EXHIBIT 10.23.5

FIFTH AMENDMENT
TO THE RESTATED AND AMENDED
PUBLIC SERVICE COMPANY OF NEW MEXICO
ACCELERATED MANAGEMENT PERFORMANCE PLAN

THIS FIFTH AMENDMENT made by the Public Service Company of New Mexico ("PNM") is effective as of November 27, 2002.

WHEREAS, PNM adopted the Public Service Company of New Mexico Accelerated Management Performance Plan (the "Plan") as of January 14, 1981 to provide supplemental retirement benefits for certain employees;

WHEREAS, the Plan was amended and restated twice, most recently on August 16, 1988;

WHEREAS, the restated Plan has been amended numerous times, most recently effective as of December 7, 1998;

WHEREAS, PNM reserved the right to amend the Plan pursuant to Section 9.01 of the Plan; and

WHEREAS, PNM now desires to amend the Plan to: (i) change the name of the Plan; (ii) change the sponsor of the Plan to PNM Resources, Inc. ("PNMR"); and (iii) designate PNM as a participating employer.

NOW, THEREFORE, PNM does hereby amend the Plan as follows:

1. The name of the Plan is hereby amended to read as follows:

PNM RESOURCES, INC.
ACCELERATED MANAGEMENT PERFORMANCE PLAN

2. Section 1.01 of the Plan is hereby amended by the addition of the following paragraph to be placed at the end thereof:

PNM Resources, Inc. became the parent holding company for Public Service Company of New Mexico as of December 31, 2001. Effective as of November 27, 2002, PNM Resources, Inc. assumes the sponsorship of the Plan.

3. Section 2.05 of the Plan is hereby amended in its entirety to read as follows:

2.05 "Company" means PNM Resources, Inc. or any successor thereto, and any company affiliated with PNM Resources, Inc. which adopts the Plan. Any affiliate that adopted the Plan prior to the assumption of the sponsorship of the Plan by the Company, including the Public Service Company of New Mexico, shall continue to participate in the Plan.

4. Section 2.11 of the Plan is hereby amended in its entirety to read as follows:

2.11 "Employees' Retirement Plan" means the PNM Resources, Inc. Employees' Retirement Plan, as amended from time to time.

5. Section 2.20 of the Plan is hereby amended in its entirety to read as follows:

2.20 "Plan" means the PNM Resources, Inc. Accelerated Management Performance Plan as described herein or as hereafter amended.

6. Section 2.23 of the Plan is hereby amended in its entirety to read as follows:

2.23 "Service Bonus Plan" means the PNM Resources, Inc. Service Bonus Plan, as amended from time to time.

7. Section 6.01 is hereby amended by the addition of the following paragraph to be placed at the end thereof to read as follows:

Each affiliate that participates in the Plan shall bear the costs and expenses of providing benefits accrued by its employee-Participants during periods while they are employed by that affiliate. Such costs and expenses shall be allocated among the participating affiliates in accordance with (a) agreements entered into between PNMR and any participating affiliate, or (b) in the absence of such an agreement, procedures adopted by PNMR.

8. The purpose of this Fifth Amendment is to transfer sponsorship of the Plan to PNMR from the PNM. All references to "Public Service Company of New Mexico" are hereby replaced with references to "PNM Resources, Inc.," unless the context (such as discussion of the formation of the Plan) indicates otherwise. Any other provisions of the Plan which are inconsistent with this transfer of sponsorship are hereby amended to the extent necessary to accomplish this transfer.

9. This Fifth Amendment changes the name and sponsorship of the Plan. Any individuals or entities serving as fiduciaries or service providers with respect to the Plan shall continue to serve as such, subject to the provisions of the Plan. Similarly, any policies or procedures previously adopted by the fiduciaries shall continue in full force and effect.

10. PNM Resources, Inc. hereby assumes all duties, obligations, and authority as the sponsor of the Plan. PNM Resources, Inc. does not assume Public Service Company of New Mexico's financial obligation for its share of the costs and expenses of Plan benefits as determined pursuant to Section 6.01 of the Plan.

11. This Fifth Amendment shall only amend the provisions of the Plan referred to above, and those provisions not amended hereby shall be considered in full force and effect.

IN WITNESS WHEREOF, Public Service Company of New Mexico and PNM Resources, Inc. have caused this Fifth Amendment to be executed as of this 27th day of November, 2002.

PUBLIC SERVICE COMPANY OF NEW MEXICO

By:      /s/ Alice A. Cobb
   ---------------------------------
Its:     Senior Vice President
People Services and Development

PNM RESOURCES, INC.

By:      /s/ Alice A. Cobb
   ---------------------------------
Its:     Senior Vice President
People Services and Development

EXHIBIT 10.25.1

AMENDMENT
TO THE
SECOND RESTATED AND AMENDED
PUBLIC SERVICE COMPANY OF NEW MEXICO
EXECUTIVE MEDICAL PLAN

THIS AMENDMENT made by the Public Service Company of New Mexico ("PNM") is effective as of January 1, 2002 unless otherwise noted herein.

WHEREAS, PNM maintains the Second Restated and Amended Public Service Company of New Mexico Executive Medical Plan (the "Plan");

WHEREAS, PNM reserved the right to amend the Plan pursuant to Article VIII of the Plan; and

WHEREAS, PNM now desires to amend the Plan to: (i) reflect certain design changes that took effect January 1, 2002 and May 1, 2002; (ii) transfer sponsorship of the Plan from PNM to PNM Resources, Inc. ("PNMR"); (iii) change the name of the Plan to reflect the transfer of sponsorship; and (iv) designate PNM as a participating employer.

NOW, THEREFORE, PNM does hereby amend the Plan as follows:

1. Effective May 1, 2002, Article I (PURPOSE) of the Plan is hereby amended by adding the following to the end thereof:

Effective May 1, 2002, the Plan shall be self-funded rather than fully insured with the benefits provided by Connecticut General Life Insurance Company. This means that benefits will be paid from the Company's general assets. Reimbursements paid from the Company's general assets must be included in a Participant's taxable income for the calendar year in which the Participant receives the reimbursement rather than the calendar year in which the underlying expense is incurred. Amounts paid from the Company's general assets will be grossed-up for taxes using the Participant's assumed tax rate, as determined by the Plan Administrator.

2. The first sentence of Article III (ELIGIBILITY) of the Plan is hereby amended and restated in its entirety to provide as follows:

The Plan shall apply only to an executive employee of the Company whose position with the Company is Vice-President or higher-ranking officer of the Company (a "Participant").

3. The fourth sentence of Article IV (COVERED CHARGES) of the Plan is hereby amended and restated in its entirety to provide as follows:

Notwithstanding the foregoing, Covered Charges shall not include expenses for transportation pursuant to Code Section 213(d)(1)(B) prior to January 1, 2002, for insurance pursuant to Code Sections 213(d)(1)(C) & (D) prior to May 1, 2002, and for lodging pursuant to Code Section 213(d)(2) prior to January 1, 2002.

4. The first sentence of Article V (ANNUAL LIMITATION) of the Plan is hereby amended and restated in its entirety to provide as follows:

The maximum annual amount of Covered Charges incurred during a calendar year subject to reimbursement hereunder shall not exceed three thousand dollars ($3,000) paid to or on behalf of each Participant (the "Annual Limitation").

5. Effective November 30, 2002, sponsorship of the Plan is hereby transferred to PNMR and PNMR, by signing below, hereby assumes all duties, obligations, and authority as the sponsor of the Plan. PNMR does not assume PNM's financial obligation for its share of the costs and expenses of Plan benefits as determined pursuant to Article IV (COVERED CHARGES) of the Plan.

6. Effective November 30, 2002, Article I (PURPOSE) of the Plan is hereby further amended by adding the following to the end thereof:

PNMR became the parent holding company of PNM as of December 31, 2001. Effective as of November 30, 2002, PNMR assumes the sponsorship of the Plan. Any affiliate that adopted the Plan prior to the assumption of the sponsorship of the Plan by PNMR, including PNM, shall continue to participate in the Plan.

7. Effective November 30, 2002, the Plan shall be known as the "PNM RESOURCES,
INC. EXECUTIVE MEDICAL PLAN."

8. Effective November 30, 2002, Article IV (COVERED CHARGES) of the Plan is hereby further amended by adding the following paragraph to the end thereof:

Each affiliate that participates in the Plan shall bear the costs and expenses of providing benefits accrued by its employee-Participants during periods while they are employed by that affiliate. Such costs and expenses shall be allocated among the participating affiliates in accordance with (i) agreements entered into between PNMR and any participating affiliate, or (ii) in the absence of such an agreement, procedures adopted by PNMR.

9. Effective November 30, 2002, all references to "Public Service Company of New Mexico" are hereby replaced with references to "PNM Resources, Inc.," unless the context (such as discussion of the formation of the Plan) indicates otherwise. Any other provisions of the Plan that are inconsistent with this transfer are hereby amended to the extent necessary to accomplish this transfer.

10. This Amendment shall only amend the provisions of the Plan referred to above, and those provisions not amended hereby shall be considered in full force and effect.

IN WITNESS WHEREOF, Public Service Company of New Mexico has caused this Amendment to be executed as of this 27 day of November, 2002.

PUBLIC SERVICE COMPANY OF NEW MEXICO

By:      /s/ Alice A. Cobb
   ---------------------------------
Its: Senior Vice President

PNM RESOURCES, INC.

By:      /s/ Alice A. Cobb
   ---------------------------------
Its: Senior Vice President

This plan serves as comprehensive single source of information about the Public Service Company of New Mexico ("PNM") annual incentive program for company officers. It describes the objectives of the plan, its various elements, and how they function. If you have questions that are not addressed by this document, please direct them to your manager.

The plan is designed to:

o Attract, motivate and retain key officer talent in a competitive business environment.

o Link the interests of officers with those of our shareholders through short-term incentives.

o Align total short-term cash compensation opportunities with competitive practices.

o Reinforce a total compensation mix for officers that is risk/reward oriented.

o Customize the plan to meet the needs of specific business segments.

The plan is effective from January 1, 2002 through December 31, 2002 (the "Plan Year"). The Board Governance and Human Resources Committee (the "Committee") of the Board of Directors (the "Board") reserves the right, however, to adjust, amend or suspend the plan at its discretion during the Plan Year.

o Plan Year Goals

Prior to the beginning of the Plan Year, after considering the recommendations of management, the Committee will approve the corporate goals against which performance will be measured for the Plan Year. The goals will be communicated to all eligible participants as soon thereafter as feasible.

o Incentive Award Approvals and Payout Timing

Shortly after the end of the Plan Year, the Committee or the Board will, in its sole discretion, determine the final performance results that will be used to determine awards, if any. Awards will be distributed by check to eligible participants following such approval during the first quarter following the end of the Plan Year, normally in February.

All officers of the company are eligible to participate in the plan.

o Pro Rata Awards for Partial Service Periods

Pro rata awards for the number of months actively employed at each eligibility level during the Plan Year will be paid to the following participants at the time awards are paid to all participants: (Note: Any month in which a participant is actively on the payroll for at least one day will count as a full month.)

- Participants who are newly hired during the Plan Year.

- Participants who are promoted, transferred or demoted during the Plan Year.

- Participants who are on leave of absence for any full months during the Plan Year.

- Participants who are impacted or leave the company due to retirement during the Plan Year.

- The spouse or legal representative of a deceased participant.

o Forfeiture of Awards

Any participant who terminates employment on or before awards are distributed for the Plan Year for any reason other than those stated above (e.g. voluntary separation, termination for performance or misconduct, even if the terminated participant elects to take retirement) will not be eligible for payment of an award.

o Provisions for a Change in Control

The following provisions will apply should a Change in Control (CIC) of the company occur:

- If neither the plan nor the participant are terminated due to a CIC during the Plan Year, a full year award equal to the higher of 50% of the maximum award opportunity or the award that results from projecting performance results through year-end based on year-to-date performance as of the CIC, if feasible, will be paid to all employees who are still active as of December 31 of the Plan Year.

- If either the plan or the participant is terminated as a result of a CIC during the Protection Period (as defined in the Retention Plans), a pro rata award equal to the higher of 50% of the maximum award opportunity or the award that results from projecting performance results through year-end based on year-to-date performance as of the CIC, if feasible, will be paid upon termination for the number of months worked during the Plan Year.

o Eligible "Base" for Incentive Purposes

For the purpose of incentive calculations, the salary range midpoint effective December 31 of the Plan Year is defined as the participant's eligible base unless the participant has been demoted during the Plan Year. In this event, the officer's award may be prorated based on the period of time worked at each level.

Awards may be earned for performance that provides value to our shareholders. The incremental performance needed to fund awards is taken into consideration in establishing performance thresholds and goals under the plan.

o Minimum Performance Threshold

The EPS "Threshold" indicated on the EPS performance scale in Attachment A must be achieved before any payout will be made for the 2002 Plan Year.

o Maximum Award Opportunity

For the 2002 Plan Year, the maximum award opportunities are as follows:

Eligibility Level                  Maximum Award Opportunity
-----------------                  -------------------------
Vice President                           50% of Midpoint
Senior Vice President                    60% of Midpoint
Executive Vice President                 70% of Midpoint
Chairman, President and CEO             100% of Midpoint

The following stand-alone performance criteria are used to determine awards under the plan:

o Team Performance: These goals, which are agreed upon at the beginning of the Plan Year, are identical for all officers. This scale does not provide for interpolation of awards.

o Individual/Unit Performance: These goals, which are agreed upon at the beginning of the Plan Year, are customized by officer and may include measurements such as overall Results Pay Plan Workgroup performance for each officer's area of responsibility, business segment EPS and/or specific individual goals of critical importance that can be linked to one-year performance milestones for the officer. This scale does not provide for interpolation of awards.

o Personal Effectiveness: Each officer's personal effectiveness, as measured against a list of Officer Core Attributes, comprises this measurement. The scale for Personal Effectiveness provides for an award ranging threshold to optimal as indicated on the matrix.

EXHIBIT 10.43.2

This document serves as a comprehensive single source of information about the PNM Resources, Inc. ("PNMR") Officer Incentive Plan. It describes the objectives of the plan, its various elements, and how they function. If you have questions that are not addressed by this document, please direct them to the Compensation Department.

The plan is designed to motivate and reward participants for achieving and exceeding annual company, business unit and individual goals, and the company-wide Earnings Per Share ("EPS") goal.

The plan is effective from January 1, 2003 through December 31, 2003 (the "Plan Year"). Management reserves the right, however, to adjust, amend or suspend the plan at its discretion during the Plan Year, with the approval of the Board Governance and Human Resources Committee (the "Committee") of the Board of Directors (the "Board").

o Plan Year Goals

Individual goal sets (e.g. combined company, business unit, and individual) will be established for each Officer. After considering the recommendations of management, the Committee will approve the company-wide EPS goals against which performance will be measured for the Plan Year.

o Incentive Award Approvals and Payout Timing

Shortly after the end of the Plan Year, the Committee or the Board will, in its sole discretion, determine the final performance results which will be used to calculate awards, if any. Awards will be distributed by check to eligible participants following such approval during the first quarter following the end of the Plan Year, typically with the last paycheck in February.

The intent of the plan is to fairly reward performance achievement. Any employee who manipulates or attempts to manipulate the plan for personal gain at the expense of customers, other employees or company objectives will be subject to appropriate disciplinary action, up to and including termination of employment.

All officers of the company are eligible to participate in the plan.

o Pro Rata Awards for Partial Service Periods

Pro rata awards for the number of months actively employed at each eligibility level during the Plan Year will be paid to the following participants at the time awards are paid to all participants: (Note: Any month in which a participant is actively on the payroll for at least one day will count as a full month.)

- Participants who are newly hired during the Plan Year.

- Participants who are promoted, transferred or demoted during the Plan Year.

- Participants who are on leave of absence for any full months during the Plan Year.

- Participants who are impacted or leave the company due to retirement during the Plan Year. (Note: For purposes of the plan, "retirement" means termination of employment with the company and all affiliates after the employee has satisfied the age and service requirements for early or normal retirement under the Employee Retirement Plan.)

- Participants who die during the Plan Year, in which case the award will be paid to the spouse of a married participant or the legal representative of an unmarried participant.

o Forfeiture of Awards

Any participant who terminates employment on or before awards are distributed for the Plan Year for any reason other than death, impaction or retirement (e.g., voluntary separation, termination for performance or misconduct - even if the terminated participant elects to take retirement) will not be eligible for payment of an award.

o Provisions for a Change in Control

Please refer to Executive Retention Plan for additional information.

o Eligible Base for Incentive Purposes

For the purpose of incentive calculations, the applicable salary grade midpoint is the participant's salary grade midpoint effective December 31 of the Plan Year unless the participant has been demoted during the Plan Year. In this event, the participant's salary grade midpoint may be prorated based on the period of time worked at each level.

Awards may be earned for performance that provides additional value to our shareholders. The incremental performance needed to fund awards is taken into consideration in establishing performance thresholds and goals under the plan.

o Performance Thresholds

In order to be eligible for incentive awards, the following performance threshold must be met for 2003:

- Overall combined company, business unit, and individual goal performance that at least achieves the threshold performance level. If this performance threshold is not met, no award will be paid for the Plan Year.

In order to be eligible for the award enhancement, the following performance threshold must be met for 2003:

- Company-wide EPS that at least achieves $1.80. If this performance threshold is not met, no award enhancement will be applied.

o Combined Company, Business Unit, and Individual Performance Award Opportunity

For the 2003 Plan Year, the combined company, business unit, and individual performance award opportunities are as follows:

------------------------------- ---------------------------------------------
    Award Eligibility Level                Individual Goal Set
------------------------------- ---------------------------------------------
                                Threshold*       Stretch*           Optimal*
------------------------------- ---------- ---------------------- -----------
Vice-President                     4.0%            7.0%              10.0%
------------------------------- ---------- ---------------------- -----------
Senior Vice-President              4.8%            8.4%              12.0%
------------------------------- ---------- ---------------------- -----------
Executive Vice-President           5.6%            9.8%              14.0%
------------------------------- ---------- ---------------------- -----------
Chairman, President, and CEO       8.0%            14.0%             20.0%
------------------------------- ---------- ---------------------- -----------

* Award calculated as a percentage of salary grade midpoint

o Earnings Per Share (EPS) Award Enhancement

For the 2003 Plan Year, the EPS award enhancement opportunities are as follows:

---------------------------- ---------------------- --------------------------
EPS Threshold Target = $1.80  EPS = $1.81 to $2.04  EPS Optimal Target = $2.05
---------------------------- ---------------------- --------------------------
Workgroup Performance Award    Workgroup Award is      Workgroup Performance
      is enhanced 2x           enhanced between 2x      Award is enhanced a
                                   and 5x using             maximum of 5x
                                  interpolation
---------------------------- ---------------------- --------------------------

For this plan, EPS is defined as net income related to running the business (excluding certain extraordinary items or events that result in windfalls or penalties which are not in keeping with the spirit of the plan) divided by the number of shares of PNMR common stock outstanding.

o Award Calculation

Combined company, business unit, and individual goal performance that meets or exceeds the threshold target level will be eligible for an award. The amount of each participant's award is determined by the participant's eligibility level and the level of combined company, business unit, and individual goal performance in the "Combined Company, Business Unit, and Individual Performance Award Opportunity" table above.

Company EPS performance that meets or exceeds the threshold target will serve as an enhancement to the award paid for workgroup performance. As identified in the "EPS Award Enhancement" table above, the award enhancement will be a minimum of 2x at the EPS threshold target, a maximum of 5x at the EPS optimal target, and interpolated between the EPS threshold and optimal targets.

The resulting percent is multiplied by the participant's eligible salary grade midpoint to determine the amount of the participant's award.

For Example: Assume that overall Workgroup results are at the optimal performance level and company-wide EPS performance is $1.93. A participant who is eligible for an award at the Vice-President eligibility level would receive an award of 35% of salary grade midpoint for the Plan Year. That is, workgroup optimal performance resulting in an award of 10%, which is then enhanced 3.5x for EPS performance. If the participant's salary grade midpoint is $160,000 the award would be $56,000 ($160,000 x 35%).

EXHIBIT 10.45.4

FOURTH AMENDMENT
TO THE PUBLIC SERVICE COMPANY OF NEW MEXICO
SERVICE BONUS PLAN

THIS FOURTH AMENDMENT made by the Public Service Company of New Mexico ("PNM") is effective as of November 27, 2002.

