PNM RESOURCES, INC.
AMENDED AND RESTATED
OMNIBUS PERFORMANCE EQUITY PLAN
SECTION 1
ESTABLISHMENT, PURPOSE, AND EFFECTIVE DATE OF
PEP
1.1
Background and Establishment . PNM Resources, Inc. (the "Company"), a
New Mexico corporation, previously established the "PNM RESOURCES,
INC. OMNIBUS PERFORMANCE EQUITY PLAN" (the "Prior Plan") for
Employees. The Company now wishes to amended and restate the
Prior Plan and hereby adopts the "PNM RESOURCES, INC. AMENDED AND
RESTATED OMNIBUS PERFORMANCE EQUITY PLAN" (the "PEP") for Employees
and Nonemployee Directors. The PEP permits the grant of Stock
Options, Restricted Stock Rights, Performance Shares, Performance
Units, and Stock Appreciation Rights.
1.2
Purpose . The purpose of the PEP is to advance the
interests of the Company by encouraging and providing for the
acquisition of an equity interest in the Company by Employees and
Nonemployee Directors, by providing additional incentives and
motivation toward superior performance of the Company, and by
enabling the Company to attract and retain the services of
Employees and Nonemployee Directors upon whose judgment, interest,
and special effort the successful conduct of its operations is
largely dependent.
1.3
Effective Date . The Prior Plan was originally effective upon the
effective date of the closing of the mandatory share exchange under
the New Mexico Business Corporation Act, N.M.Stat.Ann.
§53-13-13 (1983), which resulted in the Company becoming the
holding company for the Public Service Company of New Mexico
("Original Effective Date"). The PEP is effective as of the
date approved by the Company's shareholders at its 2005 Annual
Meeting ("Effective Date").
SECTION 2
DEFINITIONS
2.1
Definitions . Whenever used herein, the following terms will
have their respective meanings set forth below:
(a)
"Annual Meeting" or
Annual Meeting Date" means the dates established for the annual
meetings of the Company's shareholders pursuant to the Company's
Bylaws.
(b)
"Award" means any Option,
Restricted Stock Right, Performance Share, Performance Unit
or Stock Appreciation Right granted under this PEP.
(c)
"Board" means the Board
of Directors of the Company.
(d)
"Cause," means
termination of employment or directorship due to (i) the failure of
a Participant to substantially perform his or her duties with an
Employer (provided that this provision will not apply if the
failure results from the Participant's incapacity due to physical
or mental illness), or (ii) the engaging by the Participant in
conduct which is injurious to an Employer, monetarily or
otherwise.
(e)
"Change in Control," subject to the exceptions and modifications set
forth at the end of this Subsection (e), shall be deemed to have
occurred (any required approval, including any final nonappealable
regulatory order, having been obtained):
(i)
if any "person," as such term is
used in Sections 13(d) and 14(d) of the Exchange Act (as
hereinafter defined), becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty percent (20%) or more
of the combined voting power of the Company's then outstanding
securities;
(ii)
if, during any period of two (2)
consecutive years, the following individuals cease, for any reason,
to constitute a majority of the Board:
(1)
directors who were directors at the
beginning of such period; and
(2)
any new directors, whose election by
the Board or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3rds) of the
directors then still in office, who were either directors at the
beginning of such period or whose election or nomination for
election was previously so approved (such new directors being
referred to as "Approved New Directors");
(iii)
upon the shareholder approval of a
merger or consolidation of the Company with any other corporation;
or
(iv)
upon the shareholder approval of the
adoption of a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
Subsection (e)(i) shall not apply if
the "person" as referred to therein is, or shall be, (a) a trustee
or other fiduciary holding securities under an employee benefit
plan of the Company or (b) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the
Company.
In Subsection (e)(ii), the Approved
New Director shall not include a director designated by a person
who has entered into an agreement with the Company to effect a
transaction described in Subsection (e)(i), (e)(iii) or (e)(iv)
hereof.
Subsection (e)(iii) shall not apply
to a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at
least eighty percent (80%) of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or
consolidation.
(f)
"Code" means the Internal
Revenue Code of 1986, as amended.
2
(g)
"Committee" means the
Human Resources and Compensation Committee of the Board or any such
other committee as may be designated by the Board to administer the
PEP, the membership of such committee not being less than two (2)
members of the Board. All Committee members must be
"non-employee directors" (as defined in Rule 16b-3 under the
Exchange Act) if required to meet the conditions for exemption of
the Awards under the PEP from Section 16(b) of the Exchange
Act.
