lenders.

(iv) All prepayments pursuant to this Section 3.3(b) shall be subject to Section 3.14.

3.4 Fees.

(a) Commitment Fees. The Borrower agrees to pay to the Administrative Agent
for the account of each Lender a commitment fee for the period from and including the
Closing Date to and including the last day of the Availability Period, computed at the
Applicable Percentage for commitment fees determined from day to day on the average daily
amount of the Available Commitment of such Lender at the end of each day during the period
for which payment is made, payable in arrears on the last Business Day of each Fiscal
Quarter and the first Business Day following the end of the Availability Period (or, if
earlier, the date on which all of the Commitments shall have
been reduced to zero), commencing on the first of such dates to occur after the Closing
Date.

 

26

 

(b) Funding Fees. The Borrower agrees to pay to the Administrative Agent for
the account of each Lender a funding fee (the “Funding Fees”) equal to the product
of (i) the aggregate principal amount of Loans borrowed by the Borrower on each Borrowing
Date from such Lender multiplied by (ii) the Applicable Percentage for Funding Fees on such
Borrowing Date. The Funding Fees shall be due and payable on each Borrowing Date.

(c) Duration Fees. The Borrower agrees to pay to the Administrative Agent, for
the account of each Lender a duration fee equal to the product of (i) the sum of (x) the
Available Commitment of such Lender and (y) the aggregate outstanding principal amount of
Loans held by such Lender, in each case on December 31, 2008 multiplied by (ii) the
Applicable Percentage for duration fees on December 31, 2008. The durations fees shall be
due and payable on December 31, 2008

(d) Administrative Fees. The Borrower agrees to pay to the Administrative
Agent, for its own account, an annual administrative fee as agreed to between the Borrower
and the Administrative Agent in the Fee Letter.

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 Credit 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 Administrative
Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes,
absent manifest error.

(b) Usury. It is the intent of the Lenders and the Borrower to conform to and
contract in strict compliance with applicable usury Law from time to time in effect. All
agreements between the Lenders and the Borrower are hereby limited by the provisions of this
subsection which shall override and control all such agreements, whether now existing or
hereafter arising and whether written or oral. In no way, nor in any event or contingency
(including but not limited to prepayment or acceleration of the maturity of any Borrower
Obligation), shall the interest taken, reserved, contracted for, charged, or
received under this Agreement, under the Notes or otherwise, exceed the maximum
nonusurious amount permissible under applicable Law.

 

27

 

If, from any possible construction of
any of the Credit Documents or any other document, interest would otherwise be payable in
excess of the maximum nonusurious amount, any such construction shall be subject to the
provisions of this subsection and such documents shall be automatically reduced to the
maximum nonusurious amount permitted under applicable Law, without the necessity of
execution of any amendment or new document. If any Lender shall ever receive anything of
value which is characterized as interest on the 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
Credit Documents does not include the right to accelerate the payment of any interest which
has not otherwise accrued on the date of such demand, and the Lenders do not intend to
charge or receive any unearned interest in the event of such demand. All interest paid or
agreed to be paid to the Lenders with respect to the 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 Pro Rata Treatment.

Except to the extent otherwise provided herein, including Section 3.3(b)(iii), each Borrowing,
each payment or prepayment of principal of any Loan, each payment of interest, each payment of fees
(other than administrative fees paid to the Administrative Agent), each conversion or continuation
of any Loan and each reduction in the Commitments, shall be allocated pro rata among the relevant
Lenders in accordance with their pro rata share according to the respective sum of (i) the
outstanding principal amounts of the Loans then held by the Lenders and (ii) the aggregate
Available Commitments then held by the Lenders; provided that, if any Lender shall have
failed to pay its pro rata share of any Loan or fund or purchase its Participation Interest, then
any amount to which such Lender would otherwise be entitled pursuant to this Section 3.7 shall
instead be payable to the Administrative Agent until the share of such Loan or such Participation
Interest not funded or purchased by such Lender has been repaid. In the event any principal,
interest, fee or other amount paid to any Lender pursuant to this Agreement or any other Credit
Document is rescinded or must otherwise be returned by the Administrative Agent, (a) such
principal, interest, fee or other amount that had been satisfied by such payment shall be revived,
reinstated and continued in full force and effect as if such payment had not occurred and (b) such
Lender shall, upon the request of the Administrative Agent, repay to the Administrative Agent the
amount so paid to such Lender, with interest for the period commencing on the date such payment is
returned by the Administrative Agent until the date the Administrative Agent receives such
repayment at a rate per annum equal to the Federal Funds Rate if repaid within two (2) Business
Days after such request and thereafter at a rate per annum equal to the Base Rate.

 

28

 

3.8 Sharing of Payments.

The Lenders agree among themselves that, except to the extent otherwise provided herein, in
the event that any Lender shall obtain payment in respect of any Loan or any other obligation owing
to such Lender under this Agreement through the exercise of a right of setoff, banker’s lien or
counterclaim, or pursuant to a secured claim under Section 506 of the Bankruptcy Code or other
security or interest arising from, or in lieu of, such secured claim, received by such Lender under
any applicable Debtor Relief Law or other similar Law or otherwise, or by any other means, in
excess of its pro rata share of such payment as provided for in this Agreement, such Lender shall
promptly pay in cash or purchase from the other Lenders a participation in such Loans and other
obligations in such amounts, and make such other adjustments from time to time, as shall be
equitable to the end that all Lenders share such payment in accordance with their pro rata shares.
The Lenders further agree among themselves that if payment to a Lender obtained by such Lender
through the exercise of a right of setoff, banker’s lien, counterclaim or other event as aforesaid
shall be rescinded or must otherwise be returned, each Lender which shall have shared the benefit
of such payment shall, by payment in cash or a repurchase of a participation theretofore sold,
return its share of that benefit (together with its share of any accrued interest payable with
respect thereto) to each Lender whose payment shall have been rescinded or otherwise returned. The
Borrower agrees that (a) any Lender so purchasing such a participation may, to the fullest extent
permitted by Law, exercise all rights of payment, including setoff, banker’s lien or counterclaim,
with respect to such participation as fully as if such Lender were a holder of such Loan or other
obligation in the amount of such participation and (b) the Borrower Obligations that have been
satisfied by a payment that has been rescinded or otherwise returned shall be revived, reinstated
and continued in full force and effect as if such payment had not occurred. Except as otherwise
expressly provided in this Agreement, if any Lender or the Administrative Agent shall fail to remit
to any other Lender an amount payable by such Lender or the Administrative Agent to such other
Lender pursuant to this Agreement on the date when such amount is due, such payments shall be made
together with interest thereon for each date from the date such amount is due until the date such
amount is paid to the Administrative Agent or such other Lender at a rate per annum equal to the
Federal Funds Rate. If under any applicable Debtor Relief Law or other similar Law, any Lender
receives a secured claim in lieu of a setoff to which this Section 3.8 applies, such Lender shall,
to the extent practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders under this Section 3.8 to share in the benefits of any
recovery on such secured claim.

3.9 Capital Adequacy.

If any Lender determines that the introduction after the Closing Date of any Law, rule or
regulation or other Requirement of Law regarding capital adequacy or any change therein or in the
interpretation thereof, or compliance by such Lender (or its Lending Office) therewith, has or
would have the effect of reducing the rate of return on the capital or assets of such Lender or any
corporation controlling such Lender as a consequence of such Lender’s obligations hereunder (taking
into consideration its policies with respect to capital adequacy and such Lender’s desired return
on capital), then from time to time upon demand of such Lender (with a copy of such demand to the
Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will
compensate such Lender for such reduction.

 

29

 

3.10 Eurodollar Provisions.

If the Administrative Agent determines (which determination shall be conclusive and binding
upon the Borrower) in connection with any request for a Eurodollar Loan or a conversion to or
continuation thereof that (i) deposits in Dollars are not being offered to banks in the applicable
offshore interbank market for the applicable amount and Interest Period of such Eurodollar Loan,
(ii) adequate and reasonable means do not exist for determining the Eurodollar Rate for such
Eurodollar Loan, or (iii) the Eurodollar Rate for such Eurodollar Loan does not adequately and
fairly reflect the cost to the Lenders of funding such Eurodollar Loan, the Administrative Agent
will promptly notify the Borrower and the Lenders. Thereafter, the obligation of the Lenders to
make or maintain Eurodollar Loans shall be suspended until the Administrative Agent revokes such
notice. Upon receipt of such notice, the Borrower may revoke any pending Notice of 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 any Lender determines that any Requirement of Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending
Office to make, maintain or fund Eurodollar Loans, or materially restricts the authority of such
Lender to purchase or sell, or to take deposits of Dollars in the London interbank market, or to
determine or charge interest rates based upon the Eurodollar Rate, then, on notice thereof by such
Lender to the Borrower through the Administrative Agent, any obligation of such Lender to make or
continue Eurodollar Loans or to convert Base Rate Loans to Eurodollar Loans shall be suspended
until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving
rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon
demand to the Borrower from such Lender (with a copy to the Administrative Agent), prepay or, if
applicable, convert all Eurodollar Loans of such Lender to Base Rate Loans, either on the last day
of the Interest Period thereof, if such Lender may lawfully continue to maintain such Eurodollar
Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Loans. Upon any such prepayment or conversion, the Borrower shall also pay interest on
the amount so prepaid or converted, together with any amounts due with respect thereto pursuant to
Section 3.14.

3.12 Requirements of Law; Reserves on Eurodollar Loans.

(a) Changes in Law. If any Lender determines that as a result of the
introduction of or any change in, or in the interpretation of, any Requirement of Law, or
such Lender’s compliance therewith, there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining Eurodollar Loans, or a reduction in
the amount received or receivable by such Lender in connection with any of the foregoing
(excluding for purposes of this Section 3.12 any such increased costs or reduction in amount
resulting from (i) Taxes or Other Taxes (as to which Section 3.13 shall govern) and (ii)
reserve requirements contemplated by subsection (b) below), then from time to time, upon
demand of such Lender (through the Administrative Agent), the
Borrower shall pay to such Lender such additional amounts as will compensate such
Lender for such increased cost or reduction in yield.

 

30

 

(b) Reserves. The Borrower shall pay to each Lender (to the extent such Lender
has not otherwise been compensated therefor hereunder), as long as such Lender shall be
required to maintain reserves with respect to liabilities or assets consisting of or
including Eurodollar funds or deposits (currently known as “Eurodollar liabilities”),
additional interest on the unpaid principal amount of each Eurodollar Loan equal to the
actual costs of such reserves allocated to such Loan by such Lender (as determined by such
Lender in good faith, which determination shall be conclusive absent demonstrable error),
which shall be due and payable on each date on which interest is payable on such Loan;
provided that the Borrower shall have received at least 15 days’ prior notice (with
a copy to the Administrative Agent) of such additional interest from such Lender. If a
Lender fails to give notice 15 days prior to the relevant Interest Payment Date, such
additional interest shall be due and payable 15 days from receipt of such notice.

3.13 Taxes.

(a) Payment of Taxes. Any and all payments by the Borrower to or for the
account of the Administrative Agent or any Lender under any Credit Document shall be made
free and clear of and without deduction for any and all present or future income, stamp or
other taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto, but excluding, in the case of the
Administrative Agent and each Lender, taxes imposed on or measured by its net income, and
franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the Laws of which the Administrative Agent or such
Lender, as the case may be, is organized or maintains its Lending Office (all such
non-excluded present or future income, stamp or other taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, and liabilities being
hereinafter referred to as “Taxes”). If the Borrower shall be required by any
Requirement of Law to deduct any Taxes from or in respect of any sum payable under any
Credit Document to the Administrative Agent or any Lender, (i) the sum payable shall be
increased as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.13(a)), the Administrative Agent
or such Lender, as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such deductions,
(iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or
other Governmental Authority in accordance with applicable Requirements of Law, and (iv)
within 30 days after the date of such payment, the Borrower shall furnish to the
Administrative Agent (which shall forward the same to such Lender, if applicable) the
original or a certified copy of a receipt evidencing payment thereof, to the extent such
receipt is issued therefor, or other written proof of payment thereof that is reasonably
satisfactory to the Administrative Agent.

(b) Additional Taxes. In addition, the Borrower agrees to pay any and all
present or future stamp, court or documentary taxes and any other excise or property taxes
or charges or similar levies which arise from any payment made under any Credit
Document or from the execution, delivery, performance, enforcement or registration of,
or otherwise with respect to, any Credit Document (hereinafter referred to as “Other
Taxes”).

 

31

 

(c) No Deduction for Taxes. If the Borrower shall be required to deduct or pay
any Taxes or Other Taxes from or in respect of any sum payable under any Credit Document to
the Administrative Agent or any Lender, the Borrower shall also pay to the Administrative
Agent (for the account of such Lender) or to such Lender, at the time interest is paid, such
additional amount that such Lender specifies as necessary to preserve the after-tax yield
(after factoring in all taxes, including taxes imposed on or measured by net income) such
Lender would have received if such Taxes or Other Taxes had not been imposed.

(d) Indemnification. The Borrower agrees to indemnify the Administrative Agent
and each Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section
3.13(d)) paid by the Administrative Agent and such Lender, and (ii) any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.

(e) Exemption from Taxes. In the case of any payment hereunder or under any
other Credit Document by or on behalf of the Borrower through an account or branch outside
the United States, or on behalf of the Borrower by a payor that is not a United States
person, if the Borrower determines that no taxes are payable in respect thereof, the
Borrower shall furnish, or shall cause such payor to furnish, to the Administrative Agent,
an opinion of counsel reasonably acceptable to the Administrative Agent stating that such
payment is exempt from Taxes. For purposes of this subsection (e), the terms “United
States” and “United States person” shall have the meanings specified in Section 7701 of the
Code.