WHEREAS, PNM adopted the Public Service Company of New Mexico Service Bonus Plan (the "Plan") as of October 23, 1984 to provide supplemental income benefits for certain executives who have achieved maximum performance credits under the Accelerated Management Performance Plan;

WHEREAS, the Plan has been amended three times, most recently by an amendment effective on December 7, 1998;

WHEREAS, PNM reserved the right to amend the Plan pursuant to Section 9.01 of the Plan; and

WHEREAS, PNM now desires to amend the Plan to: (i) change the name of the Plan, (ii) change the sponsor of the Plan to PNM Resources, Inc. ("PNMR"), and (iii) designate PNM as a participating employer.

NOW, THEREFORE, PNM does hereby amend the Plan as follows:

1. The name of the Plan is hereby amended to read as follows:

PNM RESOURCES, INC. SERVICE BONUS PLAN

2. Section 1.01 of the Plan is hereby amended by the addition of the following paragraph to be placed at the end thereof:

PNM Resources, Inc. became the parent holding company for Public Service Company of New Mexico as of December 31, 2001. Effective as of November 27, 2002, PNM Resources, Inc. assumes the sponsorship of the Plan.

3. Section 2.01 of the Plan is hereby amended in its entirety to read as follows:

2.01 "Accelerated Management Performance Plan" means the PNM Resources, Inc. Accelerated Management Performance Plan, as amended from time to time.

4. Section 2.08 of the Plan is hereby amended in its entirety to read as follows:

2.08 "Company" means PNM Resources, Inc. or any successor thereto, and any company affiliated with PNMR that adopts the Plan. Any affiliate that adopted the Plan prior to including Public Service Company of New Mexico, shall continue to participate in the Plan.

5. Section 2.13 of the Plan is hereby amended in its entirety to read as follows:

2.13 "Employees' Retirement Plan" means the PNM Resources, Inc. Employees' Retirement Plan, as amended from time to time.

6. Section 2.20 of the Plan is hereby amended in its entirety to read as follows:

2.20 "Plan" means the PNM Resources, Inc. Service Bonus Plan as described herein or as hereafter amended.

7. Section 2.24 of the Plan is hereby amended in its entirety to read as follows:

2.24 "Service Bonus Plan" means the PNM Resources, Inc. Service Bonus Plan described herein, or as amended from time to time.

8. Section 6.01 of the Plan is hereby amended by the addition of the following paragraph to be placed at the end thereof:

Each affiliate that participates in the Plan shall bear the costs and expenses of providing benefits accrued by its employee-Participants during periods while they are employed by that affiliate. Such costs and expenses shall be allocated among the participating affiliates in accordance with (a) agreements entered into between PNM Resources, Inc. and any participating affiliate, or (b) in the absence of such an agreement, procedures adopted by PNM Resources, Inc.

9. Section 6.04 of the Plan is hereby amended in its entirety to read as follows:

6.04 Change in Control. Upon a Change in Control, as defined in the First Restated and Amended Executive Retention Plan effective December 7, 1998, and incorporated herein by reference, the Company shall sufficiently fund the Public Service Company of New Mexico and Paragon Resources, Inc. Deferred Compensation Trust Agreement (the "Rabbi Trust") to provide in full any benefits accrued under this Plan as of the date of the occurrence of the Change in Control.

10. The purpose of this Fourth Amendment is to transfer sponsorship of the Plan to PNM Resources, Inc. from the Public Service Company of New Mexico. All references to "Public Service Company of New Mexico" are hereby replaced with references to "PNM Resources, Inc.," unless the context (such as discussion of the formation of the Plan) indicates otherwise. Any other provisions of the Plan which are inconsistent with this transfer of sponsorship are hereby amended to the extent necessary to accomplish this transfer.

11. PNM Resources, Inc. hereby assumes all duties, obligations, and authority as the sponsor of the Plan. PNM Resources, Inc. does not assume Public Service Company of New Mexico's financial obligation for its share of the costs and expenses of Plan benefits as determined pursuant to Section _____ of the Plan.

12. This Fourth Amendment changes the name and sponsorship of the Plan. Any individuals or entities serving as fiduciaries or service providers with respect to the Plan shall continue to serve as such, subject to the provisions of the Plan. Similarly, any policies or procedures previously adopted by the fiduciaries shall continue in full force and effect.

13. This Fourth Amendment shall only amend the provisions of the Plan referenced above, and those provisions not amended hereby shall be considered in full force and effect.

IN WITNESS WHEREOF, Public Service Company of New Mexico and PNM Resources, Inc. have caused this Fourth Amendment to be executed as of this 27th day of November, 2002.

PUBLIC SERVICE COMPANY OF NEW MEXICO

By:      /s/ Alice A. Cobb
   ---------------------------------
Its: Senior Vice President
     People Services and Development

PNM RESOURCES, INC.

By:      /s/ Alice A. Cobb
   ---------------------------------
Its: Senior Vice President
     People Services and Development

EXHIBIT 10.48.2

SECOND AMENDMENT
TO THE
PUBLIC SERVICE COMPANY OF NEW MEXICO
OBRA '93 RETIREMENT PLAN

THIS SECOND AMENDMENT made by the Public Service Company of New Mexico ("PNM") is effective as of November 27, 2002.

WHEREAS, PNM adopted the Public Service Company of New Mexico OBRA '93 Retirement Plan (the "Plan") as of November 15, 1993 to provide nonqualified retirement benefits for certain key employees;

WHEREAS, the Plan has been amended once, effective as of December 7, 1998;

WHEREAS, PNM reserved the right to amend the Plan pursuant to Article V of the Plan; and

WHEREAS, PNM now desires to amend the Plan to: (i) change the name of the Plan, (ii) change the sponsor of the Plan to PNM Resources, Inc. ("PNMR"), and (iii) designate PNM as a participating employer.

NOW, THEREFORE, PNM hereby amends the Plan as follows:

1. The name of the Plan is hereby amended to read as follows:

PNM RESOURCES, INC. OBRA '93 RETIREMENT PLAN

2. The introductory paragraphs of the Plan (being those paragraphs that precede Article I) are hereby amended by the addition of the following paragraph to be placed at the end thereof:

PNM Resources, Inc. became the parent holding company for Public Service Company of New Mexico as of December 31, 2001. Effective as of November 27, 2002, PNM Resources, Inc. assumes the sponsorship of the Plan. Any affiliate that adopted the Plan prior to the assumption of the sponsorship of the Plan by the PNM Resources, Inc., including Public Service Company of New Mexico, shall continue to participate in the Plan.

3. Section 4.02 is hereby amended by adding a new subsection (f) to read as follows:

(f) Each employer that participates in the Plan shall bear the costs and expenses of providing benefits accrued by its employee-Participants during periods while they are employed by that employer. Such costs and expenses shall be allocated among the participating employers in accordance with (i) agreements entered into between the Company and any participating employer, or (ii) in the absence of such an agreement, procedures adopted by the Company.

4. The purpose of this Second Amendment is to transfer sponsorship of the Plan to PNMR from PNM. All references to "Public Service Company of New Mexico" or the "Company" are hereby replaced with references to "PNM Resources, Inc.," unless the context (such as discussion of the formation of the Plan) indicates otherwise. Any other provisions of the Plan which are inconsistent with this transfer of sponsorship are hereby amended to the extent necessary to accomplish this transfer.

5. This Second Amendment changes the name and sponsorship of the Plan. Any individuals or entities serving as fiduciaries or service providers with respect to the Plan shall continue to serve as such, subject to the provisions of the Plan. Similarly, any policies or procedures previously adopted by the fiduciaries shall continue in full force and effect.

6. PNMR hereby assumes all duties, obligations, and authority as the sponsor of the Plan. PNMR does not assume PNM's financial obligation for its share of the costs and expenses of Plan benefits as determined pursuant to Section 4.02(f) of the Plan.

7. This Second Amendment shall only amend the provisions of the Plan referenced above, and those provisions not amended hereby shall be considered in full force and effect.

IN WITNESS WHEREOF, Public Service Company of New Mexico and PNM Resources, Inc. have caused this Second Amendment to be executed as of this 27th day of November, 2002.

PUBLIC SERVICE COMPANY OF NEW MEXICO

By: /s/ Alice A. Cobb
   ---------------------------------
Its: Senior Vice President
     People Services and Development

PNM RESOURCES, INC.

By: /s/ Alice A. Cobb
Its: Senior Vice President
     People Services and Development

EXHIBIT 10.50.1

FIRST AMENDMENT TO THE
PUBLIC SERVICE COMPANY OF NEW MEXICO
SECTION 415 PLAN

THIS FIRST AMENDMENT TO THE PUBLIC SERVICE COMPANY OF NEW MEXICO
SECTION 415 PLAN is effective the 7th day of December 1998 by the Public Service Company of New Mexico, a New Mexico corporation ("PNM" or the "Company").

WHEREAS, the Company established the Public Service Company of New Mexico Section 415 Plan (the "Plan") effective January 1, 1994.

WHEREAS, under Section 6.03, the Company reserved the right at any time to amend the Plan;

WHEREAS, on December 7, 1998, the Compensation and Human Resources Committee of the PNM Board of Directors approved certain benefits upon a Change in Control (as defined in the First Restated and Amended Executive Retention Plan) and authorized certain amendments to affected plans, including this Plan; and

WHEREAS, the Company desires to amend this Plan to incorporate the approved Change in Control benefits to provide full and sufficient funding of the Public Service Company of New Mexico and Paragon Resources, Inc. Deferred Compensation Trust Agreement (the "Rabbi Trust") for any obligations or benefits accrued as of the date of the occurrence of a Change in Control.

NOW THEREFORE, the Company hereby amends the Plan as follows:

ITEM 1. Article V, Source of Benefit Payments, shall be amended to add
a new Section 5.02, as follows:

5.02 Change in Control. Upon a Change in Control, as defined in the First Restated and Amended Executive Retention Plan effective December 7, 1998, and incorporated herein by reference, the Company shall sufficiently fund the Public Service Company of New Mexico and Paragon Resources, Inc. Deferred Compensation Trust Agreement (the "Rabbi Trust") to provide in full for any benefits accrued under this Plan as of the date of the occurrence of the Change in Control.

ITEM 2. Except as herein above amended, the Company hereby readopts and
redeclares each and every other provision of the Plan.

IN WITNESS WHEREOF, Public Service Company of New Mexico caused this First Amendment to the Public Service Company of New Mexico Section 415 Plan to be executed by its authorized officers effective as of the date and year first above written.

PUBLIC SERVICE COMPANY OF NEW MEXICO

Date:  December 7, 1998                 By       /s/ BENJAMIN F. MONTOYA
                                           -------------------------------------
                                           BENJAMIN F. MONTOYA
                                           President and Chief Executive Officer

SECOND AMENDMENT
TO THE PUBLIC SERVICE COMPANY OF NEW MEXICO
SECTION 415 PLAN

THIS SECOND AMENDMENT TO THE PUBLIC SERVICE COMPANY OF NEW MEXICO
SECTION 415 PLAN (the "Plan"), is made by the Public Service Company of New Mexico, a New Mexico corporation ("PNM" or the "Company"), to be effective August 7, 1999.

WHEREAS, the Company adopted the Public Service Company of New Mexico
Section 415 Plan effective January 1, 1994.

WHEREAS, the Compensation and Human Resources Committee (the "Committee") of the PNM Board of Directors adopted the First Amendment to the Plan, effective December 7, 1998;

WHEREAS, under Section 6.03 of the Plan, the Company reserved the right at any time to amend the Plan;

WHEREAS, the Company has established subsidiaries and affiliates, and intends to transfer or has transferred current Participants of the Plan to the subsidiaries and affiliates; and

WHEREAS, the Company desires to amend this Plan to ensure that such transferred Participants remain eligible for benefits under the Plan.

NOW THEREFORE, the Plan is hereby amended, as follows:

ITEM 1. Section 1.01, Purpose, shall be modified as follows:

1.01 Purpose. The Purpose of the Section 415 Plan is to provide for the payment of supplemental retirement benefits to employees of the Company, its subsidiaries and affiliates, or its holding company or subsidiaries of the holding company, whose retirement benefits, under the Public Service Company of New Mexico Employees' Retirement Plan (the "Retirement Plan"), as restated effective January 1, 1997, have been reduced as required by Section 415 of the Internal Revenue Code of 1986, as amended (the "Code"), and applicable regulations and rulings promulgated thereunder. Code Section 415 requires that qualified defined benefit retirement plans, such as the Retirement Plan, limit the amount payable, in any one year, to a retired Participant. The Code
Section 415 limitations reduce the retirement benefits otherwise due a Participant notwithstanding that such benefits were previously accrued and vested pursuant to qualified retirement plans.

ITEM 2. The first paragraph of Section 2.01 Participation, shall be
modified as follows:

2.01 Participation. An employee of the Company, or any subsidiary, affiliate or holding company of the Company, or subsidiary of the holding company, who satisfies the following requirements shall be entitled to participate in the Section 415 Plan, and shall hereinafter be referred to as a "Participant." The transfer of a Participant to an affiliate shall not be deemed a termination of employment with the Company and shall not affect any Participant's rights to receive benefits hereunder.

ITEM 3. Except as herein above amended, the Company hereby readopts and
redeclares each and every other provision of the Plan.

IN WITNESS WHEREOF, Public Service Company of New Mexico caused this Second Amendment to the Public Service Company of New Mexico Section 415 Plan to be executed by its authorized officers effective as of the date and year first above written.

PUBLIC SERVICE COMPANY OF NEW MEXICO

By    /s/ ARTHUR P. ARMANO
   ---------------------------------------
   ARTHUR P. ARMANO
   Director, Personnel Services

THIRD AMENDMENT
TO THE
PUBLIC SERVICE COMPANY OF NEW MEXICO
SECTION 415 PLAN

THIS THIRD AMENDMENT made by the Public Service Company of New Mexico ("PNM") is effective as of November 27, 2002.

WHEREAS, PNM adopted the Public Service Company of New Mexico Section 415 Plan (the "Plan") as of January 1, 1994, to provide supplemental retirement benefits for certain employees;

WHEREAS, the Plan has been amended twice, the most recent amendment being effective as of August 7, 1999;

WHEREAS, PNM reserved the right to amend the Plan pursuant to Section 6.03 of the Plan; and

WHEREAS, PNM now desires to amend the Plan to: (i) change the name of the Plan; (ii) change the sponsor of the Plan to PNM Resources, Inc. ("PNMR"); and (iii) designate PNM as a participating employer.

NOW, THEREFORE, PNM hereby amends the Plan as follows:

1. The name of the Plan is hereby amended to read as follows:

PNM RESOURCES, INC. SECTION 415 PLAN

2. The introductory paragraph of the Plan is hereby amended by the addition of the following paragraph to be placed at the end thereof:

PNM Resources, Inc. became the parent holding company for Public Service Company of New Mexico as of December 31, 2001. Effective as of November 27, 2002, PNM Resources, Inc. assumes the sponsorship of the Plan. Any affiliate that adopted the Plan prior to the assumption of the sponsorship of the Plan by the PNM Resources, Inc., including Public Service Company of New Mexico, shall continue to participate in the Plan.

3. Section 1.01 of the Plan is hereby amended in its entirety to read as follows:

1.01 Purpose. The purpose of the Section 415 Plan is to provide for the payment of supplemental retirement benefits to employees of the Company, and other subsidiaries and affiliates of the Company, whose retirement benefits under the PNM Resources, Inc. Employees' Retirement Plan (the "Retirement Plan") have been reduced as required by Section 415 of the Internal Revenue Code of 1986, as amended (the "Code"), and applicable regulations and rulings promulgated

thereunder. Code Section 415 requires that qualified defined benefit retirement plans, such as the Retirement Plan, limit the amount payable, in any one year, to a retired Participant. The Code Section 415 limitations reduce the retirement benefits otherwise due a Participant notwithstanding that such benefits were previously accrued and vested pursuant to qualified retirement plans.

4. Article V of the Plan is hereby amended by the addition of a new Section 5.02 to read as follows:

5.02 Allocation Among Affiliates. Each affiliate that participates in the Plan shall bear the costs and expenses of providing benefits accrued by its employee-Participants during periods while they are employed by that affiliate. Such costs and expenses shall be allocated among the participating affiliates in accordance with (a) agreements entered into between the Company and any participating affiliate, or (b) in the absence of such an agreement, procedures adopted by the Company.

5. The purpose of this Third Amendment is to transfer sponsorship of the Plan to PNMR from PNM. All references to "Public Service Company of New Mexico" or the "Company" are hereby replaced with references to "PNM Resources, Inc.," unless the context (such as discussion of the formation of the Plan) indicates otherwise. Any other provisions of the Plan which are inconsistent with this transfer of sponsorship are hereby amended to the extent necessary to accomplish this transfer.

6. PNMR hereby assumes all duties, obligations, and authority as the sponsor of the Plan. PNMR does not assume PNM's financial obligation for its share of the costs and expenses of Plan benefits as determined pursuant to
Section 5.02 of the Plan.

7. This Third Amendment changes the name and sponsorship of the Plan. Any individuals or entities serving as fiduciaries or service providers with respect to the Plan shall continue to serve as such, subject to the provisions of the Plan. Similarly, any policies or procedures previously adopted by the fiduciaries shall continue in full force and effect.

8. This Third Amendment shall only amend the provisions of the Plan referenced above, and those provisions not amended hereby shall be considered in full force and effect.

IN WITNESS WHEREOF, Public Service Company of New Mexico and PNM Resources, Inc. have caused this Third Amendment to be executed as of this 27th day of November, 2002.

PUBLIC SERVICE COMPANY OF NEW MEXICO

By:  /s/ Alice A. Cobb
   ----------------------------------------
Its: Senior Vice President
     People Services and Development

ACCEPTED:

PNM RESOURCES, INC.

By: /s/ Alice A. Cobb
   ----------------------------------------
Its: Senior Vice President
People Services and Development

EXHIBIT 10.51.1

FIRST AMENDMENT
TO THE
PUBLIC SERVICE COMPANY OF NEW MEXICO
FIRST RESTATED AND AMENDED
EXECUTIVE RETENTION PLAN

THIS FIRST AMENDMENT made by the Public Service Company of New Mexico ("PNM") is effective as of November 27, 2002.

WHEREAS, PNM adopted the Public Service Company of New Mexico Executive Retention Plan (the "Plan") as of January 1, 1992 to provide certain benefits for its executives;

WHEREAS, the Plan has been amended and restated effective December 7, 1998;

WHEREAS, PNM reserved the right to amend the Plan pursuant to Article IX of the Plan; and

WHEREAS, PNM now desires to amend the Plan to: (i) change the name of the Plan, (ii) change the sponsor of the Plan to PNM Resources, Inc. ("PNMR"), and (iii) designate PNM as a participating employer.

NOW, THEREFORE, PNM does hereby amend the Plan as follows:

NOW, THEREFORE, Public Service Company of New Mexico does hereby amend the Plan as follows:

1. The name of the Plan is hereby amended to read as follows:

PNM RESOURCES, INC.
FIRST RESTATED AND AMENDED
EXECUTIVE RETENTION PLAN

2. The introductory paragraphs of the Plan (being those paragraphs that precede Article I) are hereby amended by the addition of the following paragraph to be placed at the end thereof:

PNM Resources, Inc. became the parent holding company for Public Service Company of New Mexico as of December 31, 2001. Effective as of November 27, 2002, PNM Resources, Inc. assumes the sponsorship of the Plan. Any affiliate that adopted the Plan prior to the assumption of the sponsorship of the Plan by the PNM Resources, Inc., including Public Service Company of New Mexico, shall continue to participate in the Plan.

3. Section 2.8 is hereby amended in its entirety to read as follows:

2.8 "Company" shall mean PNM Resources, Inc. unless the context, such as discussion of the formation of the Plan, clearly indicates otherwise, in which case "Company" can also mean Public Service Company of New Mexico. As used in this Plan, "Company" shall also mean any successor to its assets, as described in Article II, Section 2.5.3, and 2.5.4, that assumes and agrees to perform the Company's obligations hereunder, by operation of law or otherwise. "Company" may also include any holding company owning the Company or subsidiary of such holding company, depending on the context of the reference within this Plan.

4. Article VI is hereby amended by adding a new Section 6.4 to read as follows:
6.4 Allocation Among Affiliates. Each employer that participates in the Plan shall bear the costs and expenses of providing benefits accrued by its employee-Participants during periods while they are employed by that employer. Such costs and expenses shall be allocated among the participating employers in accordance with (i) agreements entered into between the Company and any participating employer, or (ii) in the absence of such an agreement, procedures adopted by the Company.

5. The purpose of this First Amendment is to transfer sponsorship of the Plan to PNMR from PNM. All references to "Public Service Company of New Mexico" or the "Company" are hereby replaced with references to "PNM Resources, Inc.," unless the context (such as discussion of the formation of the Plan) indicates otherwise. Any other provisions of the Plan which are inconsistent with this transfer of sponsorship are hereby amended to the extent necessary to accomplish this transfer.