(h)
"Company" means PNM
Resources, Inc., a New Mexico corporation.
(i)
"Disability" means the
inability of a Participant to engage in any substantially gainful
activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not
less than twelve (12) months. The permanence and degree of
impairment shall be supported by medical evidence.
(j)
"Employee" means an
individual who is classified by an Employer as a common law
employee (or who would be considered a common law employee if such
person was not on an authorized leave of absence). Regardless
of any subsequent determination by a court or a governmental agency
that an individual should be treated as a common law employee, an
individual will be considered an Employee under the PEP only if
such individual has been so classified by an Employer for purposes
of the PEP. Examples of individuals who are not Employees of
an Employer include (i) consultants, (ii) leased employees as
defined in Code Section 414(n), (iii) individuals providing
services to an Employer pursuant to a contract with the
third-party, (iv) independent contractors, (v) employees of
independent contractors, (vi) interns, and (vii) co-op
employees.
(k)
"Employer" means the
Company, or any of its subsidiaries which has by resolution of the
subsidiary's Board affirmatively adopted the PEP.
(l)
"ERISA" shall mean the
Employee Retirement Income Security Act of 1974, as amended, or the
rules thereunder.
(m)
"Exchange Act" means the
Securities Exchange Act of 1934, as amended.
(n)
"Fair Market Value" means
the closing sale price of one share of Stock for "New York Stock
Exchange Composite Transactions," as reported in the Western
Edition of the Wall Street Journal, or a successor
comparable publication, on the date such value is determined (or if
Stock is not traded on such date, on the first immediately
preceding business day on which Stock was so traded).
(o)
"Grant Date" means the
date the Committee approves the Award.
(p)
"Impaction" means
involuntary termination of an Employee's employment due to
elimination of job, position, department or work unit or general
downsizing.
(q)
"Nonemployee Director" means any member of the Board who, as of the
Grant Date, is not an Employee.
3
(r)
"Option" means the right
to purchase Stock at a stated price for a specified period of
time. For purposes of the PEP an Option may be either (i) a
"nonstatutory stock option" (an option which is not an incentive
stock option), or (ii) an "incentive stock option" within the
meaning of Section 422 of the Code.
(s)
"Participant" means any
Employee or Nonemployee Director who is selected by an Employer, or
the Committee (in the case of a Nonemployee Director), from time to
time to participate in the PEP; provided, however, that all
Employees who are selected to participate in the PEP shall be
subject to approval by the President, in his or her sole
discretion. Notwithstanding the above, the President's right
to participate in the PEP shall be determined in the sole
discretion of the Committee.
(t)
"Performance Period" means the time period during which the
performance goals must be met as determined by the
Committee.
(u)
"Performance Share" means
a right to receive a payment in the form of Stock equal to the
value of a Performance Share as determined by the
Committee.
(v)
"Performance Unit" means
a right to receive a payment in cash or Stock or a combination
thereof equal to the value of a Performance Unit as determined by
the Committee.
(w)
"PEP" shall mean the PNM
Resources, Inc. Amended and Restated Omnibus Performance Equity
Plan as set forth in this document and as amended from time to
time.
(x)
"President" means the
President of the Company.
(y)
"Restricted Period" means
the period during which a Restricted Stock Right, Performance Share
or Performance Unit is subject to restrictions pursuant to the
relevant provisions of the PEP.
(z)
"Restricted Stock Right" means the right to receive a share of Stock at
no monetary cost to the Participant.
(aa)
"Retainer" means the
annual retainer to which each Nonemployee Director is entitled, as
may be determined by the Board from time to time, in effect on the
Grant Date.
(bb)
"Retirement," for
purposes of this PEP, shall mean termination of employment and
attainment of:
(i)
age forty-five (45) and twenty (20)
years of service;
(ii)
age fifty-five (55) and ten (10)
years of service;
(iii)
age 59½; or
4
(iv)
any age and thirty (30) years of
service.
In the case of a Nonemployee
Director, Retirement means (i) a Nonemployee Director's retirement
and related resignation from the Board pursuant to the "Director
Service Policy" or equivalent policy that may be adopted or amended
from time to time by the Board, or (ii) completion of the
Nonemployee Director's elected term, pursuant to circumstances in
which he or she is not reelected for an ensuing term for any reason
other than for Cause.
(cc)
"Stock" means the Common
Stock of the Company, no par value.