(f) Foreign Lenders. Each Lender that is a foreign corporation, foreign
partnership or foreign trust within the meaning of the Code (a “Foreign Lender”)
shall deliver to the Administrative Agent, prior to receipt of any payment subject to
withholding under the Code, two duly signed completed copies of either IRS Form W-8BEN or
any successor thereto (relating to such Lender and entitling it to an exemption from, or
reduction of, withholding tax on all payments to be made to such Lender by the Borrower
pursuant to this Agreement), as appropriate, or IRS Form W-8ECI or any successor thereto
(relating to all payments to be made to such Lender by the Borrower pursuant to this
Agreement) or such other evidence satisfactory to the Borrower and the Administrative Agent
that such Lender is entitled to an exemption from, or reduction of, United States
withholding tax. Thereafter and from time to time, each such Lender shall (i) promptly
submit to the Administrative Agent such additional duly completed and signed copies of one
of such forms (or such successor forms as shall be adopted from time to time by the relevant
United States taxing authorities), as appropriate, as may reasonably be requested by the
Borrower or the Administrative Agent and then be available under then current United States
Laws and regulations to avoid, or such evidence as is satisfactory to the Borrower and the
Administrative Agent of any available

 

32

 

exemption from or reduction of, United States withholding taxes in respect of all
payments to be made to such Lender by the Borrower pursuant to this Agreement, (ii) promptly
notify the Administrative Agent of any change in circumstances which would modify or render
invalid any claimed exemption or reduction, and (iii) take such steps as shall not be
materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be
reasonably necessary (including the re-designation of its Lending Office) to avoid any
Requirement of Law that the Borrower make any deduction or withholding for taxes from
amounts payable to such Lender. If the forms or other evidence provided by such Lender at
the time such Lender first becomes a party to this Agreement indicate a United States
interest withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from Taxes unless and until such Lender provides the appropriate forms
certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only
shall be considered excluded from Taxes for periods governed by such forms;
provided, however, that, if at the date of any assignment pursuant to which
a Lender becomes a party to this Agreement, the assignor Lender was entitled to payments
under Section 3.13(a) in respect of United States withholding tax with respect to interest
paid at such date, then, to such extent, the term Taxes shall include (in addition to
withholding taxes that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to the assignee Lender
on such date. If such Lender fails to deliver the above forms or other evidence, then the
Administrative Agent may withhold from any interest payment to such Lender an amount equal
to the applicable withholding tax imposed by Sections 1441 and 1442 of the Code, without
reduction. If any Governmental Authority asserts that the Administrative Agent did not
properly withhold any tax or other amount from payments made in respect of such Lender, such
Lender shall indemnify the Administrative Agent therefor, including all penalties and
interest, any taxes imposed by any jurisdiction on the amounts payable to the Administrative
Agent under this Section 3.13(f), and costs and expenses (including the reasonable fees and
expenses of legal counsel) of the Administrative Agent. For any period with respect to
which a Lender has failed to provide the Borrower with the above forms or other evidence
(other than if such failure is due to a change in the applicable Law, or in the
interpretation or application thereof, occurring after the date on which such form or other
evidence originally was required to be provided or if such form or other evidence otherwise
is not required), such Lender shall not be entitled to indemnification under subsection (a)
or (c) of this Section 3.13 with respect to Taxes imposed by the United States by reason of
such failure; provided, however, that should a Lender become subject to
Taxes because of its failure to deliver such form or other evidence required hereunder, the
Borrower shall take such steps as such Lender shall reasonably request to assist such Lender
in recovering such Taxes. The obligation of the Lenders under this Section 3.13(f) shall
survive the payment of all Borrower Obligations and the resignation or replacement of the
Administrative Agent.

(g) Reimbursement. In the event that an additional payment is made under
Section 3.13(a) or (c) for the account of any Lender and such Lender, in its reasonable
judgment, determines that it has finally and irrevocably received or been granted a credit
against or release or remission for, or repayment of, any tax paid or payable by it in
respect of or calculated with reference to the deduction or withholding giving rise to such
payment, such Lender shall, to the extent that it determines that it can do so without
prejudice to the retention of the amount of such credit, relief, remission or
repayment, pay to the Borrower such amount as such Lender shall, in its reasonable judgment,
have determined to be attributable to such deduction or withholding and which will leave
such Lender (after such payment) in no worse position than it would have been in if the
Borrower had not been required to make such deduction or withholding. Nothing herein
contained shall interfere with the right of a Lender to arrange its tax affairs in whatever
manner it thinks fit nor oblige any Lender to claim any tax credit or to disclose any
information relating to its tax affairs or any computations in respect thereof or require
any Lender to do anything that would prejudice its ability to benefit from any other
credits, reliefs, remissions or repayments to which it may be entitled.

 

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3.14 Compensation.

Upon the written demand of any Lender, the Borrower shall promptly compensate such Lender for
and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any Eurodollar Loan on a day
other than the last day of the Interest Period for such Eurodollar Loan (whether voluntary,
mandatory, automatic, by reason of acceleration, or otherwise); or

(b) any failure by the Borrower (for a reason other than the failure of such Lender to
make a Eurodollar Loan) to prepay, borrow, continue or convert any Eurodollar Loan on the
date or in the amount previously requested by the Borrower.

The amount each such Lender shall be compensated pursuant to this Section 3.14 shall include,
without limitation, (i) any loss incurred by such Lender in connection with the re-employment of
funds prepaid, repaid, not borrowed or paid, as the case may be and (ii) any reasonable
out-of-pocket expenses (including the reasonable fees and expenses of legal counsel) incurred and
reasonably attributable thereto.

For purposes of calculating amounts payable by the Borrower to the Lenders under this Section
3.14, each Lender shall be deemed to have funded each Eurodollar Loan made by it at the Eurodollar
Rate for such Loan by a matching deposit or other borrowing in the London interbank market for a
comparable amount and for a comparable period, whether or not such Eurodollar Loan was in fact so
funded.

3.15 Determination and Survival of Provisions.

All determinations by the Administrative Agent or a Lender of amounts owing under Sections 3.9
through 3.14, inclusive, shall, absent manifest error, be conclusive and binding on the parties
hereto and all amounts owing thereunder shall be due and payable within ten Business Days of demand
therefor. In determining such amount, the Administrative Agent or such Lender may use any
reasonable averaging and attribution methods. Section 3.9 through 3.14, inclusive, shall survive
the termination of this Agreement and the payment of all Borrower Obligations.

 

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SECTION 4

CONDITIONS PRECEDENT TO CLOSING

4.1 Closing Conditions.

The obligation of the Lenders to enter into this Agreement and make the initial Loans is
subject to satisfaction of the following conditions:

(a) Executed Credit Documents. Receipt by the Administrative Agent of duly
executed copies of: (i) this Agreement, (ii) the Notes, and (iii) all other Credit
Documents, each in form and substance reasonably acceptable to the Arrangers and the Lenders
in their sole discretion.

(b) Authority Documents. Receipt by the Administrative Agent of the following:

(i) Organizational Documents. Copies of the articles of incorporation
of the Borrower certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state or other jurisdiction of its
formation and copies of the bylaws of the Borrower certified by a secretary or
assistant secretary (or the equivalent) of the Borrower to be true and correct as of
the Closing Date.

(ii) Resolutions. Copies of resolutions of the board of directors of
the Borrower approving and adopting this Agreement and the other Credit Documents to
which it is a party, the transactions contemplated herein and therein and
authorizing execution and delivery hereof and thereof, certified by a secretary or
assistant secretary (or the equivalent) of the Borrower to be true and correct and
in full force and effect as of the Closing Date.

(iii) Good Standing. Copies of certificates of good standing,
existence or its equivalent with respect to the Borrower certified as of a recent
date by the appropriate Governmental Authority of the state or other jurisdiction of
its formation.

(iv) Incumbency. An incumbency certificate of the Borrower certified
by a secretary or assistant secretary (or the equivalent) of the Borrower to be true
and correct as of the Closing Date.

(c) Opinions of Counsel. Receipt by the Administrative Agent of opinions of
counsel from outside counsel to the Borrower, in form and substance acceptable to the
Administrative Agent, addressed to the Administrative Agent and the Lenders and dated as of
the Closing Date.

(d) Material Adverse Change. Since December 31, 2007, there shall not have
occurred any event or condition that has had or could reasonably be expected to have a
Material Adverse Change.

 

35

 

(e) Information and Projections. The “Information” and the “Projections” (each
as defined in the Commitment Letter), taken as a whole, provided to the Arrangers prior to
April 27, 2008 shall not be misleading or incorrect in any material respect and the
Arrangers shall not have become aware of or have discovered new information or developments
(by means of continuing review or otherwise) concerning conditions or events previously
disclosed to them that is inconsistent in any material adverse respect with the
“Information” or “Projections” provided to them prior to such date.

(f) Litigation. There shall not exist any material order, decree, judgment,
ruling or injunction or any material pending or threatened action, suit, investigation or
proceeding against the Borrower or any of its Subsidiaries except as represented to date.

(g) Consents. All necessary governmental, shareholder and third party consents
and approvals, if any, with respect to this Agreement and the Credit Documents and the
transactions contemplated herein and therein 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
Credit Documents.

(h) Officer’s Certificates. Receipt by the Administrative Agent of a
certificate or certificates executed by an Authorized Officer of the Borrower as of the
Closing Date stating that (i) the Borrower and each of its Subsidiaries are in compliance in
all material respects with all existing material financial obligations and all material
Requirements of Law, (ii) there does not exist any material order, decree, judgment, ruling
or injunction or any material pending or threatened action, suit, investigation or
proceeding against the Borrower or any of its Subsidiaries, (iii) the financial statements
and information delivered to the Administrative Agent on or before the Closing Date were
prepared in good faith and in accordance with GAAP and (iv) immediately after giving effect
to this Agreement, the other Credit 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
Credit Documents are true and correct in all material respects, (D) since December 31, 2007,
there shall not have occurred any event or condition that has had or could reasonably be
expected to have a Material Adverse Change, (E) the Borrower shall have not syndicated or
issued, attempted to syndicate or issue, announced or authorized the announcement of, or
engaged in discussions concerning the syndication or issuance of any debt facility or debt
security of the Borrower, including renewals thereof, other than the Facility, the proposed
offering of $350,000,000 of long-term debt securities by the Borrower and the proposed
execution and delivery of the Letter of Credit Facility by the Borrower, (F) the
“Information” and the “Projections” (each as defined in the Commitment Letter), taken as a
whole, provided to the Arrangers prior to April 27, 2008 shall not be misleading or
incorrect in any material respect and the Arrangers shall have not have become aware of or
have discovered new information or developments (by means of continuing review or otherwise)
concerning conditions or events previously disclosed to them that is inconsistent in any
material adverse respect with the “Information” or “Projections” provided to them prior to
such date, (G) the Borrower is in compliance with each of the financial covenants set forth
in Section 7.2, as of March
31, 2008, as demonstrated in Covenant Compliance Worksheet attached to such
certificate, (H) the Borrower is in compliance with Section 7.7, and (I) the Borrower has
obtained prior to the Closing Date all applicable regulatory approvals to issue and sell an
additional $200,000,000 of debt securities.

 

36

 

(i) Syndication. The Borrower shall have not syndicated or issued, attempted to
syndicate or issue, announced or authorized the announcement of, or engaged in discussions
concerning the syndication or issuance of any debt facility or debt security of the
Borrower, including renewals thereof, other than the Facility, the proposed offering of
$350,000,000 of long-term debt securities by the Borrower and the proposed execution and
delivery of the Letter of Credit Facility by the Borrower.

(j) Fees and Expenses. Unless waived by the Person entitled thereto, payment
by the Borrower of all fees and expenses owed by the Borrower to the Administrative Agent,
the Arrangers and the Lenders on or before the Closing Date, including, without limitation,
as set forth in the Commitment Letter and the Fee Letter.

(k) Other. Receipt by the Lenders of such other documents, instruments,
agreements or information as reasonably requested by any Lender.

SECTION 5

CONDITIONS TO ALL EXTENSIONS OF CREDIT

5.1 Funding Requirements.

In addition to the conditions precedent stated elsewhere herein, the Lenders shall not be
obligated to make Loans, other than pursuant to a Mandatory Borrowing, unless:

(a) Notice. The Borrower shall have delivered a Notice of Borrowing, duly
executed and completed, by the time specified in Section 2.1.

(b) Representations and Warranties. The representations and warranties made by
the Borrower in any Credit Document (other than the representation and warranties in Section
6.7(a) (but only with respect to clause (a) of the definition of Material Adverse Effect)
and Section 6.9 of the Agreement) are true and correct in all material 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 such Borrowing.

(d) Fees and Expenses. Unless waived by the Person entitled thereto, payment by
the Borrower of all fees and expenses owed by the Borrower to the Administrative Agent, the
Arrangers and the Lenders on or before such Borrowing Date, including, without limitation,
all Funding Fees. The Borrower shall have paid all fees and expenses owed by the Borrower
pursuant to this Agreement.

 

37

 

The delivery of each Notice of Borrowing shall constitute a representation and warranty by the
Borrower of the correctness of the matters specified in subsections (b), (c) and (d) above. The
provisions of this Section 5.1 shall not apply to Mandatory Borrowings.

SECTION 6

REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter into this Agreement and to induce
the Lenders to extend the credit contemplated hereby, the Borrower represents and warrants to the
Administrative Agent and the Lenders as follows:

6.1 Organization and Good Standing.

Each of the Borrower and its Subsidiaries (a) is a corporation, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization, (b) is duly
qualified and in good standing as a foreign entity authorized to do business in every other
jurisdiction where the failure to so qualify would have a Material Adverse Effect and (c) has the
requisite power and authority to own its properties and to carry on its business as now conducted
and as proposed to be conducted.

6.2 Due Authorization.

The Borrower (a) has the requisite power and authority to execute, deliver and perform this
Agreement and the other Credit 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
Agreement and the other Credit Documents.

6.3 No Conflicts.

Neither the execution and delivery of this Agreement and the other Credit 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
(including without limitation, the Public Utility Holding Company Act of 1935, as amended),
regulation (including without limitation, Regulation U and Regulation X), order, writ, judgment,
injunction, decree or permit applicable to it, (c) violate, contravene or conflict with contractual
provisions of, or cause an event of default under, any indenture, loan agreement, mortgage, deed of
trust, contract or other agreement or instrument to which it is a party or by which it may be
bound, the violation of which would have or would be reasonably expected to have a Material Adverse
Effect or (d) result in or require the creation of any Lien upon or with respect to its properties.

 

38

 

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 Agreement or any of the other Credit Documents that
has not been obtained or completed.

6.5 Enforceable Obligations.

This Agreement and the other Credit 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 Lenders 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 7.1 (or as to any prior annual financial
statements) has been withdrawn.

6.7 No Material Adverse Effect.

(a) Since December 31, 2007, there has been no development or event relating to or
affecting the Borrower or any of its Subsidiaries which would have or would reasonably be
expected to have a Material Adverse Effect.

(b) Since December 31, 2007, there has been no sale, transfer or other disposition by
the Borrower or any of its Subsidiaries of any material part of its business or property,
and no purchase or other acquisition by the Borrower or any of its Subsidiaries of any
business or property (including the Capital Stock of any other Person) material in relation
to the financial condition of the Borrower or any of its Subsidiaries, in each case which is
not (i) reflected in the most recent financial statements delivered to the Lenders pursuant
to Section 7.1 or in the notes thereto or (ii) otherwise permitted by the terms of this
Agreement and communicated to the Lenders.

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.

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.

 

39

 

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 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.