6. This First Amendment changes the name and sponsorship of the Plan. Any individuals or entities serving as fiduciaries or service providers with respect to the Plan shall continue to serve as such, subject to the provisions of the Plan. Similarly, any policies or procedures previously adopted by the fiduciaries shall continue in full force and effect.

7. PNMR hereby assumes all duties, obligations, and authority as the sponsor of the Plan. PNMR does not assume PNM's financial obligation for its share of the costs and expenses of Plan benefits as determined pursuant to Section 6.4 of the Plan.

8. This First Amendment shall only amend the provisions of the Plan referenced above, and those provisions not amended hereby shall be considered in full force and effect.

IN WITNESS WHEREOF, Public Service Company of New Mexico has caused this First Amendment to be executed as of this 27th day of November, 2002.

PUBLIC SERVICE COMPANY OF NEW MEXICO

By:      /s/ Alice A. Cobb
   -------------------------------------
Its:     Senior Vice President
         People Services and Development

PNM RESOURCES, INC.

By:      /s/ Alice A. Cobb
   -------------------------------------
Its:     Senior Vice President
         People Services and Development

EXHIBIT 10.52

PNM RESOURCES, INC.
EXECUTIVE SPENDING ACCOUNT PLAN

Effective December 1, 2002

TABLE OF CONTENTS

Page

INTRODUCTION................................................................1

DEFINED TERMS...............................................................1

GENERAL INFORMATION ABOUT THE PLAN..........................................5

ELIGIBILITY AND PARTICIPATION REQUIREMENTS..................................6

SUMMARY OF PLAN BENEFITS....................................................8

HOW THE PLAN IS ADMINISTERED...............................................10

CLAIMS PROCEDURES..........................................................10

AMENDMENT OR TERMINATION OF THE PLAN.......................................14

NO CONTRACT OF EMPLOYMENT..................................................14

ARTICLE 1
INTRODUCTION

Public Service Company of New Mexico ("PNM") adopted the "Amended and Restated Medical Reimbursement Plan of Public Service Company of New Mexico" (the "MERP") effective January 1, 1980. The MERP was amended and restated in its entirety effective September 1, 1991 at which time it was renamed the "Second Restated and Amended Public Service Company of New Mexico Executive Medical Plan." Effective November 30, 2002, PNM transferred sponsorship of the MERP to PNM Resources, Inc. ("PNMR"). Effective January 1, 2002, PNMR initiated an Executive Spending Account (the "ESA").

From March 1, 2001 through April 30, 2002, the MERP was fully insured and the benefits were provided by Connecticut General Life Insurance Company ("CIGNA"). Effective May 1, 2002, a decision was made that benefits under the MERP should again be provided on a self-funded basis. The benefits provided under the ESA are, and always have been, self-funded.

By this document, effective December 1, 2002, PNMR hereby merges the MERP with and into the ESA and amends and restates both plans in the form of this combined program, such program to be known as the "PNM Resources, Inc. Executive Spending Account Plan" (the "Plan").

PNMR maintains the Plan to provide a select group of Company executives with additional remuneration in the form of reimbursements for: (i) medical benefits beyond the medical benefits available to the executives under any medical insurance under which they are covered; and (2) other expenses such as income tax preparation costs, costs for estate planning and financial counseling services, and insurance premiums for health, accident, disability, life, dependent life, long-term care, home, auto and personal umbrella insurance. The benefits provided under the Plan are paid from the general assets of PNMR and those of its affiliates that have adopted the Plan with each Company bearing the costs and expenses of providing benefits accrued by its Employee-Participants during periods while they are employed by that Company. Such costs and expenses are allocated among the Companies in accordance with (i) agreements entered into between PNMR and any participating affiliate, or (ii) in the absence of such an agreement, procedures adopted by PNMR. Because benefits are paid from the general assets of the Company, pursuant to Department of Labor regulation
Section 2520.104-24 the Plan is exempt from most of the reporting and disclosure requirements of Part 1 of Title I of ERISA, including the requirement to provide a summary plan description and the requirement to file a Form 5500 - Annual Report.

ARTICLE 2
DEFINED TERMS

Capitalized terms used in the Plan have the following meanings:

Assumed Tax Rate: The tax rate that the Plan Administrator will use to gross-up amounts reimbursed under Tier A of the Plan. Participants will be notified of their Assumed Tax Rate each Paycheck Year.

Code:                      The Internal Revenue Code of 1986, as amended.

Company:                   PNM Resources, Inc. ("PNMR") and any affiliate that
                           has adopted the Plan with the approval of PNMR. Any
                           affiliate that adopted the Plan prior to the
                           assumption of the sponsorship of the Plan by PNMR,
                           including Public Service Company of New Mexico, shall
                           continue to participate in the Plan.

Covered Expense:           Tier A Covered Expenses and Tier B Covered Expenses.


Dependent:                 A Participant's "Dependents" as defined by the
                           Medical Plan who are eligible to be enrolled in the
                           Medical Plan regardless of whether they are actually
                           enrolled in that plan.

Effective Date:            December 1, 2002.

Employee:                  A full-time employee of the Company scheduled to work
                           at least 32 hours per week, or a regular part-time or
                           job share employee scheduled to work at least 20
                           hours per week. Employee does not include: leased
                           employees or workers; independent contractors,
                           consultants or similar self-employed workers;
                           temporary employees or workers; seasonal employees or
                           workers, other contingent workers, or any employee of
                           any affiliate or related entity unless specifically
                           approved by the Company.

ERISA:                     The Employee Retirement Income Security Act of 1974,
                           as amended.

HIPAA:                     The Health Insurance Portability and Accountability
                           Act of 1996, as amended.

Medical Insurance:         Medical insurance coverage under any of the
                           following: (1) The Public Service Company of New
                           Mexico Benefits My Way Plan, Program 2, Medical Plan,
                           effective January 1, 2002, as amended from time to
                           time, or any successor plan; (2) any other employer
                           maintained medical plan covering the Participant and
                           his or her Dependants; and (3) any other medical
                           insurance covering the participant and/or his or her
                           Dependents.

NMHPA:                     The Newborns' and Mothers' Health Protection Act of
                           1996, as amended.

Participant:               An Employee who is eligible to participate in this
                           Plan pursuant to Article 4.

Paycheck Year:             The Paycheck Year commences on the third
                           Saturday before the final paycheck for a calendar
                           year is paid and ends on the third Friday before the
                           final paycheck for the next calendar year is paid.
                           For example, the final paycheck for the 2002 calendar
                           year will be issued on Friday, December 27, 2002.
                           This means that the 2003 Paycheck Year will commence
                           on December 7, 2002 and end on December 5, 2003.

Plan:                      The PNM Resources, Inc. Executive Spending Account
                           Plan, as set forth in this document.

Plan Administrator:        PNMR.

Plan Sponsor:              PNMR.

PNMR:                      PNM Resources, Inc.

Qualifying Event:          A Participant's termination of employment, reduction
                           in hours, divorce, legal separation, death or
                           becoming eligible for Medicare, and a child ceasing
                           to meet the Plan's definition of Dependent.

Tier A:                    The portion of the Plan under which Tier A Covered
                           Expenses are reimbursed. With very few exceptions,
                           expenses that were formerly reimbursed under the MERP
                           are, as of the Effective Date, reimbursed under Tier
                           A.

Tier A Benefit Limit:      The maximum amount for which you and your Dependents,
                           together, may seek reimbursement each Paycheck Year
                           for Tier A Covered Expenses. As of the Effective
                           Date, the Tier A Benefit Limit is $3,000 per Paycheck
                           Year. Any portion of the Tier A Benefit Limit that
                           remains unused at the end of a Paycheck Year may not
                           be carried over to the following Paycheck Year. Any
                           amounts reimbursed by CIGNA under the MERP from
                           January 1, 2002 through April 30, 2002 (while the
                           MERP was fully-insured), will reduce the Tier A
                           Benefit Limit for the remainder of the 2002 Paycheck
                           Year by a corresponding amount.

Tier A Covered Expenses:   Expenses  incurred by a Participant or Dependent
                           during the current or preceding Paycheck Year, while
                           covered by the Plan, for medical care as defined in
                           Section 213(d) of the Code to the extent that no
                           benefits are payable for such medical care under the
                           Participant's Medical Insurance. By way of example,
                           and not limitation, medical care, dental care, vision
                           care, premiums for medical care and qualified
                           long-term care (whether paid on a pre-tax or
                           after-tax basis), transportation primarily for and
                           essential to medical care, and amounts paid for
                           lodging (not lavish or extraordinary under the
                           circumstances) while away from home primarily for and
                           essential to medical care would all be treated as
                           Tier A Covered Expenses.

                           A Tier A Covered Expense is "incurred" when the
                           underlying medical care is provided, regardless of
                           when you are billed or pay for such medical care,
                           unless the medical care for which you are seeking
                           reimbursement is for insurance premiums covering
                           medical care or qualified long-term care, in which
                           case such expense is "incurred" on the date on which
                           you are billed for the premium.

                                       3

Tier B:                    The portion of the Plan under which Tier B Covered
                           Expenses are reimbursed. With very few exceptions,
                           expenses that were formerly reimbursed under the ESA
                           are, as of the Effective Date, reimbursed under Tier
                           B.

Tier B Benefit Limit:      The maximum amount for which you and your Dependents,
                           together, may seek reimbursement each Paycheck Year
                           for Tier B Covered Expenses. Shortly before each
                           Paycheck Year, you will be notified of your Tier B
                           Benefit Limit for the Paycheck Year. Any portion of
                           the Tier B Benefit Limit that remains unused at the
                           end of a Paycheck Year may not be carried over to the
                           following Paycheck Year. Any amounts reimbursed by
                           the Company under the ESA from January 1, 2002
                           through April 30, 2002, will reduce the Tier B
                           Benefit Limit for the remainder of the 2002 Paycheck
                           Year by a corresponding amount.

Tier B Covered Expenses:   Expenses  incurred  by the  Participant  or a
                           Dependent during the current or preceding Paycheck
                           Year, while covered by the Plan, for any of the
                           following: (1) income tax preparation; (2) estate
                           planning (including preparation of wills and trusts);
                           (3) financial counseling, but excluding brokerage
                           fees or commissions; (4) financial management
                           services (this would include, for example, the
                           services provided by a management firm that manages
                           your real estate investments); (5) premiums covering
                           the Participant and his or her Dependents for
                           accident, disability, life, dependent life, long-term
                           care and or supplemental insurance (similar to
                           AFLAIC), whether paid for by the Participant as a
                           private party or deducted from the Participant's
                           salary under a PNM benefit program; (6) premiums for
                           home, auto or personal liability umbrella insurance;
                           or (7) expenses that would qualify as a Tier A
                           Covered Expense but for the fact that the Tier A
                           Benefit Limit has already been exceeded for the
                           Paycheck Year.

                           A Tier B Covered Expense is "incurred" as of the date
                           on which you are billed for the underlying expense;
                           provided, however, that if the expense qualifies as a
                           Tier A Covered Expense, but for the fact that the
                           Tier A Benefit Limit has already been exceeded for
                           the Paycheck Year, the expense is "incurred" when the
                           underlying medical care is provided, regardless of
                           when you are billed or pay for such medical care,
                           unless the medical care for which you are seeking
                           reimbursement is for insurance premiums covering
                           medical care or qualified long-term care, in which
                           case such expense is "incurred" on the date on which
                           you are billed for the premium.

WHCRA:                     The Women's Health and Cancer Rights Act of 1998,
                           as amended.

Plan Name:                 PNM Resources, Inc. Executive Spending Account Plan.

Plan Year:                 January 1 through December 31

Plan Number:               601

Original Effective Date:   The MERP was originally  effective  January 1, 1980.
                           The ESA was first effective January 1, 2002.

Funding Medium:            The Plan is  self-funded.  This means that the
                           Company pays benefits out of its general assets.
                           Participants are not required to pay a premium in
                           order to participate in the Plan.

Plan Sponsor:              PNM Resources, Inc.
                           Alvarado Square, Mail Stop 3101
                           Albuquerque, NM  87158
                           (505) 241-2700

Plan Sponsor's Employer    85-0468296
Identification Number:

Plan Administrator &       PNM Resources, Inc.
Named Fiduciary:           Alvarado Square, Mail Stop 3101
                           Albuquerque, NM  87158
                           (505) 241-2700
                           Attention: Manager-Employee Benefits Department

                           The Plan is administered by the Company or its
                           designee.

Agent for Service of       Patrick Ortiz, General Counsel
Legal Process:             Public Service Company of New Mexico
                           Alvarado Square, Mail Stop 2822
                           Albuquerque, NM  87158
                           (505) 241-2700

Applicable Law:            The validity,  interpretation,  construction and
                           performance of the Plan shall be governed by the laws
                           of the State of New Mexico, unless preempted by
                           ERISA.

Eligibility:               You are  eligible to  participate  in the Plan if you
                           are an Employee of the Company and you are a
                           vice-president or higher-ranking officer of the
                           Company. Your spouse and "Dependents," as defined in
                           Article 2 are eligible to participate in the Plan if
                           you are.

Termination of             Your  participation  in the Plan  terminates  as of
Participation:             the  earliest  of:  (1) the date you terminate
                           employment with the Company; (2) the date you cease
                           to be a vice-president or higher ranking officer of
                           the Company; (3) the date your coverage under all
                           other Medical Insurance ceases; or (4) the date the
                           Plan is terminated.

                           Coverage for your Dependents (including your
                           spouse) stops when your coverage stops. Their
                           coverage will also stop if they cease being your
                           Dependent.

COBRA:                     If coverage for you or your Dependents (including
                           your spouse) ceases because of certain "Qualifying
                           Events," specified in a federal law called COBRA,
                           then you or your Dependents may have the right to
                           purchase continuing coverage under the Plan for a
                           limited period of time. As permitted by law, the
                           Company may impose an administrative fee (usually
                           2%) for this coverage. This right to continue
                           coverage only applies to the portions of the Plan
                           that reimburse medical care expenses.

Effect of Termination      If a Participant or Dependent's participation in the
of Participation on        Plan terminates, any Tier A or  Tier B Covered
Reimbursements:            Expenses incurred by the Participant or Dependent
                           before his or her participation terminated will be
                           eligible for reimbursement even though such
                           reimbursement is not requested or processed before
                           such termination date. Except as required by COBRA,
                           Tier A and Tier B Covered Expenses incurred after
                           such termination date will not be eligible for
                           reimbursement even though the Participant may not
                           have used all or some portion of his or her Tier A or
                           Tier B Benefit Limits. The following examples
                           illustrate how these rules operate:

                           Example 1: Assume that a Participant terminates
                           employment on June 30, and as of such date has been
                           reimbursed $2,500 under Tier A. Before terminating
                           employment, while still covered by the Plan, the
                           Participant incurred an additional $750 of Tier A
                           Covered Expenses. The Participant is entitled to
                           receive a Tier A reimbursement in the amount of
                           $500.

                                       6

                           Example 2: Assume that a Participant ceases to be a
                           vice president or higher-ranking officer on
                           September 30, and as of such date has been
                           reimbursed $500 under Tier A. After changing
                           employment status, while no longer covered by the
                           Plan, the Participant incurs an additional $1,750
                           of Tier A Covered Expenses. The Participant is not
                           entitled to receive a Tier A or Tier B
                           reimbursement for the amounts incurred after her
                           participation is terminated.

Effect of Promotion        If a Participant is promoted during a Paycheck Year
or Demotion on             and such promotion causes the  Participant to be
Reimbursements:            subject to a higher Tier B Benefit Limit, Tier B
                           Covered Expenses incurred before the increased limit
                           takes effect will be eligible for reimbursement as
                           long as they were incurred while the Participant was
                           covered by the Plan. If a Participant is demoted
                           during a Paycheck Year and such demotion causes the
                           Participant to be subject to a lower Tier B Benefit
                           Limit, Tier B Covered Expenses incurred before the
                           decreased limit takes effect will be subject to
                           reimbursement as long as they were incurred while the
                           Participant was covered by the Plan. The following
                           examples illustrate how these rules operate:

                           Example 1: Assume that a Participant is promoted
                           from vice president to senior vice president on
                           October 1st. Assume further that as vice president,
                           the Participant's Tier B Benefit Limit was $7,000
                           and as senior vice president, the Participant's
                           Tier B Benefit Limit is $12,000. Before being
                           promoted, and while covered by the Plan, the
                           Participant incurred $13,000 of Tier B Covered
                           Expenses but has only been reimbursed for $7,000.
                           As of October 1st, the Participant is entitled to
                           be reimbursed an additional $5,000 because of the
                           $12,000 Tier B Benefit Limit to which the
                           Participant is now subject.

                           Example 2: Assume that a Participant is demoted
                           from senior vice president to vice president on
                           July 1st. Assume further that as senior vice
                           president, the Participant's Tier B Benefit Limit
                           was $12,000 and as vice president, the
                           Participant's Tier B Benefit Limit is $7,000.
                           Before being demoted, and while covered by the
                           Plan, the Participant incurred $11,000 of Tier B
                           Covered Expenses but has only been reimbursed for
                           $9,000. As of October 1st, the Participant is
                           entitled to be reimbursed for the $2,000 of Tier B
                           Covered Expenses that were incurred before October
                           1st, even though the Participant is now subject to
                           a $7,000 Tier B Benefit Limit.

                                       7

                           Example 3: Assume that a Participant is demoted
                           from senior vice president to vice president on
                           November 1st. Assume further that as senior vice
                           president, the Participant's Tier B Benefit Limit
                           was $12,000 and as vice president, the
                           Participant's Tier B Benefit Limit is $7,000.
                           Before being demoted, and while covered by the
                           Plan, the Participant incurred $4,000 of Tier B
                           Covered Expenses and had been reimbursed for the
                           full $4,000. After being demoted, the Participant
                           incurs an additional $8,000 of Tier B Covered
                           Expenses. The Participant is entitled to receive a
                           Tier B reimbursement of $3,000 because as of
                           November 1st, the Participant is now subject to a
                           $7,000 Tier B Benefit Limit.

Two Tier Benefit           The Plan has two tiers, Tier A and Tier B.
Structure:
                           If an expense qualifies as a Tier A Covered Expense,
                           the Company will reimburse you for 100% of the Tier A
                           Covered Expense under Tier A of the Plan up to the
                           Tier A Benefit Limit (i.e., $3,000 for you and your
                           Dependents, together, per Paycheck Year). Once you
                           and your Dependents, together, reach the $3,000 Tier
                           A Benefit Limit, no benefits will be paid to you
                           under Tier A for the remainder of the Paycheck Year.
                           Before you submit a claim for reimbursement under
                           Tier A, you must first submit it for payment under
                           your Medical Insurance.

                           If an expense qualifies as a Tier B Covered Expense,
                           the Company will pay you for 100% of the Tier B
                           Covered Expense under Tier B of the Plan up to the
                           Tier B Benefit Limit. Once you and your Dependents,
                           together, reach the Tier B Benefit Limit, no benefits
                           will be paid to you under Tier B for the remainder of
                           the Paycheck Year. If an expense qualifies as a Tier
                           A Covered Expense but for the fact that the Tier A
                           Benefit Limit has been exceeded, the Plan
                           Administrator will automatically process the expense
                           under Tier B, and reimbursement will be made under
                           Tier B, unless the Tier B Benefit Limit has been
                           exceeded.

Tax Treatment of           The  expenses  reimbursed  under Tiers A and B must
Benefits:                  be included  in the  Participant's  taxable income
                           for the calendar year in which the Participant
                           receives the reimbursement, rather than the calendar
                           year in which the underlying expense is incurred.
                           Reimbursements approved by the Plan Administrator
                           will be added to your regular paycheck unless the
                           reimbursement is for a Tier A Covered Expense, in
                           which case it is processed as a separate check
                           through payroll. Notwithstanding the foregoing,
                           effective January 1, 2003, all reimbursements
                           approved by the Plan Administrator will be processed
                           as a separate check through payroll rather than being
                           added to your regular paycheck. In all cases the
                           additional income will be reflected on your W-2 for
                           the calendar year in which the additional income is
                           paid to you. Prior to May 1, 2002, the benefits

                                       8

                           provided under the MERP were not includable in the
                           Participant's taxable income because the benefits
                           provided under the MERP were fully insured by CIGNA.
                           Accordingly, any reimbursements received from CIGNA
                           are not includable in the Participant's taxable
                           income and are not subject to the gross-up rule
                           described below.