(dd)
"Stock Appreciation Right" and "SAR" mean the right to receive a
payment in Stock from the Company equal to the excess of the Fair
Market Value of the share of Stock at the date of exercise over a
specified price fixed by the Committee, which shall not be less
than one hundred percent (100%) of the Fair Market Value of the
Stock on the Grant Date. In the case of a Stock Appreciation
Right which is granted in conjunction with an Option, the specified
price shall be the Option exercise price.
(ee)
"Year of Service" for
purposes of this PEP shall have the same meaning as set forth in
Section 2.1(yy) of the PNM Resources, Inc. Employees' Retirement
Plan, as amended from time to time ("ERP"), and shall include
service with a predecessor organization as set forth in Section
3.3(d) of the ERP.
2.2
Gender and Number . Except when otherwise indicated by the context,
words in the masculine gender when used in the PEP will include the
feminine gender, the singular will include the plural, and the
plural will include the singular.
SECTION 3
ELIGIBILITY AND PARTICIPATION
Awards may be made only to those
Participants who are Employees of an Employer or Nonemployee
Directors on the Grant Date of the Award.
SECTION 4
ADMINISTRATION
4.1
Administration . The Committee shall be responsible for the
administration of the PEP. The Committee, by majority action
thereof, is authorized to interpret the PEP, to prescribe, amend,
and rescind rules and regulations relating to the PEP, to provide
for conditions and assurances deemed necessary or advisable to
protect the interests of the Company, and to make all other
determinations necessary or advisable for the administration of the
PEP, but only to the extent not contrary to the express provisions
of the PEP. Determinations, interpretations, or other actions
made or taken by the Committee in good faith pursuant to the
provisions of the PEP shall be final, binding and conclusive for
all purposes of the PEP.
4.2
Awards . The Committee shall have the authority,
in its sole discretion, to determine the types of Awards, the times
when Awards shall be granted, the number of Awards, the purchase
price or exercise price, if any, the period(s) during which such
Awards shall be exercisable (whether in whole or in part), the
restrictions applicable to Awards, and the other terms and
provisions thereof (which need not be identical). The
Committee shall have the authority to modify existing Awards,
subject to Section 17 of this PEP.
5
4.3
Award Agreement . Each Award shall be evidenced by an agreement
that shall specify the type of Award granted and such other
provisions and restrictions as the Committee shall
determine.
4.4
Claims . Any claim relating to an Award granted
under this PEP shall be submitted to the Committee or its
designee. The Committee shall render a written decision and,
if there is an adverse determination with respect to the claim,
either in whole or in part, the decision will set forth the basis
for the determination. If the Committee does not render a
decision within one hundred and twenty (120) days, the claim shall
be deemed denied.
SECTION 5
STOCK SUBJECT TO PEP
5.1
Number . The total number of shares of Stock subject to
all Awards under the PEP may not exceed eight million two hundred
fifty thousand (8,250,000), subject to adjustment upon occurrence
of any of the events indicated in Section 5.3. The number of
shares of Stock subject to Restricted Stock Right, Performance
Share, Performance Unit, and Stock Appreciation Right Awards may
not exceed four hundred fifty thousand (450,000), subject to
adjustment upon occurrence of any of the events indicated in
Section 5.3. The shares to be delivered under the PEP may
consist, in whole or in part, of authorized but unissued Stock or
shares purchased on the open market or treasury Stock not reserved
for any other purpose.
5.2
Availability of Stock for Grant . Subject to the express provisions of the PEP, if
any Award granted under the PEP terminates, expires, lapses for any
reason, or is paid in cash, any Stock subject to or surrendered for
such Award will again be Stock available for the grant of an
Award. With respect to Awards made to insiders under Section
16 of the Exchange Act, shares of such Stock may be reused to the
maximum extent permitted under Section 16 of the Exchange
Act.
5.3
Adjustment in Capitalization . In the event of any change in the outstanding
shares of Stock by reason of a Stock dividend or split,
recapitalization, merger, consolidation, combination, exchange of
shares, or other similar corporate change, the aggregate number of
shares of Stock available under the PEP and subject to each
outstanding Award, and its stated exercise price or the basis upon
which the Award is measured, shall be adjusted appropriately by the
Committee, whose determination shall be conclusive; provided,
however, that fractional shares shall be rounded to the nearest
whole share. Any adjustment to an incentive stock option
shall be made consistent with the requirements of Section 424 of
the Code.
5.4
Annual Limitation on Number of Shares Subject to
Awards . Notwithstanding any provision in the PEP
to the contrary, and subject to adjustment upon the occurrence of
any of the events indicated in Section 5.3, the maximum number of
shares of Stock that may be granted to any one Participant during
any of the Company's fiscal years with respe