Except as would not, individually or in the aggregate, result or reasonably be expected to
result in a Material Adverse Effect:

(a) During the five-year period prior to the date on which this representation is made
or deemed made: (i) no ERISA Event has occurred, and, to the best knowledge of the Borrower,
no event or condition has occurred or exists as a result of which any ERISA Event would be
reasonably expected to occur, with respect to any Plan; (ii) no failure to satisfy the
minimum funding standards (within the meaning of Section 412 of the Code or section 302 of
ERISA) applicable to such Plan, whether or not waived, has occurred with respect to any
Plan; (iii) each Plan has been maintained, operated, and funded in compliance with its own
terms and in material compliance with the provisions of ERISA, the Code, and any other
applicable federal or state laws; (iv) no Plan has been determined to be in “at risk”
status; and (v) no Lien in favor of the PBGC or a Plan has arisen or is reasonably likely to
arise on account of any Plan.

(b) The actuarial present value of all “benefit liabilities” under each Single Employer
Plan (determined within the meaning of Section 401(a)(2) of the Code, utilizing the
actuarial assumptions used to fund such Plans), whether or not vested, did not, as of the
last annual valuation date prior to the date on which this representation is made or deemed
made, exceed the current value of the assets of such Plan allocable to such accrued
liabilities, except as disclosed in the Borrower’s financial statements.

(c) Neither the Borrower nor any ERISA Affiliate has incurred, or, to the best
knowledge of the Borrower, is reasonably expected to incur, any Withdrawal Liability under
ERISA to any Multiemployer Plan or Multiple Employer Plan. Neither the Borrower nor any
ERISA Affiliate has received any notification that any Multiemployer Plan is in
reorganization (within the meaning of Section 4241 of ERISA), is insolvent
(within the meaning of Section 4245 of ERISA), or has been terminated (within the
meaning of Title IV of ERISA) or is in endangered or critical status, within the meaning of
Section 432 of the Code or Section 305 or Title IV of ERISA, and no Multiemployer Plan is,
to the best knowledge of the Borrower, reasonably expected to be in reorganization,
insolvent, terminated or in endangered or critical status.

 

40

 

(d) No Prohibited Transaction or breach of fiduciary responsibility has occurred with
respect to a Plan which has subjected or would be reasonably likely to subject the Borrower
or any ERISA Affiliate to any liability under Sections 406, 409, 502(i), or 502(1) of ERISA
or Section 4975 of the Code, or under any agreement or other instrument pursuant to which
the Borrower or any ERISA Affiliate has agreed or is required to indemnify any person
against any such liability.

(e) The present value (determined using actuarial and other assumptions which are
reasonable with respect to the benefits provided and the employees participating) of the
liability of the Borrower and each ERISA Affiliate for post-retirement welfare benefits to
be provided to their current and former employees under Plans which are welfare benefit
plans (as defined in Section 3(1) of ERISA), net of all assets under all such Plans
allocable to such benefits, are reflected on the financial statements referenced in Section
7.1 in accordance with FASB 106.

(f) Each Plan which is a welfare plan (as defined in Section 3(1) of ERISA) to which
Sections 601-609 of ERISA and Section 4980B of the Code apply has been administered in
compliance in all material respects with such sections.

6.13 Use of Proceeds; Margin Stock.

The proceeds of the Loans will be used solely for the purposes specified in Section 7.9. None
of such proceeds will be used for the purpose of (a) (i) purchasing or carrying any Margin Stock or
(ii) reducing or retiring any Indebtedness which was originally incurred to purchase or carry
Margin Stock, or (iii) for any other purpose that might constitute this transaction a “purpose
credit” within the meaning of Regulation U or (b) for the acquisition of another Person unless the
board of directors (or other comparable governing body) or stockholders, as appropriate, of such
Person has approved such acquisition.

6.14 Government Regulation.

(a) The Borrower is not a “holding company” within the meaning of the Public Utility
Holding Company Act of 1935, as amended (“PUHCA”). The issuance of the Notes by the
Borrower and the Borrowings of the Loans contemplated by this Agreement are not subject to
regulation under PUHCA or subject to regulation by the SEC.

(b) 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.

 

41

 

6.15 Solvency.

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

6.16 Disclosure.

Neither this Agreement nor any financial statements delivered to the Administrative Agent or
the Lenders nor any other document, certificate or statement furnished to the Administrative Agent
or the Lenders by or on behalf of the Borrower in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained therein or herein, taken as a whole, not misleading.

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 and all operations at the
Properties are in substantial compliance with all applicable Environmental Laws, (b) there is no
undocumented or unreported violation of any Environmental Law with respect to the Properties or the
businesses operated by the Borrower and its Subsidiaries (the “Businesses”) that the
Borrower is aware of, and (c) there are no conditions relating to the Businesses or Properties that
have given rise to or would reasonably be expected to give rise to a liability under any applicable
Environmental Laws.

6.18 Material Leases.

Set forth on Schedule 6.18 hereto is a complete and accurate list of the Material
Leases on the date hereof, showing the expiration date and annual rental cost thereof. The
Borrower is entitled to exercise all of the rights of lessee purported to be granted to the
Borrower under each such Material Lease.

6.19 Material Lease Interest Payments and Discount Rate.

Schedule 6.19 hereto, as most recently provided to the Administrative Agent, sets
forth the same (a) amounts with respect to the interest portion of payments under the Material
Leases and (b) discount rate used to calculate the net present value of all amounts payable under
the Material Leases as have been most recently provided (or that the Borrower intends to provide
shortly) to Moody’s and S&P or as have otherwise been agreed to by the Required Lenders.

 

42

 

SECTION 7

AFFIRMATIVE COVENANTS

The Borrower covenants and agrees that, until the termination of the Commitments and the
payment in full of all Borrower Obligations:

7.1 Information Covenants.

The Borrower will furnish, or cause to be furnished, to the Lenders:

(a) Annual Financial Statements. As soon as available, and in any event within
120 days after the close of each Fiscal Year, a consolidated balance sheet and income
statement of the Borrower and its Subsidiaries, as of the end of such Fiscal Year, together
with the related consolidated statements of income and of cash flows for such Fiscal Year,
setting forth in comparative form figures for the preceding Fiscal Year, all such financial
information described above to be in reasonable form and detail and, in each case, audited
by independent certified public accountants of recognized national standing reasonably
acceptable to the Required Lenders and whose opinion shall be furnished to the Lenders, and
shall be to the effect that such financial statements have been prepared in accordance with
GAAP (except for changes with which such accountants concur) and shall not be limited as to
the scope of the audit or qualified in any respect.

(b) Quarterly Financial Statements. As soon as available, and in any event
within 60 days after the close of each Fiscal Quarter (other than the fourth Fiscal Quarter)
(or, in the case of financial statements for the Fiscal Quarter ended March 31, 2008, as
soon as available, and in any event within 45 days after the close of such Fiscal Quarter),
a consolidated balance sheet and income statement of the Borrower and its Subsidiaries as of
the end of such Fiscal Quarter, together with the related consolidated statement of income
for such Fiscal Quarter and a year-to-date statement of cash flows, in each case setting
forth in comparative form figures for the corresponding period of the preceding Fiscal Year,
all such financial information described above to be in reasonable form and detail and
reasonably acceptable to the Required Lenders, and, in each case, accompanied by a
certificate of a Financial Officer of the Borrower to the effect that such quarterly
financial statements fairly present in all material respects the financial condition of such
Person and have been prepared in accordance with GAAP, subject to changes resulting from
audit and normal year-end audit adjustments and except that the quarterly financial
statements have fewer footnotes than annual statements.

(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 covenants 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.

 

43

 

(e) Credit Facilities. Notice of the execution and delivery of any new credit
facility and of any amendment, supplement, restatement or other modification to any such
credit facility, the Existing Credit Agreement or the Letter of Credit Facility and related
credit documents to any thereof, promptly upon the execution and delivery of any thereof and
copies of the material documents and instruments entered into in connection with any such
facility and with any such amendment, supplement, restatement or other modification.

(f) Notices. Upon the Borrower obtaining knowledge thereof, the Borrower will
give written notice to the Administrative Agent within ten days of (i) the occurrence of a
Default or Event of Default, specifying the nature and extent thereof and what action the
Borrower proposes to take with respect thereto and (ii) the occurrence of any of the
following with respect to the Borrower or any of its Subsidiaries: (A) the pendency or
commencement of any litigation, arbitration or governmental proceeding against the Borrower
or any of its Subsidiaries which, if adversely determined, would have or would reasonably be
expected to have a Material Adverse Effect, (B) one or more judgments, orders, or decrees
shall be entered against the Borrower or any of its Subsidiaries involving a liability of
$5,000,000 or more, in the aggregate, (C) the institution of any proceedings against the
Borrower or any of its Subsidiaries with respect to, or the receipt of notice by such Person
of potential liability or responsibility for violation or alleged violation of, any federal,
state or local law, rule or regulation (including, without limitation, any Environmental
Law), the violation of which would have or would reasonably be expected to have a Material
Adverse Effect or (D) any amendment or change to the Existing Credit Agreement or the Letter
of Credit Facility or the entering into of any new credit agreement.

(g) ERISA. Upon the Borrower or any ERISA Affiliate obtaining knowledge
thereof, the Borrower will give written notice to the Administrative Agent promptly (and in
any event within ten days) of any of the following which would result in or reasonably would
be expected to result in a Material Adverse Effect: (i) any event or condition, including,
but not limited to, any Reportable Event, that constitutes, or would be reasonably expected
to lead to, an ERISA Event or the occurrence of any ERISA Event; (ii) with respect to any
Multiemployer Plan or Multiple Employer Plan, the receipt of notice as prescribed in ERISA
or otherwise of any Withdrawal Liability assessed against the Borrower or any of its ERISA
Affiliates, or of a determination that any Multiemployer Plan is in reorganization,
insolvent or in endangered or critical status (each as within the meaning of Title IV of
ERISA); (iii) the failure to make full payment on or before the due date (including
extensions) thereof of all amounts which the Borrower or any of its Subsidiaries or ERISA
Affiliates is required to contribute to each Plan or Multiemployer Plan pursuant to its
terms and as required to meet the minimum funding standard set forth in ERISA and the Code
with respect thereto; (iv) a change in the funding status of any Plan, in each case together
with a description of any such event or condition or a copy of any such notice and a
statement by an officer of the Borrower briefly setting forth the details regarding such
event, condition, or notice, and the action, if any, which has been or is being taken or is
proposed to be taken with respect thereto and (v) copies of any documents described in
Sections 101(k) or 101(l) of ERISA that Borrower or any ERISA Affiliate may request with
respect to any Multiemployer Plan,

 

44

 

provided, that if Borrower or any ERISA Affiliate has not requested such documents or
notices from the administrator or sponsor of the applicable Multiemployer Plan, then upon
reasonable request of the Administrative Agent, the Borrower and/or its ERISA Affiliates
shall promptly make a request for such documents or notices from such administrator or
sponsor and the Borrower shall provide copies of such documents and notices to the
Administrative Agent promptly after receipt thereof. Promptly upon request, the Borrower
shall furnish the Lenders with such additional information concerning any Plan as may be
reasonably requested, including, but not limited to, copies of each annual report/return
(Form 5500 series), as well as all schedules and attachments thereto required to be filed
with the Department of Labor and/or the Internal Revenue Service pursuant to ERISA and the
Code, respectively, for each “plan year” (within the meaning of Section 3(39) of ERISA).

(h) Debt Ratings. Prompt notice of any change in its Debt Ratings.

(i) Other Information. With reasonable promptness upon any such request, such
other information regarding the business, properties or financial condition of the Borrower
as the Lenders may reasonably request.

Documents required to be delivered pursuant to Section 7.1(a), (b) or (d) (to the extent any
such documents are included in materials otherwise filed with the SEC) 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 each
Lender and the Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent); provided that: (A) the Borrower shall
deliver paper copies of such documents to the Administrative Agent or any Lender that requests the
Borrower to deliver such paper copies until a written request to cease delivering paper copies is
given by the Administrative Agent or such Lender and (B) the Borrower shall notify the
Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such
documents and provide to the Administrative Agent by electronic mail electronic versions (i.e.,
soft copies) of such documents. Notwithstanding anything contained herein, in every instance the
Borrower shall be required to provide paper copies of the Officer’s Certificate required by Section
7.1(c) to the Administrative Agent. Except for such Officer’s Certificate, the Administrative
Agent shall have no obligation to request the delivery or to maintain copies of the documents
referred to above, and in any event shall have no responsibility to monitor compliance by the
Borrower with any such request for delivery, and each Lender shall be solely responsible for
requesting delivery to it or maintaining its copies of such documents.

7.2 Financial Covenant.

At all times the ratio of (i) Consolidated Indebtedness to (ii) Consolidated Capitalization
shall be less than or equal to 0.65 to 1.0. For purposes of such calculation, the portion of
Consolidated Indebtedness attributable to obligations under Material Leases shall be the net
present value (using (i) the discount rate (A) set forth in Schedule 6.19, so long as
Schedule 6.19 specifies the same relevant discount rate as is used in calculating such net
present value provided
to Moody’s and S&P or (B) the discount rate used in calculating such net present value
provided to Moody’s and S&P or (ii) any such other rate as shall be proposed by the Borrower (and
agreed upon by the Required Lenders) of all amounts payable under the Material Leases.

 

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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 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.

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.

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.

7.6 Payment of Taxes and Other Indebtedness.

The Borrower will (and will cause each of its Subsidiaries to) pay, settle or discharge (a)
all taxes, assessments and governmental charges or levies imposed upon it, or upon its income or
profits, or upon any of its properties, before they shall become delinquent, (b) all lawful claims
(including claims for labor, materials and supplies) which, if unpaid, might give rise to a Lien
upon any of its properties, and (c) all of its other Indebtedness as it shall become due (to the
extent such repayment is not otherwise prohibited by this 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.

 

46

 

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 material agreements, indentures, mortgages,
security agreements or other debt instruments to which it is a party or by which it is bound.

7.9 Use of Proceeds.

The proceeds of the Loans may be used solely (a) for general corporate purposes of the
Borrower (including, but not limited to, financing the repayment of certain Indebtedness of the
Borrower) and (b) to pay fees and expenses required by the Credit Documents; provided, however that
in no event may the Borrower use the proceeds of the Loans to make any payment of any dividend or
to make any other distribution, in either case in respect of its Capital Stock.

7.10 Audits/Inspections.

Upon reasonable notice and during normal business hours, the Borrower will permit
representatives appointed by the Administrative Agent or the Lenders, including, without
limitation, independent accountants, agents, attorneys, and appraisers to visit and inspect the
Borrower’s property, including its books and records, its accounts receivable and inventory, the
Borrower’s facilities and its other business assets, and to make photocopies or photographs thereof
and to write down and record any information such representative obtains and shall permit the
Administrative Agent or such Lender or its representatives to investigate and verify the accuracy
of information provided to it and to discuss all such matters with the officers, employees and
representatives of the Borrower; provided, that an officer or authorized agent of the Borrower
shall be present during any such discussions between the officers, employees or representatives of
the Borrower and the representatives of the Administrative Agent or any Lender.