Gross-Up of Tier A         Any expense that is  reimbursed  under Tier A of the
Covered Expenses:          Plan will be grossed-up  for taxes,  using the
                           Participant's Assumed Tax Rate. For example, if a
                           Participant receives the maximum reimbursement of
                           $3,000 under Tier A, and the Participant's Assumed
                           Tax Rate is 40%, the Participant will be reimbursed
                           in the amount of $5,000. After paying taxes on the
                           $5,000, the Participant will be left with $3,000
                           (i.e., $5,000 x (1-.40) = $3,000). Expenses
                           reimbursed under Tier B will not be grossed up even
                           though such amounts must be included in the
                           Participant's taxable income.

Compliance with            The Plan will provide benefits in accordance with the
Federal Laws:              applicable requirements of federal laws, such as
                           COBRA, HIPAA, NMHPA and the WHRCA. For example, did
                           you know that the Plan, as required by the WHCRA
                           provides benefits for mastectomy-related services
                           including reconstruction and surgery to achieve
                           symmetry between breasts, prostheses, and
                           complications from mastectomy (including lymphedema)?
                           Call the Plan Administrator for more information.

Qualified Medical          The Plan will also provide benefits to an Employee's
Child Support              non-custodial Dependent child as required by any
Orders:                    qualified medical child support order, or "QMCSO"
                           (as defined in ERISA Section 609(a)). The Plan has
                           detailed procedures for determining whether an order
                           qualifies as a QMCSO. Participants and beneficiaries
                           can obtain, without charge, a copy of such procedures
                           from the Plan Administrator.

Benefits for               The Plan will  provide  benefits to  Dependent
Adopted Children:          children placed with an Employee for adoption under
                           the same terms and conditions as apply in the case of
                           Dependent children who are natural children, in
                           accordance with ERISA Section 609(c).

Special Rights             The Plan may not, under Federal law, restrict
Upon Childbirth:           benefits for any hospital length of stay in
                           connection with childbirth for the mother or newborn
                           child to less than 48 hours following a normal
                           vaginal delivery, or less than 96 hours following a
                           cesarean section. However, Federal law generally does
                           not prohibit the mother's or newborn's attending
                           provider, after consulting with the mother, from
                           discharging the mother or her newborn earlier than
                           the above periods. In any case, the Plan may not,
                           under Federal law, require that a provider obtain
                           authorization from the Plan for prescribing a length
                           of stay not in excess of the above periods.

                           its terms, for the exclusive benefit of persons
                           entitled to participate in the Plan without
                           discrimination among them. The administrative duties
                           of the Plan Administrator include, but are not
                           limited to, interpreting the Plan, and prescribing
                           applicable procedures. The Plan Administrator is also
                           responsible for determining eligibility for and the
                           amount of any benefits payable under the Plan and
                           prescribing claims procedures to be followed and the
                           claims forms to be used by employees for making
                           claims under the Plan. The Plan Administrator also
                           has the authority to require Employees to furnish it
                           with such information as it determines necessary for
                           the proper administration of the Plan.

                           The Plan Administrator may delegate any of these
                           administrative duties among one or more persons or
                           entities, provided that such delegation is in
                           writing, expressly identifies the delegate(s) and
                           expressly describes the nature and scope of the
                           delegated responsibility.

                           If you have any questions regarding the Plan, please
                           contact the Plan Administrator.

Discretionary              The  Plan   Administrator   shall  have  the
Authority to Act:          discretionary authority to perform its administrative
                           responsibilities described in this Plan as necessary
                           or appropriate to enable the Plan Administrator to
                           properly carry out such responsibilities. The
                           decisions of the Plan Administrator upon all matters
                           within the scope of the Plan Administrator's
                           respective authority shall be binding and conclusive
                           upon all persons.

                                Claims Procedures

Reimbursement             Requests: The Plan Administrator is responsible for
                          evaluating all reimbursement requests under the Plan.
                          You must submit all reimbursement requests to the Plan
                          Administrator in accordance with its procedures;
                          provided, however, that each December (or more
                          frequently if you request), the Benefits Department
                          will calculate the insurance deductions that have been
                          taken from your pay during the Paycheck Year, and will
                          submit these for reimbursement on your behalf to the
                          Plan Administrator.

                                       10

                          Reimbursement requests should be submitted as soon as
                          possible after the underlying expense is "incurred,"
                          although, for repetitive expenses, you may want to
                          submit your request when you have other expenses, or
                          at some fixed interval, such as every three or six
                          months. See the definitions of "Tier A Covered
                          Expense" and "Tier B Covered Expense" to determine
                          when an expense is incurred. Please keep in mind that
                          to be reimbursed, an expense must be submitted for
                          reimbursement no later than the end of the Paycheck
                          Year following the Paycheck Year in which the expense
                          was incurred.

                          In order to count against the Tier A or Tier B Benefit
                          Limit for a given Paycheck Year, a properly documented
                          reimbursement request must be sent to the Plan
                          Administrator on or before the last day of such
                          Paycheck Year. Any properly submitted reimbursement
                          requests submitted to the Plan Administrator during a
                          Paycheck Year will be taxable income to the
                          Participant for the calendar year that commences
                          during the Paycheck Year. For example, the 2003
                          Paycheck Year will commence on December 7, 2002 and
                          end on December 5, 2003. Thus any requests submitted
                          from December 7, 2002 through December 5, 2003 will be
                          taxable income to the Participant for the 2003
                          calendar year.

                          To facilitate recordkeeping and reimbursements,
                          expenses submitted at least 3 days before pay period
                          end will be processed and reimbursed during that same
                          payroll period. Expenses submitted after such deadline
                          will be processed and paid during the following
                          payroll period.

                          If a reimbursement request is for medical care, you
                          must first submit the claim for payment to your
                          Medical Insurance, and submit a copy of the resulting
                          explanation of benefits ("EOB") to the Plan
                          Administrator as documentation of the expense. On all
                          reimbursement requests, be sure to include the name of
                          the provider, the nature of the service rendered, and
                          your name on the receipt or invoice. If the claim is
                          in the category of health (other than for prescription
                          drugs), the ICD-9 code assigned by the provider will
                          suffice in place of the nature of the service
                          rendered. Cancelled checks and credit card receipts
                          cannot be used as the sole documentation of an expense
                          submitted for reimbursement.

Dissatisfaction with      If  a  you  are  dissatisfied  with  the
Decision:                 determination of your benefits, eligibility,
                          participation or any other right or interest under
                          this Plan, you may file a written statement setting
                          forth the basis of the claim with the Plan
                          Administrator in a manner prescribed by the Plan
                          Administrator. In connection with the determination
                          of a claim, or in connection with the review of a
                          denied claim, you may examine this Plan and any other
                          pertinent documents generally available to
                          Participants relating to the claim and you may submit
                          written comments, documents, records and other
                          information relating to the claim for benefits.

Notice of Decision:       A written notice of the disposition of any such claim
                          will be furnished to you within 90 days after the
                          claim is filed with the Plan Administrator, provided
                          that the Plan Administrator may have an additional
                          period of up to 90 days to decide the claim if it
                          determines that special circumstances require an
                          extension of time to decide the claim and it advises
                          you in writing of the need for an extension
                          (including an explanation of the special
                          circumstances requiring the extension) and the date
                          on which it expects to decide the claim.

Content of Notice:        The notice of disposition of a claim shall set forth:

                          o    the specific reasons for denial of the claim;

                          o    reference to the specific Plan provisions upon
                               which the determination is based;

                          o    a  description  of any  additional  material or
                               information  necessary for you to perfect  the
                               claim and an  explanation  of why such  material
                               or  information  is necessary; and

                          o    an explanation of the Plan's appeal procedure
                               and an explanation of the time limits
                               applicable to the Plan's appeal procedures,
                               including a statement of your right to bring
                               a civil action under Section 502(a) of ERISA,
                               following an adverse benefit determination on
                               review.

Appeal of Denied Claim:   Within 60 days after receiving the written notice of
                          the Plan Administrator's disposition of the claim,
                          your, or your duly authorized representative, may
                          request in writing that the Plan Administrator review
                          the denied claim. You may submit a written statement
                          of your claim (including any written comments,
                          documents, records and other information relating to
                          the claim) and the reasons for granting the claim.
                          The Plan Administrator shall have the right to
                          request of and receive from a claimant such
                          additional information, documents or other evidence
                          as the Plan Administrator may reasonably require. If
                          you do not request a review of the denied claim
                          within 60 days after receiving written notice of the
                          Plan Administrator's disposition of the claim, you
                          will be deemed to have accepted the Plan
                          Administrator's written disposition, unless you have
                          been physically or mentally incapacitated so as to be
                          unable to request review within the 60-day period.

                          Upon request and free of charge, you will be provided
                          reasonable access to, and copies of, all documents,
                          records, and other information relevant to your claim
                          for benefits, with such relevance to be determined as
                          set forth below under "Relevance of Documents."

                          The review shall take into account all comments,
                          documents, records and other information submitted by
                          you relating to the claim, without regard to whether
                          such documents, records or other information were
                          submitted or considered in the initial benefit
                          determination.

                                       12

Decision on Appeal:       A decision on appeal shall be rendered, in writing,
                          by the Plan Administrator ordinarily not later than
                          60 days after you request review of a denied claim,
                          and a written copy of such decision shall be
                          delivered to you. If special circumstances require an
                          extension of the ordinary period, the Plan
                          Administrator will notify you of the extension with
                          such notice containing an explanation of the special
                          circumstances requiring the extension and the date by
                          which the Plan Administrator expects to render a
                          decision. Any such extension will not extend beyond
                          60 days after the end of the ordinary period.

The denial notice shall set forth:

                          o   the specific reasons for denial of the claim;

                          o   reference to the specific Plan provisions upon
                              which the denial is based;

                          o   a statement that you are is entitled to
                              receive, upon request and free of charge,
                              reasonable access to, and copies of, all
                              documents, records, and other information
                              relevant to the your claim for benefits; and

                          o   a statement of your right to bring a civil action
                              under Section 502(a) of ERISA.

Relevance of              For purpose of this Article 7, documents, records,
Documents:                or other information shall be considered "relevant"
                          to your claim for benefits if such documents, records
                          or other information:

                          o   were relied upon in making the benefit
                              determination;

                          o   were submitted, considered, or generated in
                              the course of making the benefit determination,
                              without regard to whether such documents, records
                              or other information were relied upon in making
                              the benefit determination; or

                          o   demonstrate compliance with the administrative
                              processes and safeguards required by this
                              Article 7 regarding the making of the benefit
                              determination.

Decisions Final and       To the extent  permitted  by law, a decision on review
Procedures Mandatory:     by the Plan Administrator shall be binding and
                          conclusive upon all persons whomsoever. To the extent
                          permitted by law, completion of the claims procedures
                          described in this Article shall be a mandatory
                          precondition that must be complied with prior to
                          commencement of a legal or equitable action in
                          connection with the Plan by a person claiming rights
                          under the Plan or by another person claiming rights
                          through such a person. The Plan Administrator may, in
                          its sole discretion, waive these procedures as a
                          mandatory precondition to such an action.

ARTICLE 8
AMENDMENT OR TERMINATION OF THE PLAN

PNMR, as Plan Sponsor, has the right to amend or terminate the Plan at any time. The Plan may be amended or terminated by a written instrument duly adopted by PNMR or any of its delegates.

ARTICLE 9
NO CONTRACT OF EMPLOYMENT

The Plan is not intended to be, and may not be construed as constituting, a contract or other arrangement between you and the Company to the effect that you will be employed for any specific period of time.

IN WITNESS WHEREOF, PNM Resources, Inc. has caused this Plan to be executed as of this 27 day of November, 2002.

PNM RESOURCES, INC.

By:      /s/ Alice A. Cobb
Its: Senior Vice President

Exhibit 10.72

195,000,000

CREDIT AGREEMENT

among

PUBLIC SERVICE COMPANY OF NEW MEXICO
as Borrower,

THE LENDERS IDENTIFIED HEREIN,

BANK OF AMERICA, N.A.,
as Administrative Agent

WACHOVIA BANK, NATIONAL ASSOCIATION,
as Syndication Agent

AND

FLEET NATIONAL BANK
as Documentation Agent

DATED AS OF DECEMBER 19, 2002

BANC OF AMERICA SECURITIES LLC,
as Sole Lead Arranger and Sole Book Manager

                                TABLE OF CONTENTS
                                -----------------


SECTION 1  DEFINITIONS AND ACCOUNTING TERMS...................................1
         1.1      Definitions.................................................1
                  -----------
         1.2      Computation of Time Periods and Other
                  Definitional Provisions....................................16
                  -----------------------
         1.3      Accounting Terms/Calculation of
                  Financial Covenants........................................16
                  -------------------
         1.4      Time.......................................................16
                  ----
         1.5      Rounding of Financial Covenants............................16
                  -------------------------------
         1.6      References to Agreements and Requirement of Laws...........17
                  ------------------------------------------------

SECTION 2  CREDIT FACILITY...................................................17
         2.1      Revolving Loans............................................17
                  ---------------
         2.2      Letter of Credit Subfacility...............................18
                  ----------------------------
         2.3      Continuations and Conversions..............................25
                  -----------------------------
         2.4      Minimum Amounts............................................26
                  ---------------

SECTION 3  GENERAL PROVISIONS APPLICABLE TO REVOLVING LOANS..................26
         3.1      Interest...................................................26
                  --------
         3.2      Payments Generally.........................................27
                  ------------------
         3.3      Prepayments................................................28
                  -----------
         3.4      Fees.......................................................29
                  ----
         3.5      Payment in full at Maturity................................29
                  ---------------------------
         3.6      Computations of Interest and Fees..........................30
                  ---------------------------------
         3.7      Pro Rata Treatment.........................................30
                  ------------------
         3.8      Sharing of Payments........................................31
                  -------------------
         3.9      Capital Adequacy...........................................32
                  ----------------
         3.10     Eurodollar Provisions......................................32
                  ---------------------
         3.11     Illegality.................................................32
                  ----------
         3.12     Requirements of Law; Reserves on Eurodollar Loans..........33
                  -------------------------------------------------
         3.13     Taxes......................................................33
                  -----
         3.14     Compensation...............................................36
                  ------------
         3.15     Determination and Survival of Provisions...................36
                  ----------------------------------------

SECTION 4  CONDITIONS PRECEDENT TO CLOSING...................................37
         4.1      Closing Conditions.........................................37
                  ------------------

SECTION 5  CONDITIONS TO ALL EXTENSIONS OF CREDIT............................39
         5.1      Funding Requirements.......................................39
                  --------------------

SECTION 6  REPRESENTATIONS AND WARRANTIES....................................40
         6.1      Organization and Good Standing.............................40
                  ------------------------------
         6.2      Due Authorization..........................................40
                  -----------------
         6.3      No Conflicts...............................................40
                  ------------
         6.4      Consents...................................................40
                  --------
         6.5      Enforceable Obligations....................................41
                  -----------------------
         6.6      Financial Condition........................................41
                  -------------------
         6.7      No Material Change.........................................41
                  ------------------
         6.8      No Default.................................................41
                  ----------

                                       i

         6.9      Litigation.................................................41
                  ----------
         6.10     Taxes......................................................41
                  -----
         6.11     Compliance with Law........................................42
                  -------------------
         6.12     ERISA......................................................42
                  -----
         6.13     Use of Proceeds; Margin Stock..............................43
                  -----------------------------
         6.14     Government Regulation......................................43
                  ---------------------
         6.15     Solvency...................................................43
                  --------
         6.16     Disclosure.................................................43
                  ----------
         6.17     Environmental Matters......................................44
                  ---------------------
         6.18     Material Leases............................................44
                  ---------------
         6.19     Material Lease Interest Payments and Discount Rate.........44
                  --------------------------------------------------

SECTION 7  AFFIRMATIVE COVENANTS.............................................44
           ---------------------
         7.1      Information Covenants......................................44
                  ---------------------
         7.2      Financial Covenants........................................46
                  -------------------
         7.3      Preservation of Existence and Franchises...................46
                  ----------------------------------------
         7.4      Books and Records..........................................47
                  -----------------
         7.5      Compliance with Law........................................47
                  -------------------
         7.6      Payment of Taxes and Other Indebtedness....................47
                  ---------------------------------------
         7.7      Insurance..................................................47
                  ---------
         7.8      Performance of Obligations.................................47
                  --------------------------
         7.9      Use of Proceeds............................................48
                  ---------------
         7.10     Audits/Inspections.........................................48
                  ------------------

SECTION 8  NEGATIVE COVENANTS................................................48
           ------------------
         8.1      Nature of Business.........................................48
                  ------------------
         8.2      Consolidation and Merger...................................48
                  ------------------------
         8.3      Sale or Lease of Assets....................................48
                  -----------------------
         8.4      Affiliate Transactions.....................................49
                  ----------------------
         8.5      Liens......................................................49
                  -----
         8.6      Accounting Changes.........................................50
                  ------------------

SECTION 9  EVENTS OF DEFAULT.................................................50
           -----------------
         9.1      Events of Default..........................................50
                  -----------------
         9.2      Acceleration; Remedies.....................................52
                  ----------------------
         9.3      Allocation of Payments After Event of Default..............53
                  ---------------------------------------------

SECTION 10  AGENCY PROVISIONS................................................54
         10.1     Appointment and Authorization of Administrative Agent......54
                  -----------------------------------------------------
         10.2     Delegation of Duties.......................................55
                  --------------------
         10.3     Liability of Administrative Agent..........................55
                  ---------------------------------
         10.4     Reliance by Administrative Agent...........................55
                  --------------------------------
         10.5     Notice of Default..........................................56
                  -----------------
         10.6     Credit Decision; Disclosure of Information by the
                  Administrative Agent.......................................56
                  --------------------
         10.7     Indemnification of Administrative Agent....................57
                  ---------------------------------------
         10.8     Administrative Agent in its Individual Capacity............57
                  -----------------------------------------------
         10.9     Successor Administrative Agent.............................58
                  ------------------------------
         10.10    Administrative Agent May File Proofs of Claim..............58
                  ---------------------------------------------
         10.11    Other Agents; Arrangers and Managers.......................59
                  ------------------------------------

                                       ii

SECTION 11  MISCELLANEOUS....................................................59
         11.1     Notices and Other Communications; Facsimile Copies.........59
                  --------------------------------------------------
         11.2     Right of Set-Off...........................................60
                  ----------------
         11.3     Successors and Assigns.....................................61
                  ----------------------
         11.4     No Waiver; Remedies Cumulative.............................64
                  ------------------------------
         11.5     Attorney Costs, Expenses, Taxes and Indemnification
                  by Borrower................................................64
                  -----------
         11.6     Amendments, Waivers and Consents...........................66
                  --------------------------------
         11.7     Counterparts...............................................67
                  ------------
         11.8     Headings...................................................67
                  --------
         11.9     Survival of Indemnification and Representations
                  and Warranties.............................................67
                  --------------
         11.10    Governing Law; Venue; Jurisdiction.........................67
                  ----------------------------------
         11.11    Waiver of Jury Trial; Waiver of Consequential Damages......68
                  -----------------------------------------------------
         11.12    Severability...............................................68
                  ------------
         11.13    Further Assurances.........................................68
                  ------------------
         11.14    Confidentiality............................................68
                  ---------------
         11.15    Entirety...................................................69
                  --------
         11.16    Binding Effect; Continuing Agreement.......................69
                  ------------------------------------
         11.17    Regulatory Statement.......................................69
                  --------------------


                                       ii

SCHEDULES
---------

Schedule 1.1(a)               Pro Rata Shares
Schedule 1.1(c)               Existing Letters of Credit
Schedule 6.18                 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 Revolving Note
Exhibit 2.3                   Form of Notice of Continuation/Conversion
Exhibit 7.1(c)                Form of Compliance Certificate
Exhibit 11.3(b)               Form of Assignment and Assumption

CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this "Credit Agreement") is entered into as of December 19, 2002 among PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, as Borrower, the Lenders and BANK OF AMERICA, N.A., as Administrative Agent and L/C Issuer.

RECITALS

WHEREAS, the Borrower has requested the Lenders to provide a senior credit facility to the Borrower in an aggregate principal amount of $195,000,000; and

WHEREAS, the Lenders party hereto have agreed to make the requested senior credit 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

The following terms shall have the meanings specified herein unless the context otherwise requires. Defined terms herein shall include in the singular number the plural and in the plural the singular:

"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the Applicable Percentage.

"Administrative Agent" means Bank of America or any successor administrative agent appointed pursuant to Section 10.9.

"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 with as the Administrative Agent may from time to time notify the Borrower and the Lenders.

