EXHIBIT 10.40.1
FIRST AMENDMENT
TO
PNM RESOURCES, INC.
DIRECTOR RETAINER PLAN
PNM Resources, Inc. a New Mexico corporation (the "Company") hereby
amends the PNM Resources, Inc. Director Retainer Plan (the "Plan") pursuant to
this First Amendment to PNM Resources, Inc. Director Retainer Plan.
Recitals
--------
WHEREAS, the Company established the "PNM Resources, inc. Director
Retainer Plan" on January 1, 2002 and now desires to update the Plan by deletion
of outdated plan language relating to broker assisted "cashless" exercise
arrangements and cash out rights.
NOW THEREFORE, the Plan is amended as follows:
1. Article VII is deleted and replaced in its entirety as follows:
ARTICLE VII
Granting of and Exercise of Stock Options
7.1 Granting of Stock Options. A Director shall be entitled to
acquire one share of Stock upon exercise of each Stock Option at the
Exercise Price, subject to the limitations of Article IV and Section
6.2 and the vesting and forfeiture provisions in Article VIII. The
number of the Stock Options, and the applicable terms, conditions and
restrictions with respect thereto, shall be set forth in a certificate
provided to the Recipient thereof, within an administratively
reasonable period of time following the Grant Date of such Stock
Options.
7.2 Timing of Exercise. The Stock Options shall be exercisable
at any time following the vesting as set forth in Article VIII hereof,
and on or before the earlier of (i) one (1) year after the date of the
Recipient's Termination of Directorship; or (ii) the tenth anniversary
date of the Grant Date of the Stock Options.
7.3 Method of Payment. The Stock Options shall be exercised by
the Recipient giving written notice to the Company of his or her intent
to exercise the Stock Option, and tendering payment in full of the
Exercise Price of the Stock Options being exercised either:
(i) in cash,
(ii) in previously acquired Stock (through actual tender
or by attestation) held for more than six (6)
months, valued at its Fair Market Value on the date
of exercise, or
(iii) by a combination thereof as determined by the
Committee.
The proceeds from payment of exercised Stock Options shall be
added to the general funds of the Company and shall be used for general
corporate purposes.
7.4 Exercise Following Recipient's Death. If a Recipient of
Stock Options dies, without having fully exercised his or her Stock
Options, the personal representative or the person receiving such Stock
Options from the Recipient or his or her estate shall have the right to
exercise the Stock Options, that have vested pursuant to Article VIII,
provided, however, that in no event may the Stock Options be exercised
later than the earlier of (i) ten (10) years from the Grant Date of
such Options or (ii) one (1) year following the Recipient's Termination
of Directorship with the Company.
7.5 Cancellation of Stock Options. Any Stock Options not
exercised within the time periods specified in Sections 7.2 and 7.4
shall be canceled.
2. Section 11.1 is deleted and replaced in its entirety as follows:
11.1 Withholding Taxes. The Company shall have the right to
deduct from any payments made by the Company to the Directors, any
federal, state or local taxes of any kind required by law to be
withheld with respect to Stock Options or related cash distributions or
cash retainer, or to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for the payment of
such taxes.
To the extent permissible under applicable tax, securities and
other laws, the Company may, in its sole discretion, permit a Director
to satisfy a withholding requirement by (i) using already owned shares
that have been held by a Director for at least six (6) months; or (ii)
directing the Company to apply shares of Stock to which a Director is
entitled as a result of the exercise of a Stock Option (including for
this purpose, the filing of an election under Section 83(b) of the
Code), to satisfy the required minimum statutory amount.
2
IN WITNESS WHEREOF, the Company has caused this First Amendment to the
PNM Resources, Inc. Director Retainer Plan to be executed and to be effective as
of February 17, 2003.
PNM RESOURCES, INC.
By: /s/ Jeffry E. Sterba
--------------------------------
JEFFRY E. STERBA
Chairman, President and
Chief Executive Officer
3