7.11 Letter of Credit Facility.

The Borrower will use commercially reasonable efforts to obtain and cause to be effective no
later than May 30, 2008, the Letter of Credit Facility.

7.12 Required Debt Offerings.

The Borrower will (a) at any time on or as soon as practicable after May 30, 2008, but in any
event no later than June 13, 2008, if the Borrower has not issued and sold during the period from
April 27, 2008 until May 30, 2008 an aggregate principal amount of long-term debt securities equal
to $350,000,000, issue and sell an aggregate principal amount of long-term debt securities such
that, after giving effect thereto, the aggregate amount of long-term debt securities issued is at
least $350,000,000, upon such terms and conditions as may be available in the market at the time of
issuance and (b) at any time on or as soon as practicable after January 15, 2009 (taking into
account the then-anticipated timing of the availability of the proceeds from the
Sale of the Gas Assets), if there are any Available Commitments and/or Loans remaining
outstanding hereunder, issue and sell such aggregate principal amount of long-term debt securities
as will generate Net Cash Proceeds in an amount sufficient to repay all such outstanding Loans and
to pay all interest and other amounts due and payable under the Facility and to reduce permanently
any such Available Commitments, upon such terms and conditions as may be available in the market at
the time of issuance.

 

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7.13 Security.

(a) In the event of the occurrence of any of (i) any downgrade of the Debt Rating of
the Borrower by S&P to a Debt Rating below the Debt Rating of the Borrower on the Closing
Date, (ii) a downgrade of the Debt Rating of the Borrower by Moody’s below Baa3 or (iii) the
failure of the Borrower to issue and sell at least $350,000,000 of long-term debt securities
by June 13, 2008, the Borrower shall promptly (A) take all such actions to attempt to obtain
all necessary regulatory approvals and consents and (B) use all commercially reasonable
efforts to procure from the lenders under the Existing Credit Agreement and under PNM
Resources, Inc.’s revolving credit facility in effect on the date hereof, all consents, in
each case required to allow it to grant security interests in its Property to the
Administrative Agent for the benefit of the Lenders and, after receipt of such approvals and
consents, the Borrower shall promptly grant a first priority perfected security interest,
subject to the pari passu liens granted or to be granted as provided pursuant to Section
8.5(s), in all of its Property (other than (i) the assets being Disposed of pursuant to the
Sale of the Gas Assets, (ii) the Borrower’s assets secured under the FMB Indenture, but only
to the extent of Insured Series First Mortgage Bonds, (iii) the Borrower’s assets which
would customarily be excluded from a conventional utility mortgage and (iv) other assets as
to which the Arrangers and the Borrower reasonably determine that the cost of obtaining a
security interest or perfection thereof are excessive in relation to the benefit to the
Lenders of the security afforded thereby) to the Administrative Agent, for the benefit of
the Lenders, as security for any obligations owing under the Facility.

(b) In connection with the foregoing, the Borrower agrees, and will cause each its
Subsidiaries to, (i) execute and deliver any and all further documents, financing
statements, agreements and instruments, including the execution and delivery of any security
agreements, mortgages, deeds of trusts or other security documents, and take all such
further actions (including the filing and recording of financing statements, fixture
filings, mortgages, deeds of trust and other documents), which may be required under any
applicable law, or which the Administrative Agent, the Arrangers or the Required Lenders may
reasonably request, in order to grant, preserve, protect and perfect the validity and
priority of the security interests to be created in connection with the Section 7.13(a) and
(ii) to the extent that any such Liens on any such Property are to be pari passu with the
Liens granted or to be granted to any secured party, cause the holders of such secured
obligations (or a representative thereof) to have entered into an intercreditor agreement
acceptable to the Administrative Agent and the Arrangers, on customary terms.

 

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SECTION 8

NEGATIVE COVENANTS

Unless otherwise approved in writing by the Required Lenders, the Borrower covenants and
agrees that, until the termination of the Commitments and 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 (it being understood that the Sale of the Gas Assets will not be deemed to
materially alter the character of its business).

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) Dispose of any of its Property
(including, without limitation, all or substantially all of its Property, whether in one
transaction or a series of related transactions) except (a) sales of accounts receivable and energy
services contract revenues in connection with the PSNM Accounts Receivable Securitization and other
sales of accounts receivable and energy services contract revenues so long as such other sales are
non-recourse to the Borrower and are otherwise on customary market terms; (b) the Sale of the Gas
Assets; (c) so long as the consideration paid for any such Disposition is all in cash, the
Disposition of the Luna Facility and the Disposition of the Lordsburg Facility; (d) sales of
Property (excluding those permitted in clause (a) (b) and (c) hereof) for fair value, if the
aggregate value of all such transactions in any calendar year, does not exceed 25% of the book
value of Total Assets, as calculated as of the end of the most recent Fiscal Quarter; and (e)
Dispositions, at less than fair value, of any other Property; provided that the aggregate
book value of such Property shall not exceed $10,000,000 in any calendar year;. In connection with
any such Disposition that constitutes an Asset Sale Prepayment Event, the Borrower shall comply
with its obligations under Section 3.3(b).

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.

 

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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 Borrower Obligations, (b) Liens for taxes
not yet due or Liens for taxes being contested in good faith by appropriate proceedings for which
adequate reserves determined in accordance with GAAP have been established (and as to which the
property subject to any such Lien is not yet subject to foreclosure, sale or loss on account
thereof), (c) Liens in respect of property imposed by law arising in the ordinary course of
business such as materialmen’s, mechanics’, warehousemen’s, carrier’s, landlords’ and other
nonconsensual statutory Liens which are not yet due and payable, which have been in existence less
than 90 days or which are being contested in good faith by appropriate proceedings for which
adequate reserves determined in accordance with GAAP have been established (and as to which the
property subject to any such Lien is not yet subject to foreclosure, sale or loss on account
thereof), (d) pledges or deposits made in the ordinary course of business to secure payment of
worker’s compensation insurance, unemployment insurance, pensions or social security programs, (e)
Liens arising from good faith deposits in connection with or to secure performance of tenders,
bids, leases, government contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business (other than obligations in respect of the
payment of borrowed money), (f) Liens arising from good faith deposits in connection with or to
secure performance of statutory obligations and surety and appeal bonds, (g) easements,
rights-of-way, restrictions (including zoning restrictions), minor defects or irregularities in
title and other similar charges or encumbrances not, in any material respect, impairing the use of
the encumbered property for its intended purposes, (h) judgment Liens that would not constitute an
Event of Default, (i) Liens arising by virtue of any statutory or common law provision relating to
banker’s liens, rights of setoff or similar rights as to deposit accounts or other funds maintained
with a creditor depository institution, (j) any Lien created or arising over any property which is
acquired, constructed or created by the Borrower or its Subsidiaries, but only if (i) such Lien
secures only principal amounts (not exceeding the cost of such acquisition, construction or
creation) raised for the purposes of such acquisition, construction or creation, together with any
costs, expenses, interest and fees incurred in relation thereto or a guarantee given in respect
thereof, (ii) such Lien is created or arises on or before 180 days after the completion of such
acquisition, construction or creation, (iii) such Lien is confined solely to the property so
acquired, constructed or created and any improvements thereto and (iv) the aggregate principal
amount of all Indebtedness secured by such Liens shall not exceed $25,000,000 at any one time
outstanding, (k) any Lien on Margin Stock, (l) Liens with respect to the Indebtedness evidenced by
the FMB Indenture, but only to the extent of the Insured Series First Mortgage Bonds, and the
“permitted encumbrances” under the FMB Indenture, (m) the assignment of, or Liens on, accounts
receivable in connection with PSNM Accounts Receivable Securitization and the filing of related
financing statements under the Uniform Commercial Code of the applicable jurisdictions, (n) the
assignment of, or Liens on, demand, energy or wheeling revenues, or on capacity reservation or
option fees, payable to the Borrower 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 with
respect to asset sales permitted herein, (o) any extension, renewal or replacement (or successive
extensions, renewals
or replacements), as a whole or in part,

 

50

 

of any Liens referred to in the foregoing clauses (a)
through (n), for amounts not exceeding the principal amount of the Indebtedness secured by the Lien
so extended, renewed or replaced, provided that such extension, renewal or replacement Lien is
limited to all or a part of the same property or assets that were covered by the Lien extended,
renewed or replaced (plus improvements on such property or assets), (p) Liens on Property that is
subject to a Material Lease that is classified as an operating lease as of the Closing Date but
which is subsequently converted into a capital lease, (q) Liens securing obligations under Hedging
Agreements entered into in the ordinary course of business and not for speculative purposes, (r)
Liens on Property, in addition to those otherwise permitted by clauses (a) through (q) 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, $25,000,000 and (s) to the extent any Liens are granted on any of the Borrower’s
or any of its Subsidiaries’ Property to secure the Borrower’s Obligations pursuant to the
requirements of Section 7.13, pari passu Liens on such Property securing Indebtedness for borrowed
money of the Borrower and letter of credit related obligations of the Borrower under any credit or
loan facility or any indenture governing any debt securities in existence on the date upon which
such Liens are granted, but only to the extent that such credit or loan facilities and indentures
contain provisions requiring such pari passu Liens or other restrictions to the grant of Liens on
the Borrower’s or its Subsidiaries’ Property.

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.

8.7 Negative Pledge Clause.

The Borrower will not, after the date hereof, enter into or otherwise agree to any new
agreement that prohibits or limits the ability of the Borrower or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its assets, Property or revenues,
whether now owned or hereafter acquired, other than (a) this Agreement and the other Credit
Documents, (b) the Letter of Credit Facility and (c) any agreements governing any purchase money
Liens otherwise permitted hereby (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby).

8.8 Indebtedness.

The Borrower will not create, issue, incur, assume, become liable in respect of or suffer to
exist any Indebtedness for borrowed money that has a maturity date earlier than the Maturity Date
of the Loans, except: (a) Indebtedness of the Borrower under the Existing Credit Agreement and (b)
Indebtedness of the Borrower under any Letter of Credit Facility.

 

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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 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 Credit Documents or in connection
herewith or therewith.

(b) Representations. Any representation, warranty or statement made or deemed
to be made by the Borrower herein, in any of the other Credit Documents, or in any statement
or certificate delivered or required to be delivered pursuant hereto or thereto shall prove
untrue in any material respect on the date as of which it was deemed to have been made.

(c) Covenants. The Borrower shall:

(i) default in the due performance or observance of any term, covenant or
agreement contained in Sections 7.1(f)(i), 7.2, 7.3(a) (solely with respect to the
existence of the Borrower), 7.9, 7.10, 7.12 and 7.13 or 8.1 through 8.8 inclusive;
or

(ii) default in the due performance or observance by it of any term, covenant
or agreement (other than those referred to in subsections (a), (b) or (c)(i) of this
Section 9.1) contained in this Agreement or any other Credit Document and such
default shall continue unremedied for a period of at least 10 days after the earlier
of the Borrower becoming aware of such default or notice thereof given by the
Administrative Agent.

(d) Credit Documents. Any Credit Document shall fail to be in force and effect
or the Borrower shall so assert or any Credit Document shall fail to give the Administrative
Agent or the Lenders the rights, powers, liens and privileges purported to be created
thereby.

(e) Bankruptcy, etc. The occurrence of any of the following with respect to
the Borrower or any of its Subsidiaries (i) a court or governmental agency having
jurisdiction in the premises shall enter a decree or order for relief in respect of the
Borrower or any of its Subsidiaries in an involuntary case under any applicable Debtor
Relief Law now or hereafter in effect, or appoint a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Borrower or any of its
Subsidiaries or for any substantial part of their property or ordering the winding-up or
liquidation of its affairs; or (ii) an involuntary case under any applicable Debtor Relief
Law now or hereafter in effect is commenced against the Borrower or any of its
Subsidiaries and such petition remains unstayed and in effect for a period of 60 consecutive
days; or (iii) the Borrower or any of its Subsidiaries shall commence a voluntary case under
any applicable Debtor Relief Law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law, or consent to the appointment or
taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of such Person or any substantial part of its property or make any general
assignment for the benefit of creditors; or (iv) the Borrower or any of its Subsidiaries
admit in writing its inability to pay its debts generally as they become due or any action
shall be taken by any Person in furtherance of any of the aforesaid purposes.

 

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(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 Agreement) in excess of
$20,000,000 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.

(g) Judgments. Any judgment, order or decree involving a liability of
$20,000,000 or more, or one or more judgments, orders, or decrees involving a liability of
$40,000,000 or more, in the aggregate, shall be entered against the Borrower or any of its
Subsidiaries and such judgments, orders or decrees shall continue unsatisfied, undischarged
and unstayed for a period ending on the first to occur of (i) the last day on which such
judgment, order or decree becomes final and unappealable and, where applicable, with the
status of a judicial lien or (ii) 60 days; provided that if such judgment, order or
decree provides for periodic payments over time then the Borrower or such Subsidiary shall
have a grace period of 30 days with respect to each such periodic payment.

 

53

 

(h) ERISA. The occurrence of any of the following events or conditions if any
of the same would have or would be reasonably expected to have a Material Adverse Effect:
(i) a failure to satisfy the minimum funding standards (within the meaning of in Section 302
of ERISA and Section 412 of the Code, whether or not waived, shall exist with respect to any
Plan a determination is made that any Plan, is, or is expected to be in “at risk” status
(within the meaning of Title IV of ERISA), or any lien shall arise on the assets of the
Borrower or any ERISA Affiliate in favor of the PBGC or a Plan; (ii) an ERISA Event shall
occur with respect to a Single Employer Plan which, in the reasonable opinion of the
Required Lenders, is likely to result in the termination of such Plan for purposes of Title
IV of ERISA; (iii) an ERISA Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan which, in the reasonable opinion of the Required Lenders, is likely
to result in (A) the termination of such Plan for purposes of Title IV of ERISA, or (B) the
Borrower or any ERISA Affiliate incurring any liability in connection with a withdrawal
from, reorganization of (within the meaning of Section 4241 of ERISA), or insolvency (within
the meaning of Section 4245 of ERISA) of such Plan or determination that such Plan is in
endangered or critical status, within the meaning of Section 432 of the Code or Section 305
or Title IV of ERISA; or (iv) any Prohibited Transaction or breach of fiduciary
responsibility shall occur which would be reasonably expected to subject the Borrower or any
ERISA Affiliate to any liability under Sections 406, 409, 502(i), or 502(1) of ERISA or
Section 4975 of the Code, or under any agreement or other instrument pursuant to which the
Borrower or any ERISA Affiliate has agreed or is required to indemnify any person against
any such liability.

(i) Change of Control. There shall occur a Change of Control.