"Administrative Fees" has the meaning set forth in Section 3.4(d).

"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-Related Persons" means the Administrative Agent, together with its Affiliates and the officers, directors, employees, agents and attorneys-in-fact of the Administrative Agent and its Affiliates.

"Applicable Percentage" means, for Eurodollar Loans, L/C Fees, Commitment Fees and Utilization Fees, the appropriate applicable percentages, in each case, corresponding to the Debt Rating in effect as of the most recent Calculation Date as shown below:

------- --------------- ------------------ ----------------- -----------------
                             Applicable
                           Percentage for      Applicable        Applicable
Pricing                   Eurodollar Rate    Percentage for    Percentage for
 Level    Debt Rating   Loans and L/C Fees  Commitment Fees   Utilization Fees
------- --------------- ------------------ ----------------- -----------------
        greater than equal
   I    to BBB+/Baa1           .875%              .10%             .125%

------- --------------- ------------------ ----------------- -----------------
  II      BBB/Baa2             1.00%              .15%             .125%
------- --------------- ------------------ ----------------- -----------------
 III      BBB-/Baa3           1.125%              .20%             .125%
------- --------------- ------------------ ----------------- -----------------
  IV      BB+/Ba1              1.25%              .25%             .250%
------- --------------- ------------------ ----------------- -----------------
        less than
   V      BB+/Ba1             .50%              .30%             .500%
------- --------------- ------------------ ----------------- -----------------

The Applicable Percentages shall be determined and 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. If at any time there is a split in the Borrower's Debt Ratings between S&P and Moody's, the Applicable Percentages shall be determined by the lower of the two Debt Ratings (i.e. the higher pricing); provided that if the two Debt Ratings are more than one level apart, the Applicable Percentage shall be based on the Debt Rating which is one level higher than the lower rating. 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 as well as any new Eurodollar Loans made.

"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.

"Arranger" means Banc of America Securities LLC, together with its successors and/or assigns.

"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.

"Bank of America" means Bank of America, N.A., together with its successors and/or assigns.

"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 Bank of America as its "prime rate" (the "Prime Rate"). The Prime Rate is a rate set by Bank of America based upon various factors including Bank of America's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

"Base Rate Loan" means any Revolving 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 Obligations" means, without duplication, all of the obligations of the Borrower to the Lenders and the Administrative Agent, whenever arising, under this Credit Agreement, the Revolving Notes, or any of the other Credit Documents.

"Borrowing" means a borrowing consisting of simultaneous Revolving 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.

"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 or Charlotte, North Carolina; 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.

"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 Collateralize" means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to the Administrative Agent and the L/C Issuer.

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

"Closing Date" means the date of this Credit Agreement, which is the first date all the conditions precedent in Section 5.1 are satisfied or waived in accordance with Section 5.1.

"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 (a) make Revolving Loans to the Borrower pursuant to Section 2.1 and (b) fund or purchase Participation Interests in L/C Obligations pursuant to
Section 2.2, in an aggregate principal amount at any one time outstanding not to exceed such Lender's Pro Rata Share of the Revolving Committed Amount as 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 adjusted from time to time in accordance with this Credit Agreement.

"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 EBITDA" means, for any period, an amount equal to (a) Consolidated Net Income (excluding any extraordinary gains and extraordinary losses) for such period plus (b) an amount which in the determination of Consolidated Net Income for such period was deducted for (i) Consolidated Interest Expense, (ii) income tax expense, (iii) depreciation expense and (iv) amortization expense plus (c) non-cash items reducing Consolidated Net Income for such period less (d) non-cash items increasing Consolidated Net Income for such period.

"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.

"Consolidated Interest Expense" means, for any period, with respect to the Borrower and its Subsidiaries on a consolidated basis, an amount equal to total interest expense of the Borrower and its

Subsidiaries for such period (including, without limitation, all such interest expense accrued or capitalized during such period, whether or not actually paid during such period), as determined in accordance with GAAP.

"Consolidated Net Income" means the consolidated net income of the Borrower and its Subsidiaries, as determined in accordance with GAAP.

"Contingent Obligation" means, with respect to any Person, any direct or indirect liability of such Person with respect to any Indebtedness, liability or other obligation (the "primary obligation") of another Person (the "primary obligor"), whether or not contingent,
(a) to purchase, repurchase or otherwise acquire such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or provide funds (i) for the payment or discharge of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor in respect thereof to make payment of such primary obligation or (d) otherwise to assure or hold harmless the owner of any such primary obligation against loss or failure or inability to perform in respect thereof; provided, however, that, with respect to the Borrower and its Subsidiaries, the term Contingent Obligation shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation of any Person shall be deemed to be an amount equal to the maximum amount of such Person's liability with respect to the stated or determinable amount of the primary obligation for which such Contingent Obligation is incurred or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder).

"Covenant Compliance Worksheet" shall mean a fully completed worksheet in the form of Attachment A to Exhibit 7.1(c).

"Credit Agreement" has the meaning set forth in the Preamble hereof.

"Credit Documents" means this Credit Agreement, the Revolving Notes, any Notice of Borrowing, any Notice of Continuation/Conversion, and any other document, agreement or instrument entered into or executed in connection with the foregoing.

"Credit Extension" means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.

"Debt Rating" means the long term unsecured senior non-credit enhanced debt rating of the Borrower by 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 Revolving Loan or purchase or fund a Participation Interest (but only for so long as such Revolving 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 Credit 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.

"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 approved by the Administrative Agent, the L/C Issuer 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.

"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 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 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 play 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.

"Eurodollar Loan" means a Revolving Loan bearing interest based at a rate determined by reference to the Adjusted Eurodollar Rate.

"Eurodollar Rate" means for any Interest Period with respect to any Eurodollar Loan:

(a) the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate that appears on the page of the Telerate screen (or any successor thereto) that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or

(b) if the rate referenced in the preceding clause (i) does not appear on such page or service or such page or service shall not be available, the rate per annum equal to the rate determined by the Administrative Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or

(c) if the rates referenced in the preceding clauses (i) and (ii) are not available, the rate per annum reasonably determined by the Administrative Agent as the rate of interest 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 Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America'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 first day of such Interest Period.

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

"Exchange Act" means the Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder, as amended, modified, succeeded or replaced from time to time.

"Existing Credit Agreement" means that certain Credit Agreement, dated as of March 11, 1998, among the Borrower, the lenders party thereto, and The Chase Manhattan Bank, as Administrative Agent, as previously amended, modified or supplemented prior to the Closing Date.

"Existing Letters of Credit" means the letters of credit set forth on Schedule 1.1(c).

"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 Bank of America on such day on such transactions as determined by the Administrative Agent.

"Fee Letter" means that certain letter agreement, dated as of November 22, 2002, among the Borrower, Bank of America and the Arranger, as 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.

"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.

"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.

"Government Acts" has the meaning set forth in Section 2.2(k).

"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 (including, without limitation, any state dental board) and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

"Granting Lender" has the meaning specified in Section 11.3(g).

"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.

"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.

"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 $111,000,000 pledged by the Borrower to secure guarantees of $111,000,000 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.

"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 of the Borrower 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.

"L/C Credit Extension" means, with respect to any Letter of Credit, the issuance thereof, the extension of the expiry date thereof, the renewal or increase of the amount thereof or any extension of credit resulting from a drawing thereunder that has not been reimbursed.

"L/C Fees" has the meaning set forth in Section 3.4(c).

"L/C Fronting Fee" has the meaning set forth in Section 2.2(i).

"L/C Issuer" means (a) solely with respect to the Existing Letters of Credit, J.P. Morgan Chase Bank in its capacity as issuer of such Existing Letters of Credit and (b) with respect to all other Letters of Credit, Bank of America in its capacity as issuer of such Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.

"L/C Obligations" means, as of any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit plus the aggregate of all unreimbursed drawings under any Letter of Credit.

"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.

"Letter of Credit" means any letter of credit issued hereunder and shall include the Existing Letters of Credit.

"Letter of Credit Application" means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.

"Letter of Credit Expiration Date" means the day that is ten days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).

"Letter of Credit Sublimit" means an amount equal to FIFTY MILLION DOLLARS ($50,000,000). The Letter of Credit Sublimit is part of, and not in addition to, the Revolving Committed Amount.

"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.

"Mandatory Borrowing" has the meaning set forth in Section 2.2(d).

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

"Material Adverse Change" means a material adverse change in the condition (financial or otherwise), operations, business, performance, properties or assets of the Borrower and its Subsidiaries, taken as a whole.

"Material Adverse Effect" means a material adverse effect upon
(a) the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries, taken as a whole, (b) the ability of the Borrower to perform its obligations under this Credit Agreement or any of the other Credit Documents or (c) the legality, validity or enforceability of this Credit 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 December 18, 2003.

"Moody's" means Moody's Investors Service, Inc. and its successors.

"Multiemployer Plan" means any "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA to which the Borrower, any of its Subsidiaries or any ERISA Affiliate makes, is making or is obligated to make contributions or has made or been obligated to make contributions.

"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.

"Nonrenewal Notice Date" has the meaning set forth in Section 2.2(b)(iii).

"Notice of Borrowing" means a request by the Borrower for a Revolving 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 2.3.

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

"PBGC" means the Pension Benefit Guaranty Corporation and any successor thereto.

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

"Participation Interest" means (a) the purchase by a Lender of a participation in Letters of Credit or L/C Obligations as provided in
Section 2.2 or (b) the purchase by a Lender of a participation in any Revolving Loan as provided in Section 3.8.

"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) which is covered by 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 4069 of ERISA be deemed to be) an "employer" within the meaning of
Section 3(5) of ERISA.

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

"Pro Rata Share" means, with respect to each Lender at any time, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the Commitment of such Lender at such time and the denominator of which is the amount of the Revolving Committed Amount at such time; provided that if the Commitment of each Lender to make Revolving Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 9.2 or otherwise, then the Pro Rata Share of each Lender shall be determined based on such Lender's percentage ownership of the sum of the aggregate amount of outstanding Revolving Loans plus the aggregate amount of outstanding L/C Obligations. The initial Pro Rata Share of each Lender is set forth opposite the name of such Lender on Schedule 1.1(a) or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

"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.

"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 Lenders whose aggregate Credit Exposure (as hereinafter defined) constitutes more than 50% of the Credit Exposure of all Lenders at such time; provided, however, that if any Lender shall be a Defaulting Lender at such time then there shall be excluded from the determination of Required Lenders the aggregate principal amount of Credit Exposure of such Lender at such time. For purposes of the preceding sentence, the term "Credit Exposure" as applied to each Lender shall mean (a) at any time prior to the termination of the Commitments, the Pro Rata Share of such Lender of the Revolving Committed Amount multiplied by the Revolving Committed Amount and (b) at any time after the termination of the Commitments, the sum of (i) the principal balance of the outstanding Revolving Loans of such Lender plus (ii) such Lender's Participation Interests in the face amount of the outstanding Letters of Credit.

"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 Credit 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 Credit Agreement and the other Credit Documents.

"Revolving Committed Amount" means ONE HUNDRED NINETY-FIVE MILLION DOLLARS ($195,000,000) or such lesser amount, as it may be reduced from time to time in accordance with Section 2.1(d).

"Revolving Loans" or "Loans" has the meaning set forth in
Section 2.1(a).

"Revolving Notes" or "Notes" means the promissory notes of the Borrower in favor of each of the Lenders evidencing the Revolving 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).

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

"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

"Single Employer Plan" means any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan or Multiple Employer Plan.

"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(g).

"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).

"3838 Securization" means the electric and gas accounts receivable securitization program which is the subject of New Mexico Public Regulation Commission in Case 3838.

"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 Revolving Loan, its character as a Base Rate Loan or a Eurodollar Loan.

"Unused Revolving Commitment" means, for any date of determination, the amount by which (a) the aggregate Revolving Committed Amount on such date exceeds (b) the sum of the aggregate principal amount of outstanding Revolving Loans plus the aggregate principal amount of outstanding L/C Obligations on such date.

"Utilization Fees" has the meaning set forth in Section 3.4(b).

"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).

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 Credit Agreement to "Articles", "Sections", "Schedules" or "Exhibits" shall be to Articles, Sections, Schedules or Exhibits of or to this Credit Agreement unless otherwise specifically provided.

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 Credit 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 Credit Agreement applied on a basis consistent with the application used in preparing the most recent financial statements of the Borrower referred to in Section 4.1(d). In the event that any changes in GAAP after such date are required to be applied to the Borrower and would affect the computation of the financial covenants contained in Section 7.2, such changes shall be followed only from and after the date this Credit Agreement shall have been amended to take into account any such changes.

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

Any financial ratios required to be maintained by the Borrower pursuant to this Credit 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).

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.

SECTION 2

CREDIT FACILITY

(a) Revolving Loan Commitment. Subject to the terms and conditions set forth herein, each Lender severally agrees to make revolving loans (each a "Revolving Loan" or "Loan" and collectively the "Revolving Loans" or "Loans") in Dollars to the Borrower, at any time and from time to time, during the period from and including the Closing Date to but not including the Maturity Date (or such earlier date if the Commitments have been terminated as provided herein); provided, however, that after giving effect to any Borrowing (i) the sum of the aggregate principal amount of outstanding Revolving Loans plus the aggregate principal amount of outstanding L/C Obligations shall not exceed the Revolving Committed Amount and (ii) with respect to each individual Lender, the sum of the aggregate principal amount of outstanding Revolving Loans plus the aggregate principal amount of outstanding L/C Obligations of such Lender shall not exceed such Lender's Pro Rata Share of the Revolving Committed Amount. Subject to the terms of this Credit Agreement (including Section 3.3), the Borrower may borrow, repay and reborrow Revolving Loans.

(b) Method of Borrowing for Revolving Loans. By no later than 11:00 a.m. (i) on the date of the requested Borrowing of Revolving Loans that will be Base Rate Loans and (ii) three Business Days prior to the date of the requested Borrowing of Revolving 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 date of the requested Borrowing, (C) the Type of Revolving Loan, (D) with respect to Revolving 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 Revolving Loan requested, then such Revolving Loan shall be deemed to be a Base Rate Loan. All Revolving Loans made on the Closing Date shall be Base Rate Loans. Thereafter, all or any portion of the Revolving Loans may be converted into Eurodollar Loans in accordance with the terms of Section 2.3.

(c) Funding of Revolving Loans. Upon receipt of a Notice of Borrowing, 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 Revolving Loans 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, the amount of the requested Revolving Loans 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) Reductions of Revolving Committed Amount. Upon at least three Business Days' notice, the Borrower shall have the right to permanently terminate or reduce the aggregate unused amount of the Revolving Committed Amount at any time or from time to time; provided that (i) 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 and (ii) no reduction shall be made which would reduce the Revolving Committed Amount to an amount less than the sum of the aggregate principal amount of outstanding Revolving Loans plus the aggregate principal amount of outstanding L/C Obligations. Any reduction in (or termination of) the Revolving Committed Amount shall be permanent and may not be reinstated.

(e) Revolving Notes. The Revolving Loans made by each 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).

(a) The Letter of Credit Commitment.

(i) Subject to the terms and conditions set forth herein and other terms and conditions that the L/C Issuer may reasonably require, (A) the L/C Issuer agrees, in reliance upon the agreements of the other Lenders set forth in this
Section 2.2, from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue standby Letters of Credit in Dollars

for the account of the Borrower and to amend Letters of Credit previously issued by it, in each case in accordance with subsection (b) below and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of the Borrower; provided, however, that after giving effect to the issuance of any Letter of Credit (1) the sum of the aggregate principal amount of outstanding Revolving Loans plus the aggregate principal amount of outstanding L/C Obligations shall not exceed the Revolving Committed Amount, (2) with respect to each individual Lender, the sum of the aggregate principal amount of outstanding Revolving Loans of such Lender plus the aggregate principal amount of outstanding L/C Obligations of such Lender shall not exceed such Lender's Pro Rata Share of the Revolving Committed Amount and (3) the aggregate amount of L/C Obligations shall not at any time exceed the Letter of Credit Sublimit. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.

(ii) The L/C Issuer shall not issue or amend any Letter of Credit if:

(A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Requirement of Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;

(B) the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance, unless the Required Lenders have approved such expiry date;

(C) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Lenders have approved such expiry date;

(D) the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer; or

(E) such Letter of Credit is in an initial amount less than $100,000 (unless otherwise agreed to by the L/C Issuer), is to be used for a purpose other than as permitted by Section 7.11, or is denominated in a currency other than Dollars.

(iii) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

(b) Procedures for Issuance and Amendment of Letters of Credit.

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrower. The Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as the L/C Issuer may agree in a particular instance in its sole discretion) prior to the proposed issuance date or date of amendment, as applicable. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day), (B) the amount thereof, (C) the expiry date thereof, (D) the name and address of the beneficiary thereof, (E) the documents to be presented by such beneficiary in case of any drawing thereunder, (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder and (G) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (1) the Letter of Credit to be amended, (2) the proposed date of amendment thereof (which shall be a Business Day), (3) the nature of the proposed amendment and (4) such other matters as the L/C Issuer may require.

(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Upon receipt by the L/C Issuer of confirmation from the Administrative Agent that the requested issuance or amendment is permitted in accordance with the terms hereof, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer's usual and customary business practices.

(iii) If the Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic renewal provisions (each, an "Auto-Renewal Letter of Credit"); provided that any such Auto-Renewal Letter of Credit must permit the L/C Issuer to prevent any such renewal at least once in each twelve-month period (commencing

with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the "Nonrenewal Notice Date") in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a specific request to the L/C Issuer for any such renewal. Once an Auto-Renewal Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the renewal of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the L/C Issuer shall not permit any such renewal if (A) the L/C Issuer has determined that it would have no obligation at such time to issue such Letter of Credit in its renewed form under the terms hereof (by reason of the provisions of Section 2.2(a)(ii) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is two Business Days before the Nonrenewal Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such renewal or (2) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 5 is not then satisfied.

(iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.

(c) Participations.

(i) On the Closing Date, each Lender shall be deemed to have purchased without recourse a risk participation from the L/C Issuer in each Existing Letter of Credit and the obligations arising thereunder and any collateral relating thereto, in each case in an amount equal to its Pro Rata Share of the obligations under such Existing Letter of Credit, and shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and be obligated to pay to the L/C Issuer therefor and discharge when due, its Pro Rata Share of the obligations arising under such Existing Letter of Credit.

(ii) Each Lender, upon issuance of a Letter of Credit, shall be deemed to have purchased without recourse a risk participation from the L/C Issuer in such Letter of Credit and the obligations arising thereunder and any collateral relating thereto, in each case in an amount equal to its Pro Rata Share of the obligations under such Letter of Credit, and shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and be obligated to pay to the L/C Issuer therefor and discharge when due, its Pro Rata Share of the obligations arising under such Letter of Credit.

(d) Reimbursement.

(i) In the event of any drawing under any Letter of Credit, the L/C Issuer will promptly notify the Borrower. The Borrower shall reimburse the L/C Issuer on the day of drawing under any Letter of Credit either with the proceeds of a Revolving Loan obtained hereunder or otherwise in immediately available funds. If the Borrower shall fail to reimburse the L/C Issuer as provided hereinabove, the unreimbursed amount of such drawing shall bear interest at a per annum rate equal to the Base Rate plus two percent (2%).

(ii) Subsequent to a drawing under any Letter of Credit, unless the Borrower shall immediately notify the L/C Issuer of its intent to otherwise reimburse the L/C Issuer, the Borrower shall be deemed to have requested a Base Rate Loan in the amount of the drawing as described herein, the proceeds of which will be used to satisfy the reimbursement obligations. On any day on which the Borrower shall be deemed to have requested a Revolving Loan borrowing to reimburse a drawing under a Letter of Credit, the Administrative Agent shall give notice to the Lenders that a Revolving Loan has been deemed requested in connection with a drawing under a Letter of Credit, in which case a Revolving Loan borrowing comprised solely of Base Rate Loans (each such borrowing, a "Mandatory Borrowing") shall be immediately made from all Lenders (without giving effect to any termination of the Commitments pursuant to Section 9.2 or otherwise) pro rata based on each Lender's respective Pro Rata Share and the proceeds thereof shall be paid directly to the L/C Issuer for application to the respective L/C Obligations. Each Lender hereby irrevocably agrees to make such Revolving Loans immediately upon any such request or deemed request on account of each such Mandatory Borrowing in the amount and in the manner specified in the preceding sentence and on the same such date notwithstanding (A) the amount of Mandatory Borrowing may not comply with the minimum amount for borrowings of Revolving Loans otherwise required hereunder, (B) the failure of any conditions specified in Section 5.2 to have been satisfied, (C) the existence of a Default or an Event of Default, (D) the failure of any such request or deemed request for Revolving Loans to be made by the time otherwise required hereunder, (E) the date of such Mandatory Borrowing, or (F) any reduction in the Revolving Committed Amount or any termination of the Commitments.