9.2 Acceleration; Remedies.

Upon the occurrence and during the continuation of an Event of Default, the Administrative
Agent may or, upon the request and direction of the Required Lenders, shall take the following
actions without prejudice to the rights of the Administrative Agent or any Lender to enforce its
claims against the Borrower, except as otherwise specifically provided for herein:

(a) Termination of Commitments. Declare the Commitments terminated whereupon
the Commitments shall be immediately terminated.

(b) 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 Agents, the Agent-Related Parties or the Lenders under the
Credit Documents to be due, whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower.

(c) Enforcement of Rights. To the extent permitted by Law enforce any and all
rights and interests created and existing under applicable Law and under the Credit
Documents, including, without limitation, all rights of set-off.

 

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Notwithstanding the foregoing, if an Event of Default specified in Section 9.1(e) shall occur, then
the Commitments shall automatically terminate and all Loans, all accrued interest in respect
thereof, all accrued and unpaid fees and other Borrower Obligations owing to the Agents, the
Agent-Related Parties and the Lenders hereunder shall immediately become due and payable without
the giving of any notice or other action by the Administrative Agent or the Lenders, which notice
or other action is expressly waived by the Borrower.

Notwithstanding the fact that enforcement powers reside primarily with the Administrative Agent,
each Lender has, to the extent permitted by Law, a separate right of payment and shall be
considered a separate “creditor” holding a separate “claim” within the meaning of Section 101(5) of
the Bankruptcy Code or any other insolvency statute.

9.3 Allocation of Payments After Event of Default.

Notwithstanding any other provisions of this Agreement, after the occurrence and during the
continuation of an Event of Default, all amounts collected or received by the Administrative Agent
or any Lender on account of amounts outstanding under any of the Credit Documents shall be paid
over or delivered as follows:

FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including the
reasonable fees and expenses of legal counsel) of the Agents or any of the Lenders in
connection with enforcing the rights of the Agents and the Lenders under the Credit
Documents, ratably among them in proportion to the amounts described in this clause “FIRST”
payable to them;

SECOND, to payment of any fees owed to the Agents or any Lender, ratably among them in
proportion to the amounts described in this clause “SECOND” payable to them;

THIRD, to the payment of all accrued interest payable to the Lenders hereunder, ratably
among them in proportion to the amounts described in this clause “THIRD” payable to them;

FOURTH, to the payment of the outstanding principal amount of the Loans, ratably among
them in proportion to the amounts described in this clause “FOURTH” payable to them;

FIFTH, to all other Borrower Obligations which shall have become due and payable under
the Credit Documents and not repaid pursuant to clauses “FIRST” through “FOURTH” above,
ratably among the holders of such Borrower Obligations in proportion to the amounts
described in this clause “FIFTH” payable to them; and

SIXTH, the payment of the surplus, if any, to whomever may be lawfully entitled to
receive such surplus.

 

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SECTION 10

AGENCY PROVISIONS

10.1 Appointment and Authority.

Each of the Lenders hereby irrevocably appoints Merrill Lynch Capital Corporation to act on
its behalf as the Administrative Agent hereunder and under the other Credit Documents and
authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers
as are delegated to the Administrative Agent by the terms hereof or thereof, together with such
actions and powers as are reasonably incidental thereto. The provisions of this Section are solely
for the benefit of the Administrative Agent and the Lenders, and the Borrower shall not have rights
as a third party beneficiary of any of such provisions.

10.2 Rights as a Lender.

The Person serving as the Administrative Agent hereunder shall have the same rights and powers
in its capacity as a Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated
or unless the context otherwise requires, include the Person serving as the Administrative Agent
hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from,
lend money to, act as the financial advisor or in any other advisory capacity for and generally
engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if
such Person were not the Administrative Agent hereunder and without any duty to account therefor to
the Lenders.

10.3 Exculpatory Provisions.

The Administrative Agent shall not have any duties or obligations except those expressly set
forth herein and in the other Credit Documents. Without limiting the generality of the foregoing,
the Administrative Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby
or by the other Credit Documents that the Administrative Agent is required to exercise as
directed in writing by the Required Lenders (or such other number or percentage of the
Lenders as shall be expressly provided for herein or in the other Credit Documents);
provided that the Administrative Agent shall not be required to take any action
that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Credit Document or applicable law; and

(c) shall not, except as expressly set forth herein and in the other Credit Documents,
have any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower, its Subsidiaries or any of its Affiliates that is
communicated to or obtained by the Person serving as the Administrative Agent or any of
its Affiliates in any capacity.

 

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The Administrative Agent shall not be liable for any action taken or not taken by it (a) with
the consent or at the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 11.6 and 9.2) or (b) in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to
have knowledge of any Default unless and until notice describing such Default is given to the
Administrative Agent by the Borrower or a Lender.

The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with this Agreement or
any other Credit Document, (ii) the contents of any certificate, report or other document delivered
hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance
of any of the covenants, agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this
Agreement, any other Credit Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Section 4 or Section 5 or elsewhere herein, other than
to confirm receipt of items expressly required to be delivered to the Administrative Agent.

10.4 Reliance by Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated
by the proper Person. The Administrative Agent also may rely upon any statement made to it orally
or by telephone and believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon. In determining compliance with any condition hereunder to the
making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, the
Administrative Agent may presume that such condition is satisfactory to such Lender unless the
Administrative Agent shall have received notice to the contrary from such Lender prior to the
making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel
for the Borrower), independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of any such counsel,
accountants or experts.

10.5 Delegation of Duties.

The Administrative Agent may perform any and all of its duties and exercise its rights and
powers hereunder or under any other Credit Document by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform
any and all of its duties and exercise its rights and powers by or through their respective
Agent-Related Parties. The exculpatory provisions of this Section shall apply to any such
sub-agent and to the Agent-Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of
the credit facilities provided for herein as well as activities as Administrative Agent.

 

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10.6 Resignation of Administrative Agent.

The Administrative Agent may at any time give notice of its resignation to the Lenders and the
Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the
right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an
office in the United States, or an Affiliate of any such bank with an office in the United States.
If no such successor shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may on behalf of the Lenders, appoint a
successor Administrative Agent meeting the qualifications set forth above; provided that if
the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become effective in accordance
with such notice and (a) the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder and under the other Credit Documents and (b) all payments, communications and
determinations provided to be made by, to or through the Administrative Agent shall instead be made
by or to each Lender directly, until such time as the Required Lenders appoint a successor
Administrative Agent as provided for above in this Section. Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, such successor shall succeed to and become vested
with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative
Agent, and the retiring Administrative Agent shall be discharged from all of its duties and
obligations hereunder or under the other Credit Documents (if not already discharged therefrom as
provided above in this Section). The fees payable by the Borrower to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After the retiring Administrative Agent’s resignation hereunder and
under the other Credit Documents, the provisions of this Section and Section 11.5 shall continue in
effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective
Agent-Related Parties in respect of any actions taken or omitted to be taken by any of them while
the retiring Administrative Agent was acting as Administrative Agent.

10.7 Non-Reliance on Administrative Agent and Other Lenders.

Each Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Agent-Related Parties and based on such
documents and information as it has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender or any of their Agent-Related
Parties and based on such documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based upon this
Agreement, any other Credit Document or any related agreement or any document furnished hereunder
or thereunder.

 

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10.8 No Other Duties, Etc.

Except as specifically set forth in this Agreement, none of the Arrangers or Agents listed on
the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any
of the other Credit Documents, except in its capacity, as applicable, as the Administrative Agent
or a Lender hereunder.

10.9 Administrative Agent May File Proofs of Claim.

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the
Borrower, the Administrative Agent (irrespective of whether the principal of any Loan shall then be
due and payable as herein expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered,
by intervention in such proceeding or otherwise

(a) to file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans and all other Borrower Obligations that are owing and
unpaid and to file such other documents as may be necessary or advisable in order to have
the claims of the Lenders, the Agents and the Agent-Related Parties (including any claim for
the reasonable compensation, expenses, disbursements and advances of the Lenders, the Agents
and the Agent-Related Parties and their respective agents and counsel and all other amounts
due the Lenders, the Agents and the Agent-Related Parties under Sections 3.4 and 11.5)
allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such payments to the
Administrative Agent and, in the event that the Administrative Agent shall consent to the making of
such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its
agents and counsel, and any other amounts due the Administrative Agent under Sections 3.4 and 11.5.

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or
consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement,
adjustment or composition affecting the Borrower Obligations or the rights of any Lender or to
authorize the Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.

 

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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 applicable telephone number, as follows:

(i) if to the Borrower or the Administrative Agent, to the address, telecopier number,
electronic mail address or telephone number specified for such Person on Schedule
11.1; and

(ii) if to any other Lender, to the address, telecopier number, electronic mail address
or telephone number specified in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall
be deemed to have been given when received; notices sent by telecopier shall be deemed to have been
given when sent (except that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next business day for the recipient).
Notices delivered through electronic communications to the extent provided in subsection (b) below,
shall be effective as provided in such subsection (b).

(b) Electronic Communications. Notices and other communications to the Lenders
hereunder may be delivered or furnished by electronic communication (including e-mail and Internet
or intranet websites) pursuant to procedures approved by the Administrative Agent; provided
that the foregoing shall not apply to notices to any Lender pursuant to Section 2 if such
Lender has notified the Administrative Agent that it is incapable of receiving notices under such
Section by electronic communication. The Administrative Agent or the Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of such procedures may
be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement
from the intended recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement); provided that if such notice or other
communication is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on the next business day
for the recipient, and (ii) notices or communications posted to an Internet or intranet website
shall be deemed received upon the deemed receipt by the intended recipient at
its e-mail address as described in the foregoing clause (i) of notification that such notice
or communication is available and identifying the website address therefor.

 

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(c) Borrower Materials/The Platform. The Borrower hereby acknowledges that (i) the
Administrative Agent and/or the Arrangers will make available to the Lenders materials and/or
information provided by or on behalf of the Borrower hereunder (collectively, “Borrower
Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic
system (the “Platform”). THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR
THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE
BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE
BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its
Agent-Related Parties (collectively, the “Agent Parties”) have any liability to the
Borrower, any Lender or any other Person for losses, claims, damages, liabilities or expenses of
any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the
Administrative Agent’s transmission of Borrower Materials through the Internet, except to the
extent that such losses, claims, damages, liabilities or expenses are determined by a court of
competent jurisdiction by a final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Agent Party; provided, however, that in no
event shall any Agent Party have any liability to the Borrower, any Lender or any other Person for
indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual
damages).

(d) Change of Address, Etc. Each of the Borrower and the Administrative Agent may
change its address, telecopier or telephone number for notices and other communications hereunder
by notice to the other parties hereto. Each other Lender may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to the Borrower and the
Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time
to time to ensure that the Administrative Agent has on record (i) an effective address, contact
name, telephone number, telecopier number and electronic mail address to which notices and other
communications may be sent and (ii) accurate wire instructions for such Lender.

(e) Reliance by Administrative Agent and Lenders. The Administrative Agent and the
Lenders 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 Agents, each Lender and the Agent-Related
Parties of each of them from all losses, costs, expenses and liabilities resulting from the
reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All
telephonic notices to and other telephonic communications with the
Administrative Agent may be recorded by the Administrative Agent, and each of the parties
hereto hereby consents to such recording.

 

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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, each Lender is authorized at any time and from
time to time, without presentment, demand, protest or other notice of any kind (all of which rights
being hereby expressly waived), to set-off and to appropriate and apply any and all deposits
(general or special) and any other indebtedness at any time held or owing by such Lender
(including, without limitation, branches, agencies or Affiliates of such Lender wherever located)
to or for the credit or the account of the Borrower against obligations and liabilities of the
Borrower to the Lenders hereunder, under the Notes, the other Credit Documents or otherwise,
irrespective of whether the Administrative Agent or the Lenders shall have made any demand
hereunder and although such obligations, liabilities or claims, or any of them, may be contingent
or unmatured, and any such set-off shall be deemed to have been made immediately upon the
occurrence of an Event of Default even though such charge is made or entered on the books of such
Lender subsequent thereto. The Borrower hereby agrees that any Person purchasing a participation
in the Loans and Commitments hereunder pursuant to Sections 3.8 or 11.3(e) may exercise all rights
of set-off with respect to its participation interest as fully as if such Person were a Lender
hereunder.

11.3 Successors and Assigns.

(a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of the Administrative Agent and
each Lender and no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of
this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of
this Section, (iii) by way of pledge or assignment of a security interest subject to the
restrictions of subsection (f) of this Section, or (iv) to an SPC in accordance with the provisions
of subsection (h) of this Section (and any other attempted assignment or transfer by any party
hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section
and, to the extent expressly contemplated hereby, the Agent-Related Parties of each of the Agents
and the Lenders) any legal or equitable right, remedy or claim under or by reason of this
Agreement.

 

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(b) Assignments by Lenders.

(i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may at
any time assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment and the
Loans at the time owing to it) with the prior written consent of:

(A) the Borrower (such consent not to be unreasonably withheld); provided that no
consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender,
an Approved Fund with respect to a Lender or, if a Default or an Event of Default has occurred and
is continuing, any other Person; and

(B) the Administrative Agent, provided that no consent of the Administrative Agent
shall be required for an assignment of all or any portion of a Loan to a Lender, an affiliate of a
Lender or an Approved Fund with respect to any Lender.

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved
Fund with respect to any Lender or an assignment of the entire remaining amount of the assigning
Lender’s Commitments or Loans, the amount of the Commitments or Loans of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent) shall not be less than
$1,000,000 unless each of the Borrower and the Administrative Agent otherwise consent;
provided that (1) no such consent of the Borrower shall be required if an Event of Default
has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender
and its Affiliates or Approved Funds, if any; and

(B) the parties to each assignment shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500,
and the Eligible Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent
an Administrative Questionnaire.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c)
of this Section, from and after the effective date specified in each Assignment and Assumption, the
Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest
assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations
under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be
entitled to the benefits of Sections 3.9, 3.11, 3.12, 3.13, 3.14 and 11.5(b) with respect to facts
and circumstances occurring prior to the effective date of such assignment. Upon request, the
Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment
or transfer by a Lender of rights or obligations under this Agreement that does not comply with
this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with subsection (d) of this Section.

 

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(c) Register. The Administrative Agent, acting solely for this purpose as an agent of
the Borrower, shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each
Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the
Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by the Borrower at any reasonable time and from time to time upon
reasonable prior notice. In addition, at any time that a request for a consent for a material or
substantive change to the Credit Documents is pending, any Lender may request and receive from the
Administrative Agent a copy of the Register.

(d) Participations. Any Lender may at any time, without the consent of, or notice to,
the Borrower or the Administrative Agent, sell participations to any Person (other than a natural
person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a
“Participant”) in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans owing to it);
provided that (i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent and the Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender’s rights and obligations
under this Agreement.

Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described in the first proviso to
Section 11.6 that affects such Participant. Subject to subsection (e) of this Section, the
Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.9, 3.11,
3.12, 3.13 and 3.14 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to subsection (b) of this Section. To the extent permitted by Law, each
Participant also shall be entitled to the benefits of Section 3.7 as though it were a Lender;
provided such Participant agrees to be subject to Section 3.8 as though it were a Lender.

(e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Sections 3.9, 3.11, 3.12, 3.13 or 3.14 than the applicable Lender
would have been entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the Borrower’s prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to
the benefits of Section 3.13 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section
3.13(f) as though it were a Lender.

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

 

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(g) Electronic Execution of Assignments. The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of which shall be of the
same legal effect, validity or enforceability as a manually executed signature or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as provided for in any
applicable law, including the Federal Electronic Signatures in Global and National Commerce Act,
the New York State Electronic Signatures and Records Act, or any other similar state laws based on
the Uniform Electronic Transactions Act.

(h) Special Purpose Funding Vehicles. Notwithstanding anything to the contrary
contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding
vehicle identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Borrower (an “SPC”) the option to provide all or any part of
any Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement;
provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Loan,
and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of
such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof.
Each party hereto hereby agrees that (i) neither the grant to any SPC nor the exercise by any SPC
of such option shall increase the costs or expenses or otherwise increase or change the obligations
of the Borrower under this Agreement (including its obligations under Sections 3.9, 3.11, 3.12,
3.13 and 3.14), (ii) no SPC shall be liable for any indemnity or similar payment obligation under
this Agreement for which a Lender would be liable, and (iii) the Granting Lender shall for all
purposes, including the approval of any amendment, waiver or other modification of any provision of
any Credit Document, remain the lender of record hereunder. The making of a Loan by an SPC
hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such
Loan were made by such Granting Lender. In furtherance of the foregoing, each party hereto hereby
agrees (which agreement shall survive the termination of this Agreement) that, prior to the date
that is one year and one day after the payment in full of all outstanding commercial paper or other
senior debt of any SPC, it will not institute against, or join any other Person in instituting
against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation
proceeding under the laws of the United States or any State thereof. Notwithstanding anything to
the contrary contained herein, any SPC may (A) with notice to, but without prior consent of the
Borrower and the Administrative Agent and with the payment of a processing fee in the amount of
$2,500, assign all or any portion of its right to receive payment with respect to any Loan to the
Granting Lender and (B) disclose on a confidential basis any non-public information relating to its
funding of Loans to any rating agency, commercial paper dealer or provider of any surety or
guarantee or credit or liquidity enhancement to such SPC.

11.4 No Waiver; Remedies Cumulative.

No failure or delay on the part of the Administrative Agent or any Lender in exercising any
right, power or privilege hereunder or under any other Credit Document and no course of dealing
between the Borrower and the Administrative Agent or any Lender shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or privilege
hereunder or under any other Credit Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies
provided herein are cumulative and not exclusive of any rights or remedies which the Administrative
Agent or any Lender would otherwise have. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Administrative Agent or the Lenders to any other or
further action in any circumstances without notice or demand.

 

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

(a) The Borrower agrees (i) to pay or reimburse the Agents and the Arrangers for all
reasonable costs and expenses incurred in connection with the development, preparation, negotiation
and execution of this Agreement and the other Credit Documents and any amendment, waiver, consent
or other modification of the provisions hereof and thereof (whether or not the transactions
contemplated hereby or thereby are consummated), and the consummation and administration of the
transactions contemplated hereby and thereby, including all reasonable fees and expenses of legal
counsel, and (ii) to pay or reimburse the Agents, the Arrangers and each Lender for all costs and
expenses incurred in connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or the other Credit Documents (including all such costs and
expenses incurred during any “workout” or restructuring in respect of the Borrower Obligations and
during any legal proceeding, including any proceeding under any Debtor Relief Law), including all
reasonable fees and expenses of legal counsel. The foregoing costs and expenses shall include all
search, filing, recording, and appraisal charges and fees and taxes related thereto, and other
reasonable out-of-pocket expenses incurred by the Agents and the Arrangers and the cost of
independent public accountants and other outside experts retained by the Agents, the Arrangers or
any Lender. Other than costs and expenses payable in connection with the closing of the
transactions contemplated by this Agreement pursuant to this Section 11.5(a) (which shall be
payable on the Closing Date unless otherwise agreed by the Agents and the Arrangers), all amounts
due under this Section 11.5 shall be payable within ten Business Days after demand therefor. The
agreements in this Section shall survive the termination of the Commitments 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 Agent, each Agent-Related Party, each Lender and their respective
Affiliates, directors, officers, employees, counsel, agents and attorneys-in-fact (collectively the
“Indemnitees”) from and against any and all liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including
the reasonable fees and expenses of legal counsel) of any kind or nature whatsoever which may at
any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to
or arising out of or in connection with (i) the execution, delivery, enforcement, performance or
administration of any Credit Document or any other agreement, letter or instrument delivered in
connection with the transactions contemplated thereby or the consummation of the transactions
contemplated thereby, (ii) any Commitment or 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,

 

66

 

(iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation for, or defense of
any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether
any Indemnitee is a party thereto or (v) any civil penalty or fine assessed by Office of Foreign
Assets Control (the “OFAC”) against, and all reasonable costs and expenses (including
counsel fees and disbursements) incurred in connection with defense thereof, by any Indemnitee as a
result of conduct of the Borrower that violates a sanction enforced by OFAC (all the foregoing,
collectively, the “Indemnified Liabilities”), in all cases, whether or not caused by or
arising, in whole or in part, out of the negligence of the Indemnitee; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs,
expenses or disbursements are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful misconduct of such
Indemnitee. No Indemnitee shall be liable for any damages arising from the use by others of any
information or other materials obtained through IntraLinks or other similar information
transmission systems in connection with this Agreement, nor shall any Indemnitee have any liability
for any indirect or consequential damages relating to this Agreement or any other Credit Document
or arising out of its activities in connection herewith or therewith (whether before or after the
Closing Date).

(c) To the extent that the Borrower for any reason fails to indefeasibly pay any amount
required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent
(or any sub-agent thereof) or any Agent-Related Party of any of the foregoing, each Lender
severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Agent-Related
Party, as the case may be, such Lender’s pro rata share (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the Administrative Agent
(or any such sub-agent) in its capacity as such, or against any Agent-Related Party of any of the
foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such
capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions
of Section 3.2(d).

All amounts due under this Section 11.5 shall be payable within ten Business Days after demand
therefor. The agreements in this Section shall survive the resignation of the Administrative
Agent, the replacement of any Lender, the termination of the Commitments 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 Agreement or any other Credit Document, and no
consent to any departure by the Borrower therefrom, shall be effective unless in writing signed by
the Required Lenders and the Borrower and acknowledged by the Administrative Agent, and each such
waiver or consent shall be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such amendment, waiver or consent shall:

(a) waive any condition set forth in Section 4.1 or Section 5.1 without the written consent of
each Lender;

(b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated
pursuant to Section 2.1(a), Section 3.3(b) or Section 9.2) without the written consent of such
Lender;

 

67

 

(c) postpone any date fixed by this Agreement or any other Credit Document for any payment
(including mandatory prepayments) of principal, interest, fees or other amounts due to the Lenders
(or any of them) or any scheduled or mandatory reduction of the Commitments hereunder or under any
other Credit Document without the written consent of each Lender directly affected thereby;

(d) amend, waive, modify or otherwise consent to any change of any of the terms of Section
3.3(b) or Section 7.12 without the written consent of each Lender;

(e) reduce or forgive the principal of, or the rate of interest specified herein on, any Loan
or any fees or other amounts payable hereunder or under any other Credit Document without the
written consent of each Lender directly affected thereby; provided, however, that
only the consent of the Required Lenders shall be necessary to amend the definition of “Default
Rate”;

(f) change Section 3.8 or Section 9.3 in a manner that would alter the pro rata sharing of
payments required thereby without the written consent of each Lender; or

(g) change any provision of this Section or the definition of “Required Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to amend, waive or
otherwise modify any rights hereunder or make any determination or grant any consent hereunder
without the written consent of each Lender;

and, provided further, (i) no amendment, waiver or consent shall, unless in writing
and signed by the Administrative Agent in addition to the Lenders required above, affect the rights
or duties of the Administrative Agent under this Agreement or any other Credit Document; (ii)
Section 11.3(h) may not be amended, waived or otherwise modified without the consent of each
Granting Lender all or any part of whose Loans are being funded by an SPC at the time of such
amendment, waiver or other modification; and (iii) the Fee Letter may be amended, or rights or
privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove
any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be
increased or extended without the consent of such Lender. Notwithstanding the foregoing, this
Agreement may be amended (or amended and restated) without the written consent of the Lenders or
the Borrower to effect any change associated with the effects of Section 11.7.

 

68

 

11.7 Most Favored Nation.

The Borrower agrees that, to the extent that either the Existing Credit Agreement or the
Letter of Credit Facility is amended, modified, supplemented, restated, amended and restated or
replaced, or any new credit facility is entered into by the Borrower or one of its
Subsidiaries after the date hereof that imposes upon the Borrower any material agreement, covenant,
default or other condition that is more restrictive than any of the agreements, covenants, defaults
or conditions set forth in this Agreement, then such new more restrictive agreements, covenants,
defaults or other conditions shall be deemed to be incorporated herein by reference for the benefit
of the Lenders, and shall continue in effect for purposes of this Agreement regardless of any
termination or any amendment or waiver of, or any consent to any deviation from, or any
modification of, the Existing Credit Agreement, the Letter of Credit Facility or such new credit
facility, as the case may be. The Borrower and the Administrative Agent agree (without any
requirement to receive any consent from the Lenders), no later than thirty days following any such
imposition, to amend the provisions of this Agreement to reflect such new more restrictive
agreements, covenants, defaults or other conditions.

11.8 Counterparts.

This 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.

11.9 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 Agreement.

11.10 Survival of Indemnification and Representations and Warranties.

(a) Survival of Indemnification. All indemnities set forth herein shall survive the
execution and delivery of this Agreement, the making of any Loans and the repayment of the Loans
and other Borrower Obligations and the termination of the Commitments hereunder.

(b) Survival of Representations and Warranties. All representations and warranties
made hereunder and in any other Credit Document or other document delivered pursuant hereto or
thereto or in connection herewith or therewith shall survive the execution and delivery hereof and
thereof. Such representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by the Administrative
Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any
Lender may have had notice or knowledge of any Default or Event of Default at the time of any
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.

11.11 Governing Law; Venue; Service.

(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. Any legal action or proceeding with respect to this
Agreement or any other Credit Document may be brought in the courts of the State of New York or of
the United States for the Southern District of New York, and, by
execution and delivery of this Agreement, the Borrower hereby irrevocably accepts for itself
and in respect of its Property, generally and unconditionally, the jurisdiction of such courts.

 

69

 

(b) The Borrower irrevocably consents to the service of process in any action or proceeding
with respect to this Agreement or any other Credit Document by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at the address for notices pursuant to Section
11.1, such service to become effective ten days after such mailing. Nothing herein shall affect
the right of a Lender to serve process in any other manner permitted by Law.

11.12 Waiver of Jury Trial; Waiver of Consequential Damages.

EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE
OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY. Each of the parties to
this Agreement agrees not to assert any claim against any other party hereto, any Agent, any
Lender, any of their Affiliates, or any of their respective directors, officers, employees,
attorneys or agents, on any theory of liability, for special, indirect, consequential or punitive
damages arising out of or otherwise relating to any of the transactions contemplated herein and in
the other Credit Documents.

11.13 Severability.

If any provision of any of the Credit Documents is determined to be illegal, invalid or
unenforceable, such provision shall be fully severable and the remaining provisions shall remain in
full force and effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.

11.14 Further Assurances.

The Borrower agrees, upon the request of the Administrative Agent, to promptly take such
actions, as reasonably requested, as is necessary to carry out the intent of this Agreement and the
other Credit Documents.

11.15 Confidentiality.

Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to its Affiliates and
to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors
and representatives (it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority purporting to have
jurisdiction over it 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 Credit Document or any
action or proceeding relating to this Agreement or any other Credit Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or Participant in, or
any prospective assignee of or Participant in, any of its rights or obligations under this
Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Borrower and its obligations, (g) with the consent of the
Borrower or (h) to the extent such Information (x) becomes publicly available other than as a
result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender
or any of their respective Affiliates on a nonconfidential basis from a source other than the
Borrower.

 

70

 

For purposes of this Section, “Information” means all information received from the
Borrower or any Subsidiary or any of their respective businesses, other than any such information
that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by the Borrower or any Subsidiary; provided that, in the case of information
received from the Borrower or any Subsidiary after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own confidential
information.

11.16 Entirety.

This Agreement together with the other Credit 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 Credit Documents or the
transactions contemplated herein and therein.

11.17 Binding Effect; Continuing Agreement.

(a) This Agreement shall become effective at such time when all of the conditions set forth in
Section 5.1 have been satisfied or waived by the Lenders and it shall have been executed by the
Borrower and each Agent, and the Administrative Agent shall have received copies hereof (telefaxed
or otherwise) which, when taken together, bear the signatures of each Lender, and thereafter this
Agreement shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent
and each Lender and their respective successors and assigns.

(b) This 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 and all
Commitments have been terminated. Upon termination, the Borrower shall have no further obligations
(other than the indemnification provisions and other provisions that by their terms survive) under
the Credit Documents; provided that should any payment, in whole or in part, of the
Borrower Obligations be rescinded or otherwise required to be restored or returned by the
Administrative Agent or any Lender, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, then the Credit Documents shall automatically be reinstated and all
amounts required to be restored or returned and all costs and expenses incurred by the
Administrative Agent or any Lender in connection therewith shall be deemed included as part of the
Borrower Obligations.

 

71

 

11.18 Regulatory Statement.

Pursuant to the terms of an order issued by the New Mexico Public Regulation Commission, the
Borrower is required to include the following separateness covenants in any debt instrument:

(a) The Borrower and its corporate parent, PNM Resources, Inc. (“Parent”) are
being operated as separate corporate and legal entities. In agreeing to make loans to
Parent, Parent’s lenders are relying solely on the creditworthiness of Parent based on the
assets owned by Parent, and the repayment of the loan will be made solely from the assets of
Parent and not from any assets of the Borrower; and the Parent’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
the Borrower.

(b) Notwithstanding any of the foregoing set forth in this Section 11.18, the Borrower
and the Lenders hereby acknowledge and agree that (i) this Agreement and the Notes evidence
Indebtedness of the Borrower and not of the Parent, (ii) the Lenders are not, and shall not
at any time be deemed to be, “Parent’s lenders” under this Agreement and the Notes, (iii) as
set forth in this Agreement and the Notes, the Borrower is responsible for the repayment of
all amounts outstanding hereunder, (iv) the Lenders reserve all rights to pursue any and all
remedies available at law and otherwise (including, without limitation, in bankruptcy)
should the Borrower breach any of the its obligations under this Agreement and/or the Notes.