(iii) In the event that any Mandatory Borrowing cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the commencement of a proceeding under the Bankruptcy Code with respect to the Borrower), then each such Lender hereby agrees that it shall forthwith fund (as of the date the Mandatory Borrowing would otherwise have occurred, but adjusted for any payments received from the Borrower on or after such date and prior to such purchase) its Pro Rata Share in the outstanding L/C Obligations; provided, that in the event any Lender shall

fail to fund its Pro Rata Share on the day the Mandatory Borrowing would otherwise have occurred, then the amount of such Lender's unfunded participation interest therein shall bear interest payable to the L/C Issuer upon demand, at the rate equal to, if paid within two Business Days of such date, the Federal Funds Rate, and thereafter at a rate equal to the Base Rate. Simultaneously with the making of each such payment by a Lender to the L/C Issuer, such Lender shall, automatically and without any further action on the part of the L/C Issuer or such Lender, acquire a participation in an amount equal to such payment (excluding the portion of such payment constituting interest owing to the L/C Issuer) in the related unreimbursed drawing portion of the L/C Obligation and in the interest thereon and shall have a claim against the Borrower with respect thereto. Any payment by the Lenders pursuant to this clause (iii) shall not relieve or otherwise impair the obligations of the Borrower to reimburse the L/C Issuer under a Letter of Credit.

(e) Obligations Absolute. The obligation of the Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Credit Agreement under all circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this Credit Agreement, or any other agreement or instrument relating thereto;

(ii) the existence of any claim, counterclaim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Credit Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

(iv) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or

(v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower.

The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower's instructions or other irregularity, the Borrower will immediately notify the L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.

(f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, any Agent-Related Person nor any of the respective correspondents, participants or assignees of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable, (ii) any action taken or omitted in the absence of gross negligence or willful misconduct or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Letter of Credit Application. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrower's pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, any Agent-Related Person, nor any of the respective correspondents, participants or assignees of the L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.2(e). In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

(g) Cash Collateral. If, as of the Letter of Credit Expiration Date, any Letter of Credit for any reason remains outstanding and partially or wholly undrawn, the Borrower shall immediately Cash Collateralize the then aggregate principal amount of all L/C Obligations (in an amount equal to such aggregate principal amount determined as of the Letter of Credit Expiration Date). The Borrower hereby grants to the Administrative Agent, for the benefit of the L/C Issuer and the Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America.

(h) Applicability of ISP98 and UCP. Unless otherwise expressly agreed by the L/C Issuer and the Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), the rules of the "International Standby Practices 1998" published by the Institute of International Banking Requirement of Law & Practice (or such later version thereof as may be in effect at the time of issuance) and the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce (the "ICC") at the time of issuance (including the ICC decision published by the Commission on Banking Technique and Practice on April 6, 1998 regarding the European single currency
(euro)) shall apply to each Letter of Credit.

(i) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The Borrower shall pay directly to the L/C Issuer for its own account a fronting fee with respect to each Letter of Credit in an amount equal to 0.125% times the daily maximum amount available to be drawn under such Letter of Credit (the "L/C Fronting Fee"). The L/C Fronting Fee shall be computed on a quarterly basis in arrears and shall be due and payable on the last Business Day of each fiscal quarter of the Borrower (as well as on the Letter of Credit Expiration Date) for the fiscal quarter (or portion thereof) then ending, beginning with the first of such dates to occur after the issuance of such Letter of Credit. In addition, the Borrower shall pay directly to the L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

(j) Conflict with Letter of Credit Application. In the event of any conflict between the terms hereof and the terms of any Letter of Credit Application, the terms hereof shall control.

(k) Indemnification of L/C Issuer.

(i) In addition to its other obligations under this Credit Agreement, the Borrower hereby agrees to protect, indemnify, pay and hold the L/C Issuer harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys' fees) that the L/C Issuer may incur or be subject to as a consequence, direct or indirect, of (A) the issuance of any Letter of Credit or (B) the failure of the L/C Issuer to honor a drawing under a Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority (all such acts or omissions, herein called "Government Acts").

(ii) As between the Borrower and the L/C Issuer, the Borrower shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. In the absence of gross negligence or willful misconduct, the L/C Issuer shall not be responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason; (C) failure of the beneficiary of a Letter of Credit to comply fully with conditions required in order to draw upon a Letter of Credit; (D) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under a Letter of Credit or of the proceeds thereof; and (G) any consequences arising from causes beyond the control of the L/C Issuer, including, without limitation, any Government Acts. None of the above shall affect, impair, or prevent the vesting of the L/C Issuer's rights or powers hereunder.

(iii) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by the L/C Issuer, under or in connection with any Letter of Credit or the related certificates, if taken or omitted in good faith, shall not put the L/ C Issuer under any resulting liability to the Borrower. It is the intention of the parties that this Credit Agreement shall be construed and applied to protect and indemnify the L/C Issuer against any and all risks involved in the issuance of the Letters of Credit, all of which risks are hereby assumed by the Borrower, including, without limitation, any and all risks of the acts or omissions, whether rightful or wrongful, of any present or future Government Acts. The L/C Issuer shall not, in any way, be liable for any failure by the L/C Issuer or anyone else to pay any drawing under any Letter of Credit as a result of any Government Acts or any other cause beyond the control of the L/C Issuer.

(iv) Nothing in this subsection (l) is intended to limit the reimbursement obligation of the Borrower contained in this Section 2.2. The obligations of the Borrower under this subsection (l) shall survive the termination of this Credit Agreement. No act or omission of any current or prior beneficiary of a Letter of Credit shall in any way affect or impair the rights of the L/ C Issuer to enforce any right, power or benefit under this Credit Agreement.

(l) Letter of Credit Amounts. Unless otherwise specified, all references herein to the amount of a Letter of Credit at any time shall be deemed to mean the maximum face amount of such Letter of Credit after giving effect to all increases thereof contemplated by such Letter of Credit or the Letter of Credit Application therefor, whether or not such maximum face amount is in effect at such time.

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 2.3, setting forth whether the Borrower wishes to continue or convert such Revolving 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.

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) 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 Revolving Loans) and (c) no more than five Eurodollar Loans shall be outstanding hereunder at any one time. For the purposes of this Section 2.4, separate Eurodollar Loans that begin and end on the same date, as well as Eurodollar Loans that begin and end on different dates, shall all be considered as separate Eurodollar Loans.

SECTION 3

GENERAL PROVISIONS APPLICABLE
TO REVOLVING LOANS

(a) Interest Rate. Subject to Sections 3.1(b), (i) all Base Rate Loans shall accrue interest at the Base Rate and (ii) all Eurodollar Loans shall accrue interest at the Adjusted Eurodollar Rate.

(b) Default Rate of Interest. After the occurrence, and during the continuation, of an Event of Default, the principal of and, to the extent permitted by Law, interest on the Revolving 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.

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

(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 date 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 Revolving 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.

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 Revolving Loans and to fund or purchase Participation Interests are several and not joint. The failure of any Lender to make any Revolving 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 Revolving 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 Revolving 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 Revolving Loan in any particular place or manner.

(a) Voluntary Prepayments. The Borrower shall have the right to prepay the Revolving 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, (iii) each such partial prepayment of Eurodollar Loans shall be in the minimum principal amount of $5,000,000 and integral multiples of $1,000,000 and (iv) each such partial prepayment of Base Rate Loans shall be in the minimum principal amount of $500,000 and integral multiples of $100,000 or, in the case of clauses (iii) and (iv), if less than such minimum amounts, the entire principal amount thereof then outstanding. Amounts prepaid pursuant to this Section 3.3(a) shall be applied as the Borrower may elect based on the Lenders' Pro Rata Shares; 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.

(b) Mandatory Prepayments. If at any time (i) the sum of the aggregate principal amount of Revolving Loans outstanding plus the aggregate principal amount of L/C Obligations outstanding exceeds the Revolving Committed Amount or (ii) the aggregate principal amount of L/C Obligations outstanding exceeds the Letter of Credit Sublimit, the Borrower shall immediately make a principal payment to the Administrative Agent and/or Cash Collateralize outstanding L/C Obligations in a manner, in an amount and in Dollars as is necessary to be in compliance with Sections 2.1 and 2.2, as applicable, and as directed by the Administrative Agent. All amounts required to be prepaid pursuant to this Section 3.3(b) shall be applied first to Base Rate Loans, second to Eurodollar Loans in direct order of Interest Period maturities and third to Cash Collateralize outstanding L/C Obligations. All prepayments pursuant to this Section 3.3(b) shall be subject to Section 3.14.

(a) Commitment Fees. In consideration of the Revolving Committed Amount being made available by the Lenders hereunder, the Borrower agrees to pay to the Administrative Agent, for the pro rata benefit of each Lender based on its Pro Rata Share, a per annum fee

equal to the daily average sum of the Applicable Percentage for Commitment Fees for each day during the period of determination multiplied by the Unused Revolving Commitment for each such day (the "Commitment Fees"). The Commitment Fees shall commence to accrue on the Closing Date and shall be due and payable in arrears on the last Business Day of each fiscal quarter of the Borrower (as well as on the Maturity Date and on any date that the Revolving Committed Amount is reduced) for the fiscal quarter (or portion thereof) then ending, beginning with the first of such dates to occur after the Closing Date.

(b) Utilization Fees. If at any time the aggregate principal amount of outstanding Revolving Loans exceeds an amount equal to thirty-three percent (33%) of the Revolving Committed Amount, the Borrower shall pay to the Administrative Agent, for the ratable benefit of the Lenders, a utilization fee (the "Utilization Fees") equal to the product of (i) the average daily aggregate principal amount of outstanding Revolving Loans, calculated from the date the aggregate principal amount of outstanding Revolving Loans exceeds an amount equal to thirty-three percent (33%) of the Revolving Committed Amount but excluding the date the aggregate principal amount of outstanding Revolving Loans falls below an amount equal to thirty-three percent (33%), times (ii) a per annum percentage equal to the Applicable Percentage for Utilization Fees. The Utilization Fees shall be payable in arrears on the last Business Day of each fiscal quarter of the Borrower (as well as on the Maturity Date and on any date that the Revolving Committed Amount is reduced) for the fiscal quarter (or portion thereof) then ending, beginning with the first of such dates to occur after the Closing Date.

(c) L/C Fees. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Pro Rata Share a fee for each Letter of Credit equal to the Applicable Percentage for L/C Fees times the daily maximum amount available to be drawn under such Letter of Credit (the "L/C Fees"). The L/C Fees shall be computed on a quarterly basis in arrears and shall be due and payable on the last Business Day of each fiscal quarter of the Borrower (as well as on the Letter of Credit Expiration Date) for the fiscal quarter (or portion thereof) then ending, beginning with the first of such dates to occur after the issuance of such Letter of Credit.

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

On the Maturity Date, the entire outstanding principal balance of all Revolving 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.

(a) Calculation of Interest. 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.

(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 Credit Agreement, under the Revolving Notes or otherwise, exceed the maximum nonusurious amount permissible under applicable Law. 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 Revolving 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 Revolving 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 Revolving Loans. The right to demand payment of the Revolving 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 Revolving 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 Revolving Loans so that the amount of interest on account of the Revolving Loans does not exceed the maximum nonusurious amount permitted by applicable Law.

Except to the extent otherwise provided herein, each Borrowing, each payment or prepayment of principal of any Revolving Loan, each L/C Credit Extension, each payment of interest, each payment of fees (other than administrative fees paid to the Administrative Agent and fronting, documentary and processing fees paid to the L/C Issuer), each conversion or continuation of any Revolving Loans and each reduction in the Revolving Committed Amount, shall be allocated pro rata among the relevant Lenders in accordance with their Pro Rata Shares; provided that, if any Lender shall have failed to pay its Pro Rata Share of any Revolving 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 Revolving 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 Credit 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 the Base Rate.

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 Revolving Loan, any L/C Obligations or any other obligation owing to such Lender under this Credit 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 Credit Agreement, such Lender shall promptly pay in cash or purchase from the other Lenders a participation in such Revolving Loans, L/C Obligations 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 Revolving Loan, L/C Obligations 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 Credit 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 Credit 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.

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 in such 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.

(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.

(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.

(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").

(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 Credit 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 Credit 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 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 Credit 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 Credit 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 Credit 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.

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 a 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 such 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.

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 Credit Agreement and the payment of all Borrower Obligations.

SECTION 4

CONDITIONS PRECEDENT TO CLOSING

The obligation of the Lenders to enter into this Credit Agreement and make the initial Revolving 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 Credit Agreement, (ii) the Revolving Notes, and (iii) all other Credit Documents, each in form and substance reasonably acceptable to 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 Credit 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) Financial Statements. Receipt by the Administrative Agent of a copy of (i) the annual consolidated financial statements
(including balance sheets, income statements and cash flow statements) of the Borrower and its Subsidiaries for fiscal years 2000 and 2001, audited by independent public accountants of recognized national standing, (ii) the consolidated balance sheet and income statement of the Borrower and its Subsidiaries for the fiscal quarter ended September 30, 2002, together with the related consolidated statement of income for such fiscal quarter and a year to date statement of cash flows and (iii) such other financial information regarding the Borrower as the Administrative Agent may reasonably request.

(e) Due Diligence. The Administrative Agent and the Lenders shall have completed all due diligence with respect to the Borrower and its Subsidiaries and the transactions contemplated by this Credit Agreement and the other Credit Documents, in scope and determination reasonably satisfactory to the Administrative Agent and the Lenders.

(f) Material Adverse Effect. Since December 31, 2001, there shall have been no development or event relating to or affecting the Borrower or any of its Subsidiaries that has had or could be reasonably expected to have a Material Adverse Effect and no Material Adverse Change in the facts and information regarding the Borrower and its Subsidiaries as represented to date.

(g) Absence of Market Disruption. There shall not have occurred a material adverse change in or material disruption of conditions in the financial, banking or capital markets which the Administrative Agent and the Arranger, in their sole discretion, deem material in connection with the syndication of the Credit Agreement.

(h) 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.

(i) Consents. All necessary governmental, shareholder and third party consents and approvals, if any, with respect to this Credit 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.

(j) 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 Credit 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, 2001, there has been no development or event relating to or affecting the Borrower or any of its Subsidiaries that has had or could be reasonably expected to have a Material Adverse Effect and there exists no event, condition or state of facts that could result in or reasonably be expected to result in a Material Adverse Change and (E) the Borrower is in compliance with each of the financial covenants set forth in Section 7.2, as of September 30, 2002, as demonstrated in Covenant Compliance Worksheets attached to such certificate.

(k) Existing Credit Agreement. Receipt by the Administrative Agent of evidence that all amounts outstanding under the Existing Credit Agreement have been paid in full and the commitments thereunder terminated or that such payments will be made and commitments terminated simultaneously with the execution and delivery of the Credit Documents.

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

(m) 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

In addition to the conditions precedent stated elsewhere herein, the Lenders shall not be obligated to make Revolving Loans and the L/C Issuer shall not be obligated to issue Letters of Credit unless:

(a) Notice. The Borrower shall have delivered (i) in the case of any new Revolving Loan, a Notice of Borrowing, duly executed and completed, by the time specified in Section 2.1 and (ii) in the case of any Letter of Credit, a Letter of Credit Application, duly executed and completed, by the time specified in Section 2.2.

(b) Representations and Warranties. The representations and warranties made by the Borrower in any Credit Document 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 Credit Extension.

(d) Availability. Immediately after giving effect to such Credit Extension (and the application of the proceeds thereof), (i) the aggregate principal amount of outstanding Revolving Loans plus the aggregate principal amount of outstanding L/C Obligations shall not exceed the Revolving Committed Amount, (ii) with respect to each individual Lender, the sum of outstanding principal amount of Revolving Loans of such Lender and outstanding principal amount of L/C Obligations of such Lender shall not exceed such Lender's Pro Rata Share of the Revolving Committed Amount and (iii) the aggregate amount of L/C Obligations shall not exceed the Letter of Credit Sublimit.

The delivery of each Notice of Borrowing or a Letter of Credit Application shall constitute a representation and warranty by the Borrower of the correctness of the matters specified in subsections (b), (c) and (d) above.

SECTION 6

REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter into this Credit 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:

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.

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

Neither the execution and delivery of this Credit 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.

Other than the filing of annual short-term financing plans with the New Mexico Public Regulation Commission in the normal course of business, 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 Credit Agreement or any of the other Credit Documents that has not been obtained or completed.

This Credit 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.

The financial statements delivered to the Lender pursuant to Section 4.1(d) and pursuant to Sections 7.1(a) and (b): (i) have been prepared in accordance with GAAP except that the quarterly financial statements are subject to year-end adjustments and have fewer footnotes than annual statements and (ii) present fairly the financial condition, results of operations and cash flows of the Borrower and its Subsidiaries as of such date and for such periods. No opinion provided with respect to the Borrower's financial statements pursuant to
Section 7.1 (or as to any prior annual financial statements) has been withdrawn.

(a) Since December 31, 2001, there has been no development or event relating to or affecting the Borrower which would have or would reasonably be expected to have a Material Adverse Effect.

(b) Since December 31, 2001, there has been no sale, transfer or other disposition by the Borrower of any material part of its business or property, and no purchase or other acquisition by the Borrower of any business or property (including the Capital Stock of any other Person) material in relation to the financial condition of the Borrower, in each case which is not (i) reflected in the most recent financial statements delivered to the Lender pursuant to Section 4.1(d) or 7.1 or in the notes thereto or (ii) otherwise permitted by the terms of this Credit Agreement and communicated to the Lender.

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.

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.

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 thereon 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) owing 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.

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.

Except as would not 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 "accumulated funding deficiency," as such term is defined in Section

302 of ERISA and Section 412 of the Code, 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; and (iv) no Lien in favor or 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), and no Multiemployer Plan is, to the best knowledge of the Borrower, reasonably expected to be in reorganization, insolvent, or terminated.

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

(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.

The proceeds of the Credit Extensions hereunder 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.

(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 Note by the Borrower and the Credit Extensions contemplated by this Credit Agreement are not subject to regulation under PUHCA or subject to regulation by the Securities and Exchange Commission

(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.

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

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

Except as would not result or reasonably be expected to result in a Material Adverse Effect: (a) each of the properties of the Borrower and its Subsidiaries (the "Properties") and all operations at the Properties are in substantial compliance with all applicable Environmental Laws, (b) there is no undocumented or unreported violation of any Environmental 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.

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.

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.

SECTION 7

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

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

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

(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.

(e) Notices. Upon the Borrower obtaining knowledge thereof, the Borrower will give written notice to the Lender 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 or (C) the institution of any proceedings against the Borrower or any of its Subsidiaries with respect to, or the receipt of notice by such Person of potential liability or responsibility for violation or alleged violation of, any federal, state or local law, rule or regulation (including, without limitation, any Environmental Law), the violation of which would have or would reasonably be expected to have a Material Adverse Effect.

(f) ERISA. Upon the Borrower or any ERISA Affiliate obtaining knowledge thereof, the Borrower will give written notice to the Lender promptly (and in any event within ten days) of any of the following which would result in or reasonably would be expected to result in a Material Adverse Effect: (i) any event or condition, including, but not limited to, any Reportable Event, that constitutes, or would be reasonably expected to lead to, an ERISA Event; (ii) with respect to any Multiemployer Plan, the receipt of notice as prescribed in ERISA or otherwise of any withdrawal liability assessed against the Borrower or any of its ERISA Affiliates, or of a determination that any Multiemployer Plan is in reorganization or insolvent (both 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 pursuant to its terms and as required to meet the minimum funding standard set forth in ERISA and the Code with respect thereto; or (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. Promptly upon request, the Borrower shall furnish the Lender 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).

(g) Debt Ratings. Promptly upon any change in its Debt Ratings.

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

(a) Debt Capitalization. At all times the ratio of (i) Consolidated Indebtedness to (ii) Consolidated Capitalization shall be less than or equal to .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.

(b) Interest Coverage Ratio. As of the last day of each fiscal quarter of the Borrower, for the twelve month period ending on such date, the ratio of (i) Consolidated EBITDA to (ii) Consolidated Interest Expense shall be greater than or equal to 3.0 to 1.0.

(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.

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).

(a) The Borrower will comply (and will cause each of its Subsidiaries to comply) with all laws (including, without limitation, all Environmental Laws and ERISA laws), rules, regulations and orders, and all applicable restrictions imposed by all Governmental Authorities, applicable to it and its properties, if the failure to comply would have or would reasonably be expected to have a Material Adverse Effect.