11.19 USA Patriot Act Notice.

Each Lender and each Agent (for itself and not on behalf of any Lender) hereby notifies the
Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and
record information that identifies the Borrower, which information includes the name and address of
the Borrower and other information that will allow such Lender or the Administrative Agent, as
applicable, to identify the Borrower in accordance with the Act.

11.20 Acknowledgment.

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

 

72

 

11.21 Replacement of Lenders.

If (a) any Lender requests compensation under Section 3.12, (b) the Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 3.13, or (c) a Lender (a “Non-Consenting Lender”) does not
consent to a proposed change, waiver, discharge or termination with respect to any Credit
Document that has been approved by the Required Lenders as provided in Section 11.6, but requires
unanimous consent of all Lenders or all Lenders directly affected thereby (as applicable) or (d)
any Lender is a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained in, and consents
required by, Section 11.3), all of its interests, rights and obligations under this Agreement and
the related Credit Documents to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that:

(i) the Borrower shall have paid to the Administrative Agent the assignment fee
specified in Section 11.3(b);

(ii) such Lender shall have received payment of an amount equal to the outstanding
principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable
to it hereunder and under the other Credit Documents (including any amounts under Section
3.14) from the assignee (to the extent of such outstanding principal and accrued interest
and fees) or the Borrower (in the case of all other amounts);

(iii) in the case of any such assignment resulting from a claim for compensation under
Section 3.12 or payments required to be made pursuant to Section 3.13, such assignment will
result in a reduction in such compensation or payments thereafter; and

(iv) such assignment does not conflict with applicable Laws; and

(v) in the case of any such assignment resulting from a Non-Consenting Lender’s failure
to consent to a proposed change, waiver, discharge or termination with respect to any Credit
Document, the applicable replacement bank or financial institution consents to the proposed
change, waiver, discharge or termination; provided that the failure by such
Non-Consenting Lender to execute and deliver an Assignment and Assumption shall not impair
the validity of the removal of such Non-Consenting Lender and the mandatory assignment of
such Non-Consenting Lender’s Commitments and outstanding Loans pursuant to this Section
shall nevertheless be effective without the execution by such Non-Consenting Lender of an
Assignment and Assumption.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

73

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their proper and duly authorized officers as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	PUBLIC SERVICE COMPANY OF NEW MEXICO, as Borrower	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Terry R. Horn
 

Name: Terry R. Horn
	 	 
	 

	 	 	 	Title: Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	MERRILL LYNCH CAPITAL CORPORATION,

 as Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Arminee Bowler	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Arminee Bowler	 	 
	 

	 	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	MORGAN STANLEY SENIOR FUNDING, INC., 

as Co-Syndication Agent,
Arranger and Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Peter Zippelius	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Peter Zippelius	 	 
	 

	 	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION,
 

as Co-Syndication Agent and Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Frederick W. Price	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Frederick W. Price	 	 
	 

	 	 	 	Title: Managing Director	 	 

 

 

 

	 	 	 	 	 
	 	 	MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED, as Arranger
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Karl F. Schlopy
	 

	 	 	 	 

	 

	 	 	 	Name: Karl F. Schlopy
	 

	 	 	 	Title: Managing Director
	 
	 	 	 	 
	 	 	MERRILL LYNCH BANK USA, as Lender
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Louis Alder
	 

	 	 	 	 

	 

	 	 	 	Name: Louis Alder
	 

	 	 	 	Title: First Vice President
	 
	 	 	 	 
	 	 	WACHOVIA CAPITAL MARKETS LLC, as Arranger
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Andrew J. Gamble
	 

	 	 	 	 

	 

	 	 	 	Name: Andrew J. Gamble
	 

	 	 	 	Title: Managing Director

 

2

 

Schedule 1.1(a)

Commitments

	 	 	 	 	 
	Lender	 	Commitment	 
	Merrill Lynch Bank USA
	 	$	100,000,000	 
	Morgan Stanley Senior Funding, Inc.
	 	$	100,000,000	 
	Wachovia Bank, National Association
	 	$	100,000,000	 
	 
	 	 	 
	Total
	 	$	300,000,000	 
	 
	 	 	 

 

 

 

SCHEDULE 6.18

MATERIAL LEASES

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Description	 	Expiration	 	 	Annual Rent	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Palo Verde Unit 1
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	1.1		 	 	Facility Lease dated as of December 16, 1985, between Public
Service Company of New Mexico
(“PNM”) and U. S. Bank National
Association (successor in
interest to State Street Bank and
Trust Company, as successor to
The First National Bank of
Boston) (“U. S. Bank”), as Owner
Trustee under a Trust Agreement
dated as of December 16, 1985,
with MFS Leasing Corp. (“MFS”),
as Owner Participant, as amended.
	 	 	1/15/2015	 	 	$	5,580,122.54	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	1.2		 	 	Facility Lease dated as of December 16, 1985, between PNM
and U. S. Bank, as Owner Trustee
under a Trust Agreement dated as
of December 16, 1985, with
Daimler Chrysler Capital Services
(debis) LLC, a Delaware limited
liability company (as successor
to Daimler Chrysler Financial
Services Americas L.L.C.,
successor to Daimler Chrysler
Financial Services North America
L.L.C., successor to Chrysler
Financial Company L.L.C.,
successor to Chrysler Financial
Corporation), as Owner
Participant, as amended.
	 	 	1/15/2015	 	 	$	15,693,862.76	 
	 
	1.3		 	 	Facility Lease dated as of December 15, 1986, between PNM
and U. S. Bank, as Owner Trustee
under a Trust Agreement dated as
of December 15, 1986, with Palo
Verde 1-PNM December 75
Corporation
(successor-in-interest to Chase),
as Owner Participant, as amended.
	 	 	1/15/2015	 	 	$	4,757,769.00	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	1.4		 	 	Facility Lease dated as of July 31, 1986, between PNM and U.
S. Bank, as Owner Trustee under a
Trust Agreement dated as of
July 31, 1986, with Palo
Verde 1-PNM August 50 Corporation
(successor-in-interest to Chase
Manhattan Realty Leasing
Corporation (“Chase”)), as Owner
Participant, as amended.
	 	 	1/15/2015	 	 	$	6,974,313.00	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Total Unit 1
	 	 	 	 	 	$	33,006,067.01	 

 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	Description	 	Expiration	 	Annual Rent	 
	 	 	 
	 	 	 	 	 	 
	 	 	Palo Verde Unit 2
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	2.1	 	Facility Lease dated as of August 12, 1986, between PNM and U.
S. Bank, as Owner Trustee under a
Trust Agreement dated as of
August 12, 1986, with MFS, as Owner
Participant, as amended.
	 	1/15/2016	 	$	5,742,060.00	 
	 	 	 
	 	 	 	 	 	 
	2.2	 	Facility Lease dated as of August 12, 1986, between PNM and U.
S. Bank, as Owner Trustee under a
Trust Agreement dated as of
August 12, 1986, with CGI Capital,
Inc., as Owner Participant, as
amended.
	 	1/15/2016	 	$	9,958,478.04	 
	 	 	 
	 	 	 	 	 	 
	2.3	 	Facility Lease dated as of August 12, 1986, between PNM and U.
S. Bank, as Owner Trustee under a
Trust Agreement dated as of
August 12, 1986, with PNMR
Development and Management
Corporation (as assignee of Palo
Verde Leasing Corporation,
successor-in-interest to First
Chicago Lease Holdings, Inc.), as
Owner Participant, as amended.
	 	1/15/2016	 	$	9,569,653.00	 
	 	 	 
	 	 	 	 	 	 
	2.4	 	Facility Lease dated as of August 12, 1986, between PNM and U.
S. Bank, as Owner Trustee under a
Trust Agreement dated as of
August 12, 1986, with MFS
(successor-in-interest to Beneficial
Leasing Group, Inc.), as Owner
Participant, as amended.
	 	1/15/2016	 	$	4,743,012.00	 
	 	 	 
	 	 	 	 	 	 
	2.5	 	Facility Lease dated as of December 15, 1986, between PNM and U. S.
Bank, as Owner Trustee under a Trust
Agreement dated as of December 15,
1986, with PV2-PNM December 35
Corporation (successor-in-interest
to Chase), as Owner Participant, as
amended.
	 	1/15/2016	 	$	3,272,560.40	 
	 	 	 
	 	 	 	 	 	 
	 	 	Total Unit 2
	 	 	 	$	33,285,763.44	 
	 	 	 
	 	 	 	 	 	 
	 	 	Eastern Interconnection Project (EIP)
	 	 	 	 	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	Amended and Restated Lease dated as of September 1. 1993 between PNM as
	 	4/1/2015	 	$	2,675,739.30	*
	 	 	Lessee and U.S. Bank, as Owner
Trustee under a Trust Agreement
dated as of January 2, 1985 with
General Foods Corporation, as
Lessor.
	 	 	 	$	2,844,913.50	 
	 	 	 
	 	 	 	 	 	 
	 	 	Total EIP
	 	 	 	$	2,675,739.30	*
	 	 	 
	 	 	 	$	2,844,913.50	 
	 	 	 
	 	 	 	 	 	 
	 	 	 
	 	 	 	*1994 Only	 

 

 

 

SCHEDULE 6.19

MATERIAL LEASE INTEREST PAYMENTS AND DISCOUNT RATE

EIP (12.85%)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total	 	 	Principal	 	 	Interest	 	 	Loan	 
	Date	 	Payment	 	 	Payment	 	 	Payment	 	 	Balance EoY	 
	2002
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4,638,915	 
	2003
	 	 	1,250,043	 	 	 	664,042	 	 	 	586,001	 	 	 	3,974,873	 
	2004
	 	 	1,589,597	 	 	 	1,113,483	 	 	 	476,114	 	 	 	2,861,390	 
	2005
	 	 	1,299,597	 	 	 	971,162	 	 	 	328,435	 	 	 	1,890,229	 
	2006
	 	 	608,408	 	 	 	377,028	 	 	 	231,380	 	 	 	1,513,201	 
	2007
	 	 	642,648	 	 	 	462,245	 	 	 	180,402	 	 	 	1,050,955	 
	2008
	 	 	683,422	 	 	 	565,607	 	 	 	117,815	 	 	 	485,348	 
	2009
	 	 	58,795	 	 	 	-3,678	 	 	 	62,474	 	 	 	489,027	 
	2010
	 	 	112,898	 	 	 	49,936	 	 	 	62,962	 	 	 	439,091	 
	2011
	 	 	53,990	 	 	 	-2,495	 	 	 	56,485	 	 	 	441,586	 
	2012
	 	 	498,398	 	 	 	441,586	 	 	 	56,811	 	 	 	0	 
	2013
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2014
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2015
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2016
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2017
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2018
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2019
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2020
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

PVNG (10.25%)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Total	 	 	Interest	 	 	Principal	 	 	Loan	 
	Date	 	Payment	 	 	Payment	 	 	Payment	 	 	Balance EoY	 
	2002
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	119,432,650	 
	2003
	 	 	12,682,996	 	 	 	12,241,847	 	 	 	441,149	 	 	 	118,991,501	 
	2004
	 	 	12,667,756	 	 	 	12,196,629	 	 	 	471,127	 	 	 	118,520,374	 
	2005
	 	 	14,380,430	 	 	 	12,148,338	 	 	 	2,232,092	 	 	 	116,288,282	 
	2006
	 	 	15,239,058	 	 	 	11,919,549	 	 	 	3,319,509	 	 	 	112,968,773	 
	2007
	 	 	16,147,881	 	 	 	11,579,299	 	 	 	4,568,582	 	 	 	108,400,191	 
	2008
	 	 	17,117,049	 	 	 	11,111,020	 	 	 	6,006,029	 	 	 	102,394,162	 
	2009
	 	 	14,895,517	 	 	 	10,495,402	 	 	 	4,400,115	 	 	 	97,994,046	 
	2010
	 	 	13,670,429	 	 	 	10,044,390	 	 	 	3,626,039	 	 	 	94,368,007	 
	2011
	 	 	14,513,604	 	 	 	9,672,721	 	 	 	4,840,883	 	 	 	89,527,124	 
	2012
	 	 	26,655,935	 	 	 	9,176,530	 	 	 	17,479,405	 	 	 	72,047,719	 
	2013
	 	 	29,233,436	 	 	 	7,384,891	 	 	 	21,848,545	 	 	 	50,199,174	 
	2014
	 	 	34,358,781	 	 	 	5,145,415	 	 	 	29,213,366	 	 	 	20,985,809	 
	2015
	 	 	19,428,445	 	 	 	2,151,045	 	 	 	17,277,400	 	 	 	3,708,409	 
	2016
	 	 	4,088,521	 	 	 	380,112	 	 	 	3,708,409	 	 	 	0	 
	2017
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2018
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2019
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2020
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

 

Schedule 11.1

If to the Borrower:

Public Service Company of New Mexico

Alvarado Square

Albuquerque, New Mexico 87158

Attention: Terry R. Horn

Tel: 505-241-2119

If to the Administrative Agent:

Merrill Lynch Capital Corporation

4 World Financial Center

250 Vesey Street

New York, NY 10080

Attention: Wajeeh Faheem

Tel: 212-449-3068

 

 

 

EXHIBIT 2.1(b)

FORM OF

NOTICE OF BORROWING

	 	 	 
	TO:

	 	MERRILL LYNCH CAPITAL CORPORATION, as Administrative Agent
	 
	 	 
	RE:

	 	Delayed Draw Term Loan Agreement dated as of May
 _____, 2008 among
Public Service Company of New Mexico (the “Borrower”), Merrill Lynch
Capital Corporation, (the “Administrative Agent”), and the Lenders
identified therein (as the same may be amended, modified, extended
or restated from time to time, the “Term Loan Agreement”)
	 
	 	 
	DATE:

	 	                    ,
 _____ 

	1.	 	This Notice of Borrowing is made pursuant to the terms of the Term Loan Agreement. All
capitalized terms used herein unless otherwise defined shall have the meanings set forth in
the Term Loan Agreement.

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

	 	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Principal amount of requested
Loans
	 	$	                    
	 
	 	 	 	 	 	 	 	 
	 

	 	(b)
	 	Borrowing Date
	 	 	                    
	 
	 	 	 	 	 	 	 	 
	 

	 	(c)
	 	Interest rate applicable to the
requested Loans:	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(i) ________	Base Rate
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	(ii) ________	Eurodollar Rate for an Interest Period of:
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	                     one month
	 	 	 	 	 	                     two months
	 	 	 	 	 	                     three months
	 	 	 	 	 	                     six months

	3.	 	The representations and warranties made by the undersigned in any Credit Document (other than
the representation and warranties in Section 6.7(a) (but only with respect to clause (a) of
the definition of Material Adverse Effect) and Section 6.9 of the Term Loan Agreement) are
true and correct in all material respects at and as if made on the date of the requested Loans
except to the extent they expressly relate to an earlier date.

	4.	 	No Default or Event of Default as to the undersigned exists or shall be continuing either
prior to or after giving effect to the Loans made pursuant to this Notice of Borrowing.

	5.	 	Unless waived by the Person entitled thereto, the Borrower has paid all fees and expenses
owed by the Borrower to the Administrative Agent, the Arrangers and the Lenders on or before
the date of this Notice of Borrowing, including, without limitation, all Funding Fees.

	 	 	 	 	 	 	 
	 	 	PUBLIC SERVICE COMPANY OF NEW MEXICO,

a New Mexico corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 
 

	 	 
	 

	 	Name:	 	 
 

	 	 
	 

	 	Title:	 	 
 

	 	 

 

1

 

EXHIBIT 2.1(e)

FORM OF NOTE

			
	 	 	 
	Lender:                     
	 	                    , 200    

FOR VALUE RECEIVED, PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation (the
“Borrower”), hereby promises to pay to the order of the Lender referenced above (the
“Lender”), at the Administrative Agent’s Office set forth in that certain Delayed Draw Term
Loan Agreement dated as of May
 _____, 2008 (as amended, modified, extended or restated from time to
time, the “Term Loan Agreement”) among the Borrower, the Lenders party thereto (including
the Lender) and Merrill Lynch Capital Corporation, as Administrative Agent (the “Administrative
Agent”) (or at such other place or places as the holder of this Note may designate), the
aggregate unpaid principal amount of the Loans made by the Lender to the Borrower under the Term
Loan Agreement, in lawful money and in immediately available funds, on the dates and in the
principal amounts provided in the Term Loan Agreement (but, in any event, no later than the
Maturity Date), and to pay interest on the unpaid principal amount of each Loan made by the Lender,
at such office, in like money and funds, for the period commencing on the date of each Loan until
each Loan shall be paid in full, at the rates per annum and on the dates provided in the Term Loan
Agreement.

This Note is one of the Notes referred to in the Term Loan Agreement and evidences Loans made
by the Lender to the Borrower thereunder. Capitalized terms used in this Note have the respective
meanings assigned to them in the Term Loan Agreement and the terms and conditions of the Term Loan
Agreement are expressly incorporated herein and made a part hereof.

The Term Loan Agreement provides for the acceleration of the maturity of the Loans evidenced
by this Note upon the occurrence of certain events (and for payment of collection costs in
connection therewith) and for prepayments of Loans upon the terms and conditions specified therein.
In the event this Note is not paid when due at any stated or accelerated maturity, the Borrower
agrees to pay, in addition to principal and interest, all costs of collection, including reasonable
attorney fees.

The date, amount, type, interest rate and duration of Interest Period (if applicable) of each
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 Term Loan Agreement or under this Note in respect of
the Loans 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 Term 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.

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

	 	 	 	 	 	 	 
	 	 	PUBLIC SERVICE COMPANY OF NEW MEXICO,

a New Mexico corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 
 

	 	 
	 

	 	Name:	 	 
 

	 	 
	 

	 	Title:	 	 
 

	 	 

 

 

 

EXHIBIT 2.2

FORM OF

NOTICE OF CONTINUATION/CONVERSION

			
	TO:	 	MERRILL LYNCH CAPITAL CORPORATION, as Administrative Agent

			
	RE:	 	Delayed Draw Term Loan Agreement dated as of May __, 2008 among
Public Service Company of New Mexico (the “Borrower”), Merrill Lynch
Capital Corporation, (the “Administrative Agent”), and the Lenders
identified therein (as the same may be amended, modified, extended
or restated from time to time, the “Term Loan Agreement”).

			
	DATE:	 	             
       ,
200         

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

	2.	 	Please be advised that the Borrower, is requesting that a portion of the current outstanding
Loans in the amount of $            ,
currently accruing interest at
               
     , be extended or converted as of     
                ,
200_____ 

at the interest rate option set forth in paragraph 3 below.

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

	 	a.	 	             
            the Base Rate
	 
	 	b.	 	             
            the 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.

	 	 	 	 	 	 	 
	 	 	PUBLIC SERVICE COMPANY OF NEW MEXICO,

a New Mexico corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

 

 

 

EXHIBIT 3.3(b)(iii)

FORM OF

PREPAYMENT OPTION NOTICE

Attention of [   
       ]

Telecopy No. [          ]

[Date]

Ladies and Gentlemen:

The undersigned, Merrill
Lynch Capital Corporation, as administrative agent (in such capacity,
the “Administrative Agent”), refers to that certain Delayed Draw Term Loan Agreement dated
as of May
 _____, 2008 (as amended, modified, extended or restated from time to time, the “Term
Loan Agreement”) among Public Service Company of New Mexico, (the “Borrower”), the
Lenders party thereto and the Administrative Agent. Unless otherwise defined herein, terms defined
in the Term Loan Agreement and used herein shall have the meanings given to them in the Term Loan
Agreement. The Administrative Agent hereby gives notice of an offer of prepayment made by the
Borrower pursuant to Section 3.3(b)(iii) of the Term Loan Agreement of the Prepayment Amount.
Amounts applied to prepay the Loans shall be applied pro rata to the Loan held by you. The portion
of the prepayment amount to be allocated to the Loan held by you and the date on which such
prepayment will be made to you (should you elect to receive such prepayment) are set forth below:

	 	 	 	 	 
	(A)

	 	Total Prepayment Amount
	 	          
          
	 
	 	 	 	 
	(B)

	 	Portion of Prepayment
Amount to be received by you
	 	          
          
	 
	 	 	 	 
	(C)

	 	Mandatory Prepayment Date (10 Business Days after the
date of this Prepayment Option Notice)
	 	          
          

IF YOU DO NOT WISH TO RECEIVE
ALL OF THE PREPAYMENT AMOUNT TO BE ALLOCATED TO YOU ON THE
MANDATORY PREPAYMENT DATE INDICATED IN PARAGRAPH (C) ABOVE, please sign this notice in the space
provided below and indicate the percentage of the Prepayment Amount otherwise payable which you do
not wish to receive. Please return this notice as so completed via telecopy to the attention of
[               
               
          ] at 

[   
                
 ], no later than 10:00 a.m.,
New York City time, on the Mandatory Prepayment Date, at Telecopy No.

 [  
                
             ]. IF
YOU DO NOT RETURN THIS NOTICE, YOU WILL RECEIVE 100% OF THE LOAN PREPAYMENT ALLOCATED TO YOU ON THE
MANDATORY PREPAYMENT DATE.

	 	 	 	 	 
	 	MERRILL LYNCH CAPITAL CORPORATION,

 as
Administrative Agent

 	 
	 	By:  	 	 
	 	Title: 	 
	 	 	 	 
	 

	 	 	 	 	 
	             
               
               
           ,

(Name of Lender)	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Title:

	 	 

	 	 

Percentage of Loans

Prepayment
Amount Declined:
             %

 

 

 

EXHIBIT 7.1(c)

FORM OF

COMPLIANCE CERTIFICATE

			
	TO:	 	MERRILL LYNCH CAPITAL CORPORATION, as Administrative Agent

			
	RE:	 	Delayed Draw Term Loan Agreement dated as of May __, 2008 among
Public Service Company of New Mexico (the “Borrower”), Merrill Lynch
Capital Corporation, (the “Administrative Agent”), and the Lenders
identified therein (as the same may be amended, modified, extended
or restated from time to time, the “Term Loan Agreement”)

			
	DATE:	 	             
       , 200__

Pursuant to the terms of
the Term Loan Agreement, I,             
                
            , Chief Financial Officer
of Public Service Company of New Mexico, hereby certify on behalf of the Borrower that, as of the
quarter ending               
      , 200____, the statements below are accurate and complete in all respects (all
capitalized terms used below shall have the meanings set forth in the Term Loan Agreement):

a. Attached hereto as Schedule 1 are calculations (calculated as of the date of
the financial statements referred to in paragraph c. below) demonstrating compliance by the
Borrower with the financial covenants contained in Section 7.2 of the Term Loan Agreement.

b. No Default or Event of Default exists under the Term 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. The quarterly/annual financial statements for the fiscal quarter/year ended
              
      , 200_____ 
which accompany this certificate fairly present in all material respects
the financial condition of the Borrower and its Subsidiaries and have been prepared in
accordance with GAAP, subject to changes resulting from normal year-end audit adjustments
and except that the quarterly financial statements have fewer footnotes than annual
statements.

	 	 	 	 	 	 	 
	 	 	PUBLIC SERVICE COMPANY OF NEW MEXICO,

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
	 	.65 to 1.0	 

 

	 	 	 
	*	 	For purposes of such calculation, the portion of
Consolidated Indebtedness attributable to obligations under Material Leases
shall be the net present value (using (i) the discount rate (A) set forth in
Schedule 6.19 of the Term Loan Agreement, so long as such
Schedule 6.19 specifies the same relevant discount rate as is used in
calculating such net present value provided to Moody’s and S&P or (B) the
discount rate used in calculating such net present value provided to Moody’s
and S&P or (ii) any such other rate as shall be proposed by the Company (and
agreed upon by the Required Lenders) of all amounts payable under the Material
Leases.

 

 

 

EXHIBIT 11.3(b)

FORM OF

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between    
               
   (the
“Assignor”) and           
               
               
(the “Assignee”). Capitalized terms used
but not defined herein shall have the meanings given to them in the Delayed Draw Term Loan
Agreement identified below (as amended, the “Term Loan Agreement”), receipt of a copy of
which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in
Schedule 1 attached hereto (the “Standard Terms and Conditions”) are hereby agreed to and
incorporated herein by reference and made a part of this Assignment and Assumption as if set forth
herein in full.

For an agreed consideration,
the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Term Loan Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below (a) all or a portion of
the Assignor’s rights and obligations in its capacity as a Lender under the Term Loan Agreement and
any other documents or instruments delivered pursuant thereto to the extent related to the amount
and percentage interest identified below of all or a portion, as the case may be, of such
outstanding rights and obligations of the Assignor under the respective facilities identified below
(including without limitation any letters or credit, guarantees, and swingline loans included in
such facilities) and (b) to the extent permitted to be assigned under applicable law, all claims,
suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against
any Person, whether known or unknown, arising under or in connection with the Term Loan Agreement,
any other documents or instruments delivered pursuant thereto or the loan transactions governed
thereby or in any way based on or related to any of the foregoing, including, but not limited to,
contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or
in equity related to the rights and obligations sold and assigned pursuant to clause (a) above (the
rights and obligations sold and assigned pursuant to clauses (a) and (b) above being referred to
herein collectively as, the “Assigned Interest”). Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment and Assumption,
without representation or warranty by the Assignor.

	 	 	 	 	 
	1.

	 	Assignor:
	 	          
               
               
                    
	 
	 	 	 	 
	2.

	 	Assignee:
	 	         
              
               
              
        

and is an Affiliate/Approved Fund of         
            
	 
	 	 	 	 
	3.

	 	Borrower:
	 	Public Service Company of New Mexico
	 
	 	 	 	 
	4.

	 	Administrative Agent:
	 	Merrill Lynch Capital Corporation, as the Administrative Agent under the Term Loan Agreement

 

 

 

	 	 	 	 	 
	5.

	 	Term Loan Agreement:
	 	Term Loan Agreement dated as of May
 _____, 2008 among the Borrower, the Administrative Agent, and
the Lenders identified therein.
	 
	 	 	 	 
	6.

	 	Assigned Interest:	 	 

	 	 	 	 	 	 	 	 	 
	Aggregate Amount of	 	Amount of	 	 	 	 
	Commitment/Loans for all	 	Commitment/Loans	 	 	Percentage Assigned of	 
	Lenders	 	Assigned	 	 	Commitment/Loans	 
	$
	 	$	 	 	 	 	%	 

	7.	 	After giving effect to the foregoing assignment, the Assignor and the Assignee shall have the
following Commitments, pro rata shares and outstanding Loans:

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Outstanding	 
	 	 	Commitments	 	Pro Rata Share	 	 	Loans	 
	Assignor
	 	 	 	 	 	 	 	 	 	 
	Assignee
	 	 	 	 	 	 	 	 	 	 

Effective Date:
              
      
 _____, 200_____ 

 

 

 

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

	 	 	 	 	 	 	 
	 	 	ASSIGNOR	 	 
	 
	 	 	 	 	 	 
	 	 	[NAME OF ASSIGNOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	ASSIGNEE	 	 
	 
	 	 	 	 	 	 
	 	 	[NAME OF ASSIGNEE]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

Consented to and Accepted if applicable:

	 	 	 	 	 
	MERRILL LYNCH CAPITAL CORPORATION,

as Administrative Agent	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Consented to if applicable:	 	 
	 
	 	 	 	 
	PUBLIC SERVICE COMPANY OF NEW MEXICO.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 

 

 

 

SCHEDULE 1

TO EXHIBIT 11.3(b)

TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor.
 The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and
clear of any lien, encumbrance or other adverse claim and (iii) it has full power and
authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations made in or
in connection with the Term Loan Agreement or any other Credit Document, (ii) the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the Credit
Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any
of its Subsidiaries or Affiliates or any other Person obligated in respect of any Credit
Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or
Affiliates or any other Person of any of their respective obligations under any Credit
Document.

1.2.
Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver this
Assignment and Assumption and to consummate the transactions contemplated hereby and to
become a Lender under the Term Loan Agreement, (ii) it meets all requirements of an Eligible
Assignee under the Term Loan Agreement (subject to receipt of such consents as may be
required under the Term Loan Agreement), (iii) from and after the Effective Date, it shall
be bound by the provisions of the Term Loan Agreement as a Lender thereunder and, to the
extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it
has received a copy of the Term Loan Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 7.1 thereof, as applicable, and such
other documents and information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Assignment and Assumption and to purchase the Assigned
Interest on the basis of which it has made such analysis and decision independently and
without reliance on the Administrative Agent or any other Lender, and (v) if it is a foreign
lender, attached to the Assignment and Assumption is any documentation required to be
delivered by it pursuant to the terms of the Term Loan Agreement, duly completed and
executed by the Assignee; and (b) agrees that (i) it will, independently and without
reliance on the Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Documents, and (ii) it will
perform in accordance with their terms all of the obligations which by the terms of the
Credit Documents are required to be performed by it as a Lender.

2. Payments.
 From and after the Effective Date, the Administrative Agent shall make
all payments in respect of the Assigned Interest (including payments of principal, interest, fees
and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective
Date and to the Assignee for amounts which have accrued from and after the Effective Date.

3. General Provisions.
 This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.

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