(b) The Borrower will timely file with the New Mexico Public Regulation Commission such short-term financing plans (and obtain all appropriate approvals) as are necessary to ensure that the indebtedness incurred hereunder is permitted.

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 Credit 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.

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.

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.

The proceeds of the Credit Extensions may be used solely (a) to repay amounts under the Existing Credit Agreement, (b) to pay fees and expenses required by the Credit Document, and (c) for general corporate purposes of the Borrower (including working capital and capital expenditures).

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

SECTION 8

Unless otherwise approved in writing by the Required Lenders, the Borrower covenants and agrees that, until the termination of the Commitments, the termination or expiration of all Letters of Credit and the payment in full of all Borrower Obligations:

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

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 corporation.

The Borrower will not (nor will it permit its Subsidiaries to) sell, lease, transfer or otherwise dispose of, any of its assets (including, without limitation, all or substantially all of its assets, whether in one transaction or a series of related transactions) except (a) sales of accounts receivable and energy services contract revenues in connection with the 3838 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) sales of assets (excluding those permitted in clause
(a) hereof) for fair value, if the aggregate value of all such transactions in any calendar year, does not exceed 25% of the book value of Total Assets, as calculated as of the end of the most recent fiscal quarter; and (c) sale, lease, transfer or other disposition, at less than fair value, of any other assets, provided that the aggregate book value of such assets shall not exceed $10,000,000 in any calendar year.

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.

The Borrower will not (and will not 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) 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 3838 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, 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, and (q) Liens on Property, in addition to those otherwise permitted by clauses (a) through (p) 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.

The Borrower will not make or permit, or permit any of its Subsidiaries to make or permit, any change in accounting policies or reporting practices, except as required by GAAP, or as permitted by GAAP, if the amounts involved are not material.

SECTION 9

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 Revolving 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 7.2,
7.3(a) (solely with respect to the existence of the Borrower), 7.9, 7.10 or 8.1 through 8.6, 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 Credit 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 Lender.

(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 Lender 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 shall admit in writing its inability to pay its debts generally as they become due or any action shall be taken by any Person in furtherance of any of the aforesaid purposes.

(f) Defaults under Other Agreements.

(i) The Borrower or any of its Subsidiaries shall default in the due performance or observance (beyond the applicable grace period with respect thereto) of any material obligation or condition of any contract or lease to which it is a party, if such default would have or would reasonably be expected to have a Material Adverse Effect.

(ii) With respect to any Indebtedness of the Borrower or any of its Subsidiaries (other than Indebtedness outstanding under this Credit 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.

(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) any "accumulated funding deficiency," as such term is defined in Section 302 of ERISA and Section 412 of the Code, whether or not waived, shall exist with respect to any Plan, 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 is, in the reasonable opinion of the Lender, 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 is, in the reasonable opinion of the Lender, 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 (iv) any prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code) 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(l) of ERISA or Section 4975 of the Code, or under any agreement or other instrument pursuant to which the Borrower or any ERISA Affiliate has agreed or is required to indemnify any person against any such liability.

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

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 and the obligation of the L/C Issuer to make L/C Credit Extensions terminated whereupon the Commitments and the obligation of the L/C Issuer to make L/C Credit Extensions shall be immediately terminated.

(b) Acceleration of Revolving Loans. Declare the unpaid principal of and any accrued interest in respect of all Revolving Loans, all L/C Obligations and any and all other Borrower Obligations of any and every kind owing by the Borrower to the Administrative Agent 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) Cash Collateral. Direct the Borrower to Cash Collateralize (and the Borrower agrees that upon receipt of such notice, or upon the occurrence of an Event of Default under Section 9.1(e), it will immediately Cash Collateralize) L/C Obligations in respect of subsequent drawings under all then outstanding Letters of Credit in an amount equal to the then outstanding principal amount of L/C Obligations.

(d) 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.

Notwithstanding the foregoing, if an Event of Default specified in Section 9.1(e) shall occur, then the Commitments and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate and all Revolving Loans, all L/C Obligations, all accrued interest in respect thereof, all accrued and unpaid fees and other Borrower Obligations owing to the Administrative Agent 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.

Notwithstanding any other provisions of this Credit 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 Administrative Agent, the L/C Issuer or any of the Lenders in connection with enforcing the rights of the Administrative Agent, the L/C Issuer 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 Administrative Agent, the L/C Issuer 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, and the L/C Issuer 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 Revolving Loans and L/C Obligations, ratably among them in proportion to the amounts described in this clause "FOURTH" payable to them;

FIFTH, to the Administrative Agent, for the account of the L/C Issuer, to Cash Collateralize that portion of the L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit;

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

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

Amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause "FIFTH" above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as cash collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Borrower Obligations, if any, in the order set forth above.

SECTION 10

AGENCY PROVISIONS

(a) Each Lender hereby irrevocably appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Credit Agreement and each other Credit Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Credit Agreement or any other Credit Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere herein or in any other Credit Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Credit Agreement or any other Credit Document or otherwise exist against the Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" herein and in the other Credit Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Requirement of Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

(b) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (i) provided to the Administrative Agent in this Section 10 with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and the applications and agreements for letters of credit pertaining to such Letters of Credit as fully as if the term "Administrative Agent" as used in this Section 10 and in the definition of "Agent-Related Person" included the L/C Issuer with respect to such acts or omissions, and (ii) as additionally provided herein with respect to the L/C Issuer.

The Administrative Agent may execute any of its duties under this Credit Agreement or any other Credit Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct.

No Agent-Related Person shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Credit Agreement or any other Credit Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct in connection with its duties expressly set forth herein), or (b) be responsible in any manner to any Lender or participant for any recital, statement, representation or warranty

made by the Borrower or any officer thereof, contained herein or in any other Credit Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Credit Agreement or any other Credit Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Credit Agreement or any other Credit Document, or for any failure of the Borrower or any other party to any Credit Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender or participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Credit Agreement or any other Credit Document, or to inspect the properties, books or records of the Borrower or any Affiliate thereof.

(a) The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under any Credit Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Credit Agreement or any other Credit Document in accordance with a request or consent of the Required Lenders (or such greater number of Lenders as may be expressly required hereby in any instance) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.

(b) For purposes of determining compliance with the conditions specified in Section 4.1, each Lender that has signed this Credit Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or the Borrower referring to this Credit Agreement, describing such Default or Event of

Default and stating that such notice is a "notice of default." The Administrative Agent will notify the Lenders of its receipt of any such notice. The Administrative Agent shall take such action with respect to such Default or Event of Default as may be directed by the Required Lenders in accordance with
Section 9; provided, however, that unless and until the Administrative Agent has received any such direction, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Lenders.

Each Lender acknowledges that no Agent-Related Person has made any representation or warranty to it, and that no act by the Administrative Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of the Borrower or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower and their respective Subsidiaries, and all applicable bank or other regulatory Requirement of Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Credit Agreement and to extend credit to the Borrower hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Credit Agreement and the other Credit Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Borrower or any of their respective Affiliates which may come into the possession of any Agent-Related Person.

Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand each Agent-Related Person (to the extent not reimbursed by or on behalf of the Borrower and without limiting the obligation of the Borrower to do so), pro rata, and hold harmless each Agent-Related Person from and against any and all Indemnified Liabilities incurred by it; provided, however, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities to the extent determined in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Agent-Related Person's own gross negligence or willful misconduct; it being understood and agreed that no action taken in accordance with the directions of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Without limitation of the foregoing, each Lender shall

reimburse the Administrative Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including, without limitation, the reasonable fees and expenses of legal counsel) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Credit Agreement, any other Credit Document, or any document contemplated by or referred to herein, to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Borrower. The undertaking in this Section shall survive termination of the Commitments, the payment of all Borrower Obligations and the resignation of the Administrative Agent.

Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Borrower and its Affiliates as though Bank of America were not the Administrative Agent or the L/C Issuer hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding the Borrower or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Borrower or an Affiliate) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them. With respect to its Revolving Loans, Bank of America shall have the same rights and powers under this Credit Agreement as any other Lender and may exercise such rights and powers as though it were not the Administrative Agent or the L/C Issuer, and the terms "Lender" and "Lenders" include Bank of America in its individual capacity. The foregoing provisions of this Section 10.8 shall apply equally to Lenders and their Affiliates to the extent such Lenders are acting in their individual capacities and not in their capacities as Lenders hereunder.

The Administrative Agent may resign as Administrative Agent upon 30 days' notice to the Lenders; provided that any such resignation by Bank of America shall also constitute its resignation as L/C Issuer. If the Administrative Agent resigns under this Credit Agreement, the Required Lenders shall appoint from among the Lenders a successor Administrative Agent for the Lenders, which successor Administrative Agent shall be consented to by the Borrower at all times other than during the existence of an Event of Default (which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor Administrative Agent is appointed prior to the effective date of the resignation of the retiring Administrative Agent, the retiring Administrative Agent may appoint, after consulting with the Lenders and the Borrower, a successor Administrative Agent from among the Lenders. Upon the acceptance of its appointment as successor Administrative Agent hereunder, the Person acting as such successor Administrative Agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and the retiring L/C Issuer and the respective terms "Administrative Agent" and "L/C Issuer" shall mean such successor Administrative Agent and L/C Issuer and the retiring Administrative Agent's appointment, powers and duties as Administrative Agent shall be terminated and the retiring L/C Issuer's rights, powers and duties as such shall be terminated, without any other or further act or deed on the part

of such retiring Administrative Agent or L/C Issuer or any other Lender, other than the obligation of the successor L/C Issuer to issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or to make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Section 10 and Sections 11.5 and 11.6 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Credit Agreement. If no successor Administrative Agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above.

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 Revolving Loan or L/C Obligation 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 Revolving Loans, L/C Obligations 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 and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and its respective agents and counsel and all other amounts due the Lenders and the Administrative Agent 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.

None of the Lenders or other Persons identified on the facing page or signature pages of this Credit Agreement as a "syndication agent," "documentation agent," "co-agent," "book manager," "lead manager," "arranger," "lead arranger" or "co-arranger" shall have any right, power, obligation, liability, responsibility or duty under this Credit Agreement other than, in the case of such Lenders, those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified in deciding to enter into this Credit Agreement or in taking or not taking action hereunder.

SECTION 11

MISCELLANEOUS

(a) General. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission). All such written notices shall be mailed, faxed or delivered to the applicable address, facsimile number or (subject to subsection (c) below) electronic mail address, 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, the Administrative Agent or the L/C Issuer, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 11.1 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and

(ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the Borrower, the Administrative Agent and the L/C Issuer.

All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic

mail (which form of delivery is subject to the provisions of subsection (c) below), when delivered; provided, however, that notices and other communications to the Administrative Agent and the L/C Issuer pursuant to Section 2 shall not be effective until actually received by such Person. In no event shall a voicemail message be effective as a notice, communication or confirmation hereunder.

(b) Effectiveness of Facsimile Documents and Signatures. Credit Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable Requirement of Law, have the same force and effect as manually-signed originals and shall be binding on the Borrower, the Administrative Agent and the Lenders. The Administrative Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature.

(c) Limited Use of Electronic Mail. Electronic mail and Internet and intranet websites may be used only to distribute routine communications, such as financial statements and other information as provided in Section 7.1 and 7.2, and to distribute Credit Documents for execution by the parties thereto, and may not be used for any other purpose.

(d) 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 each Agent-Related Person and each Lender 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 communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

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 Revolving 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 Revolving 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.

(a) The provisions of this Credit 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 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, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) or (i) of this Section, or (iv) to an SPC in accordance with the provisions of subsection (g) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Credit 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 Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Credit Agreement.

(b) Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Credit Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations) at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund (as defined in subsection (g) of this Section) with respect to a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) 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 or, if "Trade Date" is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents
(each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Credit Agreement with respect to the Loans or the Commitment assigned, (iii) any assignment of a Commitment must be approved by the Administrative Agent and the L/C Issuer (such approval not to be unreasonably withheld or delayed) unless the Person that is the proposed assignee is itself a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500. 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 Credit Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Credit 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 Credit Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Credit Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 3.9, 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 Credit Agreement that does not comply with this subsection shall be treated for purposes of this Credit Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c) 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 and L/C Obligations 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 Credit Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) 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 Credit Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender's participations in L/C Obligations) owing to it); provided that (i) such Lender's obligations under this Credit 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 other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Credit 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 Credit Agreement and to approve any amendment, modification or waiver of any provision of this Credit 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 directly 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, 3.12, 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) A Participant shall not be entitled to receive any greater payment under Section 3.9, 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) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Credit 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.

(g) 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 Credit 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 (A) 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 Credit Agreement (including its obligations under Sections 3.9, 3.12, 3.13 and 3.14), (B) no SPC shall be liable for any indemnity or similar payment obligation under this Credit Agreement for which a Lender would be liable, and (C) 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 Committed 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 Credit 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
(i) with notice to, but without prior consent of the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or any portion of its right to receive payment with respect to any Loan to the Granting Lender and (ii) 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.

(i) Notwithstanding anything to the contrary contained herein, any Lender that is a Fund may create a security interest in all or any portion of the Loans owing to it and the Note, if any, held by it to the trustee for holders of obligations owed, or securities issued, by such Fund as security for such obligations or securities, provided that unless and until such trustee actually becomes a Lender in compliance with the other provisions of this Section 11.3, (i) no such pledge shall release the pledging Lender from any of its obligations under the Credit Documents and (ii) such trustee shall not be entitled to exercise any of the rights of a Lender under the Credit Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise.

(j) Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment and Loans pursuant to subsection (b) above, Bank of America may upon 30 days' notice to the Borrower and the Lenders, resign as L/C Issuer. In the event of any such resignation as L/C Issuer, the Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer hereunder; provided, however, that no failure by the Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer. If Bank of America resigns as L/C Issuer, it shall retain all the rights and obligations of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Loans or fund risk participations pursuant to Section 2.2.

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.

(a) The Borrower agrees (i) to pay or reimburse the Administrative Agent and the Arranger for all costs and expenses incurred in connection with the development, preparation, negotiation and execution of this Credit 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 Administrative Agent 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 Credit 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 out-of-pocket expenses incurred by the Administrative Agent and the Arranger and the cost of independent public accountants and other outside experts retained by the Administrative Agent, the Arranger or any Lender. Other than costs and expenses payable in connection with the closing of the transactions contemplated by this Credit Agreement pursuant to Section
11.5(a) (which shall be payable on the Closing Date unless otherwise agreed by the Administrative Agent and the Arranger), 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-Related Person, 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, Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), 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, or (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 (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 Credit Agreement, nor shall any Indemnitee have any liability for any indirect or consequential damages relating to this Credit Agreement or any other Credit Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date). 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.

Neither this Credit Agreement nor any other Credit Document nor any of the terms hereof or thereof may be amended, changed, waived, discharged or terminated unless such amendment, change, waiver, discharge or termination is in writing and signed by the Required Lenders and the Borrower; provided that no such amendment, change, waiver, discharge or termination shall, without the consent of each Lender directly affected thereby:

(a) extend the Maturity Date;

(b) reduce the rate or extend the time of payment of interest (other than as a result of waiving the applicability of any post-default increase in interest rates on the Revolving Loans or fees hereunder;

(c) reduce or waive the principal amount of any Revolving Loan or extend the time of payment thereof;

(d) increase or extend the Commitment of a Lender (it being understood and agreed that a waiver of any Default or Event of Default or a waiver of any mandatory reduction in the Commitments shall not constitute a change in the terms of any Commitment of any Lender);

(e) release the Borrower from its obligations or consent to the assignment or transfer by the Borrower of any of its rights and obligations under (or in respect of) the Credit Documents;

(f) amend, modify or waive any provision of this Section 11.6 or Sections 3.7, 3.8, 9.1(a), 11.2, 11.3 or 11.5; or

(g) reduce any percentage specified in, or otherwise modify, the definition of Required Lenders.

Notwithstanding the above, (i) no provision of Section 3.4(d) or
Section 10 may be amended or modified without the consent of the Administrative Agent, (ii) no provision of this Credit Agreement or any other Credit Document that addresses the rights or obligations of the Administrative Agent may be amend or modified without prior written consent of the Administrative Agent and
(iii) no provision of Section 2.2 and no other provision of this Credit Agreement or any other Credit Document that addresses the rights or obligations of the L/C Issuer may be amended or modified without the prior written consent of the L/C Issuer.

Each Lender understands and agrees that if such Lender is a Defaulting Lender then, notwithstanding the provisions of this Section 11.6, it shall not be entitled to vote on any matter requiring the consent of the Required Lenders or to object to any matter requiring the consent of all the Lenders; provided, however, that all other benefits and obligations under the Credit Documents shall apply to such Defaulting Lender.

Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, (A) each Lender is entitled to vote as such Lender sees fit on any reorganization plan that affects the Borrower Obligations, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set forth herein and (B) the Required Lenders may consent to allow a Borrower to use cash collateral in the context of a bankruptcy or insolvency proceeding.

This Credit 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.

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 Credit Agreement.

(a) Survival of Indemnification. All indemnities set forth herein shall survive the execution and delivery of this Credit Agreement, the making of any Credit Extension and the repayment of the Revolving 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 Credit Extension, and shall continue in full force and effect as long as any Loan or any other Borrower Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

THIS CREDIT 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 (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT EXCLUDING ALL OTHER CHOICE OF LAW AND CONFLICTS OF LAW RULES). The Borrower irrevocably consents to the service of process in any action or proceeding with respect to this Credit 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.

EACH OF THE PARTIES TO THIS CREDIT AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY. Each of the parties to this Credit Agreement agrees not to assert any claim against any other party hereto, Administrative 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.

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.

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 Credit Agreement and the other Credit Documents.

Each Lender agrees that it will use reasonable efforts to keep confidential any non-public information from time to time supplied to it under any Credit Document; provided, however, that nothing herein shall prevent the disclosure of any such information to (a) the extent a Lender in good faith believes such disclosure is required by Law or judicial process, (b) counsel for

a Lender or to its accountants, (c) bank examiners or auditors or comparable Persons, (d) any Affiliate of a Lender, (e) any other Lender, or any assignee, transferee or Participant, or any potential assignee, transferee or Participant, of all or any portion of any Lender's rights under this Credit Agreement who is notified of the confidential nature of such information or (f) any other Person in connection with (i) any litigation to which any one or more of the Lenders is a party if required by a court of Law of competent jurisdiction or (ii) any proceeding to enforce such Lender's rights hereunder, under any other Credit Document or under any Hedging Agreement. No Lender shall have any obligation under this Section 11.14 to the extent any such information becomes available on a non-confidential basis from a source other than a Borrower or that any information becomes publicly available other than by a breach of this Section 11.14 by any Lender or representative thereof.

This Credit Agreement together with the other Credit Documents, the Fee Letter and any confidentiality agreements between the Borrower and any Lender 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.

(a) This Credit 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 the Administrative 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 Credit 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 Credit Agreement shall be a continuing agreement and shall remain in full force and effect until all Revolving Loans, interest, fees and other Borrower Obligations have been paid in full and all Letters of Credit and 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.

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 11.17, the Borrower and the Lenders hereby acknowledge and agree that (i) this Credit Agreement and the Revolving 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 Credit Agreement and the Revolving Notes and the foregoing covenants are therefore wholly inapplicable and ineffective under the terms of this Credit Agreement and the Revolving Notes,
(iii) as set forth in this Credit Agreement and the Revolving 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 Credit Agreement and/or the Revolving Notes.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

PUBLIC SERVICE COMPANY OF NEW MEXICO,
a New Mexico corporation

By:      /s/ T. R. Horn
   -----------------------------------------------
Name:    T. R. Horn
     ---------------------------------------------
Title:   Vice President and Treasurer
      --------------------------------------------

BANK OF AMERICA, N.A.,
individually in its capacity as a Lender and in
its capacity as Administrative Agent and L/C Issuer

By:      /s/ Michelle A. Schoenfeld
   ----------------------------------------------
Name:    Michelle A. Schoenfeld
     --------------------------------------------
Title:   Principal
      -------------------------------------------

                                 SCHEDULE 1.1(a)

                                 PRO RATA SHARES
                                 ---------------

-------------------------------------------- ---------------- ---------------
                Lender                          Commitment    Pro Rata Share
-------------------------------------------- ---------------- ---------------

Bank of America, N.A                          $25,000,000.00  12.8205128205%
-------------------------------------------- ---------------- ---------------
Fleet National Bank                            25,000,000.00  12.8205128205%
-------------------------------------------- ---------------- ---------------
Wachovia Bank, National Association            25,000,000.00  12.8205128205%
-------------------------------------------- ---------------- ---------------
Bank of Albuquerque, N.A.                      20,000,000.00  10.2564102564%
-------------------------------------------- ---------------- ---------------
Wells Fargo Bank, National Association         20,000,000.00  10.2564102564%
-------------------------------------------- ---------------- ---------------
JPMorgan Chase Bank                            15,000,000.00   7.6923076923%
-------------------------------------------- ---------------- ---------------
Citibank NA                                    15,000,000.00   7.6923076923%
-------------------------------------------- ---------------- ---------------
Bank of the West                               15,000,000.00   7.6923076923%
-------------------------------------------- ---------------- ---------------
Compass Bank                                   15,000,000.00   7.6923076923%
-------------------------------------------- ---------------- ---------------
Mellon Bank, N.A.                              10,000,000.00   5.1282051282%
-------------------------------------------- ---------------- ---------------
Morgan Stanley Bank                            10,000,000.00   5.1282051282%
-------------------------------------------- ---------------- ---------------
                                     Total:  $195,000,000.00       100%
-------------------------------------------- ---------------- ---------------

$3,000,000.0      Expiration Date: January 4, 2003   L/C No. P-360138
---------------------------------------------------------------------

Beneficiary:      The California Power Exchange Corporation
                  200 South Los Robles Ste 400
                  Pasadena, California 91011-2482

$500,000.00       Expiration Date: March 11, 2003    L/C No. P-227635
---------------------------------------------------------------------

Beneficiary:      California Independent System Operator Corporation
                  Blue Raven Road
                  Folsom, California 95630

         Description                                               Expiration         Annual Rent
         -----------                                               ----------         -----------

Palo Verde Unit 1

Facility Lease dated as of  December 16, 1985 between              1/15/2015       $  5,580,122.54
PNM and State Street Bank and Trust Company,( as successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of  December 16, 1985, with MFS
Leasing Corp. as Owner Participant, as amended.

Facility Lease dated as of  December 16, 1985 between              1/15/2015       $ 15,693,862.76
PNM and State Street Bank and Trust Company, (as successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of  December 16, 1985, with Daimler
Chrysler Services North America LLC (as successor to Chrysler
Financial Corporation), as Owner Participant, as amended.

Facility Lease dated as of  December 15, 1986 between              1/15/2015       $  4,757,769.00
PNM and State Street Bank and Trust Company, (as successor
to The First National Bank of Boston), 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 Manhattan Realty Leasing Corporation), as Owner
Participant (Unit 1), as amended.

Facility Lease dated as of July 31, 1986 between                   1/15/2015       $  6,974,313.00
PNM and State Street Bank and Trust Company, (as successor
to The First National Bank of Boston), 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), as Owner
Participant  (Unit 1), as amended.


Total - Unit 1                                                                     $ 33,006.067.10

         Description                                                  Expiration         Annual Rent
         -----------                                                  ----------         -----------

Palo Verde Unit 2

Facility Lease dated as of August  12, 1986 between                    1/15/2016      $  5,742,060.00
PNM and State Street Bank and Trust Company,( as successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of  August 12, 1986, with MFS
Leasing Corp. as Owner Participant, as amended.

Facility Lease dated as of August 12,  1986 between                    1/15/2016      $  9,958,478.04
PNM and State Street Bank and Trust Company, (as successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of August 12, 1986, with CGI
Capital, Inc., as Owner Participant, as amended.

Facility Lease dated as of August 12, 1986 between                     1/15/2016      $  9,569,653.00
PNM and State Street Bank and Trust Company, (as successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of August 12, 1986, with Palo Verde
Leasing Corporation (successor-in-interest to First Chicago Lease
Holdings, Inc.) as Owner Participant, as amended.

Facility Lease dated as of August 12, 1986 between                     1/15/2016      $  4,743,012.00
PNM and State Street Bank and Trust Company, (as successor
to The First National Bank of Boston), 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.

Facility Lease dated as of December 15, 1986 between                   1/15/2016      $  3,272,560.40
PNM and State Street Bank and Trust Company, (as successor
to The First National Bank of Boston), as Owner Trustee under
a Trust Agreement dated as of December 15, 1986, with Palo
Verde 2- PNM [December 35] Corporation (successor-in-interest
to  Chase Manhattan Realty Leasing Corporation), as Owner
Participant  (Unit 2), as amended.


Total - Unit 2                                                                        $ 33,285.763.44

         Description                                       Expiration            Annual Rent
         -----------                                       ----------            -----------

Eastern Interconnection Project (EIP)

Amended and Restated Lease dated as of September 1,         4/1/2015          $  4,009,766.52*
1993, between PNM as Lessee, and  State Street Bank                           $  4,487,119.64
and Trust Company,( as successor to The First National
Bank of Boston), as Owner Trustee under a Trust
Agreement dated as of January 2, 1985, with DCC
Project Finance Two, Inc., as Lessor.

Amended and Restated Lease dated as of September 1,         4/1/2015          $  2,675,739.30*
1993, between PNM as Lessee, and  State Street Bank                           $  2,844,913.50
and Trust Company,( as successor to The First National
Bank of Boston), as Owner Trustee under a Trust
Agreement dated as of January 2, 1985, with General
Foods Credit Corporation, as Lessor.

Total EIP                                                                     $ 6, 685,505.82*
                                                                              $  7,332,033.14

                                                                                  * 1994 Only

SCHEDULE 6.19

MATERIAL LEASE INTEREST PAYMENTS AND DISCOUNT RATE

Schedule 11.1

PUBLIC SERVICE COMPANY OF NEW MEXICO:

Public Service Company of New Mexico
414 Silver Avenue, MS 2702
Albuquerque, NM 87102
Attention: Kirk Meyer
Telephone: 505-241-4529
Facsimile: 505-241-2369
Electronic Mail: kmeyer@pnm.com

ADMINISTRATIVE AGENT:

Attention:        Sandra Leon
                  Vice President
Telephone:  213.345.5231
Facsimile:  213.345.6694

Electronic Mail: Sandra.Leon@bankofamerica.com

LENDERS:

Bank of America, N.A.
Bank of America Corporate Center
100 N. Tryon Street, 16th Floor
Charlotte, NC 28255
Attn: Michelle A. Schoenfeld
Telephone: 704.386.1432
Facsimile: 704.386.1319
Electronic Mail: michelle.a.schoenfeld@bankofamerica.com

Bank of Albuquerque, N.A.
201 Third Street NW, Suite 1400
Albuquerque, NM 87102
Attn: Richard W. Burdick
Telephone: 505.222.8441
Facsimile: 505.222.8481
Electronic Mail: rburdick@bokf.com

Mellon Bank, N.A.
One Mellon Center
Room 151-4530
Pittsburgh, PA 15258
Attn: Mark W. Rogers
Telephone: 412-234-1888
Facsimile: 412-236-1840
Electronic Mail: rogers.mw@mellon.com

Morgan Stanley Bank
750 Seventh Avenue, 11th Floor
New York, NY 10020
Attn: Joseph DiTomaso
Telephone: 212-537-1470
Facsimile: 212-537-1867/1866
Electronic Mail: Joseph.DiTomaso@morganstanley.com

Compass Bank
2444 Louisiana Blvd., NE
Suite 200
Albuquerque, NM 87110
Attn: Abran C. Villegas
Telephone: 505-888-9038
Facsimile: 505-888-9176
Electronic Mail: abran.villegas@compassbnk.com

Citibank NA
388 Greenwich Street, 23rd Floor
New York, NY 10013
Attn: Stuart Glen
Telephone: 212-816-8553
Facsimile: TBD
Electronic Mail: Stuart.j.glen@citigroup.com

Bank of the West
500 Marquette NW, 14th Floor
Albuquerque, NM 87102
Attn: J. Chesley Steel
Telephone: 505-843-9180
Facsimile: 505-843-9164
Electronic Mail: csteel@bankofthewest.com

Wells Fargo Bank, N.A.
200 Lomas Blvd. NW
MAC Q2129-013
Albuquerque, NM 87102
Attn: Richard A. Zeigner
Telephone: 505-766-6239
Facsimile: 505-247-4639
Electronic Mail: ziegnerr@wellsfargo.com

Wachovia Bank, National Association
301 S. College Street
Charlotte, NC 28288
Attn: Joe Dancy
Telephone: 704-383-4748
Facsimile: 704-374-2570
Electronic Mail: Joe.dancy@wachovia.com

JPMorgan Chase Bank
270 Park Avenue, 4th Floor
New York, NY 10017
Attn: Thomas Hou
Telephone: 212-270-6072
Facsimile: 212-270-3089
Electronic Mail: Thomas.Hou@jpmorgan.com

TO:           BANK OF AMERICA, N.A., as Administrative Agent

RE:           Credit Agreement dated as of December 19, 2002 among Public
              Service Company of New Mexico (the "Borrower"), Bank of America,
              N.A., as Administrative Agent, and the Lenders identified
              therein (as the same may be amended, modified, extended or
              restated from time to time, the "Credit Agreement")

DATE:         _____________, ______


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

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

                  (a)      Principal amount of requested
                           Revolving Loans                $___________________

                  (b)      Date of requested Revolving
                           Loans                           ___________________

                  (c)      Interest rate applicable to the

requested Revolving Loans:

(i) ________Base Rate

(ii) ________Adjusted Eurodollar Rate for an Interest Period of:

________ one month ________ two months ________ three months ________ six months

3. Subsequent to the funding of the requested Revolving Loan, the aggregate amount of Revolving Loans outstanding plus the aggregate amount of L/C Obligations outstanding will be $________________ which is less than or equal the Revolving Committed Amount.

4. The representations and warranties made by the Borrower in any Credit Document are true and correct in all material respects at and as if made on the date of the requested Revolving Loans except to the extent they expressly relate to an earlier date.

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

PUBLIC SERVICE COMPANY OF NEW MEXICO,
a New Mexico corporation

Exhibit 2.1(e)

Lender: ______________ _____________, 2002

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 Credit Agreement dated as of December 19, 2002 (as amended, modified, extended or restated from time to time, the "Credit Agreement") among the Borrower, the Lenders party thereto (including the Lender) and Bank of America, N.A., as Administrative Agent (the "Administrative Agent") (or at such other place or places as the holder of this Revolving Note may designate), the aggregate unpaid principal amount of the Revolving Loans made by the Lender to the Borrower under the Credit Agreement, in lawful money and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each Revolving Loan made by the Lender, at such office, in like money and funds, for the period commencing on the date of each Revolving Loan until each Revolving Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement.

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

The Credit Agreement provides for the acceleration of the maturity of the Revolving Loans evidenced by this Revolving Note upon the occurrence of certain events (and for payment of collection costs in connection therewith) and for prepayments of Revolving Loans upon the terms and conditions specified therein. In the event this Revolving 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 Revolving 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 Credit Agreement or under this Revolving Note in respect of the Revolving Loans to be evidenced by this Revolving 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 Credit Agreement, this Revolving Note may not be assigned by the Lender to any other Person.

THIS REVOLVING 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 Revolving Note to be executed as of the date first above written.

PUBLIC SERVICE COMPANY OF NEW MEXICO,
a New Mexico corporation

TO:         BANK OF AMERICA, N.A., as Administrative Agent

RE:         Credit Agreement dated as of December 19, 2002 among Public Service
            Company of New Mexico (the "Borrower"), Bank of America, N.A., as
            Administrative Agent, and the Lenders named therein (as the same may
            be amended, modified, extended or restated from time to time, the
            "Credit Agreement")

DATE:       _____________, 200_

--------------------------------------------------------------------------------

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

2.       Please be advised that the Borrower is requesting that a portion of the
         current outstanding Revolving 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 Revolving Loans (as set forth above) shall
         be:

         a. ________ the Base Rate

         b. ________ the Adjusted Eurodollar Rate for an Interest Period of:

                                    ________ one month
                                    ________ two months
                                    ________ three months
                                    ________ six months

4.       As of the date hereof, no Default or Event of Default has occurred and
         is continuing.


                                          PUBLIC SERVICE COMPANY OF NEW MEXICO,
                                          a New Mexico corporation


                                          By:
                                             ---------------------------------
                                          Name:
                                               -------------------------------
                                          Title:
                                                ------------------------------

TO:           BANK OF AMERICA, N.A., as Administrative Agent

RE:           Credit Agreement dated as of December 19, 2002 among Public
              Service Company of New Mexico (the "Borrower"), Bank of America,
              N.A. as Administrative Agent, and the Lenders named therein (as
              the same may be amended, modified, extended or restated from time
              to time, the "Credit Agreement")

DATE:         _____________, 200__

Pursuant to the terms of the Credit 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 Credit 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 Credit Agreement.

b. No Default or Event of Default exists under the Credit 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

A.       Compliance with Section 7.2(a):
         Debt to Capitalization
         ----------------------

         1. Consolidated Indebtedness*                   $___________

         2. Consolidated Capitalization*                 $___________
         3. Debt to Capitalization Ratio
                  (Line 1 / Line 2)                       _____:_____

         Maximum Allowed:  Line A.3 shall be less than
                    or equal to 0.65 to 1.0

B.       Compliance with Section 7.2(b):
         Interest Coverage Ratio
         -----------------------

         1.       Consolidated EBITDA
                  (See Exhibit A attached hereto)        $___________

2. Consolidated Interest Expense $___________
3. Interest Coverage Ratio (Line 1 / Line 2) _____:_____

Minimum Required: Line B.3 shall be greater than or equal to 3.00 to 1.0

Exhibit A to Schedule 1 to Exhibit 7.2(a)

Calculation Schedule to Compliance Certificate As of __________________

------------------------ ---------- --------- ---------- ---------- ----------
                           Twelve
                           Months    Quarter   Quarter     Quarter   Quarter
Consolidated EBITDA        Ended      Ended     Ended       Ended     Ended
                          --------  --------   --------   --------   --------
------------------------ ---------- --------- ---------- ---------- ----------
Consolidated Net Income
------------------------ ---------- --------- ---------- ---------- ----------
+ Extraordinary Losses
------------------------ ---------- --------- ---------- ---------- ----------
- Extraordinary Gains
------------------------ ---------- --------- ---------- ---------- ----------
+ Consolidated Interest
  Expense
------------------------ ---------- --------- ---------- ---------- ----------
+ Taxes
------------------------ ---------- --------- ---------- ---------- ----------
+ Depreciation
------------------------ ---------- --------- ---------- ---------- ----------
+ Amortization
------------------------ ---------- --------- ---------- ---------- ----------
+ Other Non-Cash Losses
------------------------ ---------- --------- ---------- ---------- ----------
- Other Non-Cash Gains
------------------------ ---------- --------- ---------- ---------- ----------
= Consolidated EBITDA
------------------------ ---------- --------- ---------- ---------- ----------

Exhibit 11.3(b)

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 Credit Agreement identified below (as amended, the "Credit 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 Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (a) all of the Assignor's rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including without limitation any Letters of 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 Credit 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: Bank of America, N.A. as the Administrative Agent under the Credit Agreement

5. Credit Agreement: Credit Agreement dated as of December 19, 2002 among Public Service Company of New Mexico, as Borrower, the Lenders party thereto and Bank of America, N.A., as Administrative Agent for the Lenders

6. Assigned Interest:

Commitment/Loans for all          Assigned             Commitment/Loans
         Lenders
------------------------ -------------------------- ----------------------
$                        $                                    %
------------------------ -------------------------- ----------------------

7. After giving effect to the foregoing assignment, the Assignor and the Assignee shall have the following Commitments, Pro Rata Shares, outstanding Loans and Participation Interests:

----------- ------------ -------------- ----------------- -------------------
            Commitments  Pro Rata Share   Outstanding       Participation
                                           Revolving         Interests in
                                             Loans        Letters of Credit
----------- ------------ -------------- ----------------- -------------------
Assignor
----------- ------------ -------------- ----------------- -------------------
Assignee
----------- ------------ -------------- ----------------- -------------------

8. Trade Date: ______________

Effective Date: _____________ ___, 200__

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

[NAME OF ASSIGNOR]

[NAME OF ASSIGNEE]

Consented to and Accepted:

BANK OF AMERICA, N.A.,
as Administrative Agent and L/C Issuer

Consented to:

PUBLIC SERVICE COMPANY OF NEW MEXICO

Schedule1

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 Credit 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 Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit 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 Credit 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 Credit 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.

EXHIBIT 10.75

PNM RESOURCES, INC.

EXECUTIVE SAVINGS PLAN

                                TABLE OF CONTENTS

                                                                          Page

ARTICLE I             DEFINITIONS...........................................1

         1.1.     "Committee"...............................................1

         1.2.     "Benefits Department".....................................1

         1.3.     "Board"...................................................1

         1.4.     "Code"....................................................1

         1.5.     "Company".................................................1

         1.6.     "Company Stock"...........................................2

         1.7.     "Company Stock Fund"......................................2

         1.8.     "Compensation"............................................2

         1.9.     "Distribution Election Form"..............................2

         1.10.    "Investment Fund".........................................2

         1.11.    "MESP"....................................................2

         1.12.    "MESP Employer Contribution"..............................2

         1.13.    "MESP Employer Contribution Account"......................2

         1.14.    "MESP Matching Contribution"..............................2

         1.15.    "Participant".............................................2

         1.16.    "Plan"....................................................2

         1.17.    "Plan Administrator"......................................2

         1.18.    "Plan Year"...............................................2

         1.19.    "Recordkeeper"............................................2

         1.20.    "Supplemental Deferral Account"...........................3

         1.21.    "Supplemental Deferral Agreement".........................3

         1.22.    "Supplemental Deferrals"..................................3

         1.23.    "Supplemental Employer Account"...........................3

         1.24.    "Supplemental Employer Credits"...........................3

         1.25.    "Supplemental Matching Credits"...........................3

         1.26.    "Valuation Date"..........................................3

ARTICLE II            ELIGIBILITY; ADOPTION BY AFFILIATES...................3

         2.1.     The Eligible Class........................................3

         2.2.     Selection of Participants.................................3

         2.3.     Discontinuance of Participation...........................3

         2.4.     Adoption by Affiliates....................................4

                                TABLE OF CONTENTS
                                  (Continued)
                                                                          Page

ARTICLE III           SUPPLEMENTAL DEFERRALS AND CREDITS....................4

         3.1.     Supplemental Deferral Agreement...........................4

         3.2.     Supplemental Deferrals....................................4

         3.3.     Supplemental Matching and Employer Credits................5

         3.4.     Benefits Not Contingent...................................5

         3.5.     Allocation Among Affiliates...............................5

ARTICLE IV            INVESTMENT OF ACCOUNTS................................5

         4.1.     Adjustment of Accounts....................................5

         4.2.     Investment Direction......................................6

         4.3.     Special Company Stock Fund Provisions.....................7

         4.4.     Compliance with Securities Laws...........................7

ARTICLE V             DISTRIBUTIONS.........................................7

         5.1.     Right to Receive Distribution.............................7

         5.2.     Form of Distribution......................................7

         5.3.     Amount of Distribution....................................8

         5.4.     Limits on Distributions of Company Stock..................9

         5.5.     Timing of Distribution....................................9

         5.6.     Accelerated Withdrawals...................................9

         5.7.     Beneficiary Designation..................................10

         5.8.     Withholding..............................................10

         5.9.     Deductibility............................................10

ARTICLE VI            ADMINISTRATION OF THE PLAN...........................10

         6.1.     Appointment of Committee.................................10

         6.2.     Majority Rule and Delegation of Ministerial Acts.........10

         6.3.     Meetings.................................................11

         6.4.     General Powers and Duties................................11

         6.5.     Claims...................................................12

         6.6.     Appeals..................................................12

         6.7.     Right to Examine Plan Documents and to Submit Materials..13

         6.8.     Relevance................................................14

         6.9.     Decisions Final; Procedures Mandatory....................14

         6.10.    Time For Filing Legal Or Equitable Action................14

                                TABLE OF CONTENTS
                                  (Continued)

                                                                           Page

ARTICLE VII           AMENDMENT OR TERMINATION..............................14

         7.1.     Amendment or Termination..................................14

         7.2.     Effect of Amendment or Termination........................14

ARTICLE VIII          GENERAL PROVISIONS....................................15

         8.1.     Participant's Rights Unsecured............................15

         8.2.     Funding Upon A Change In Control..........................15

         8.3.     No Guaranty of Benefits...................................15

         8.4.     No Enlargement of Employee Rights.........................15

         8.5.     Spendthrift Provision.....................................15

         8.6.     Applicable Law............................................15

         8.7.     Incapacity of Recipient...................................16

         8.8.     Successors................................................16

         8.9.     Unclaimed Benefit.........................................16

         8.10.    Limitations on Liability..................................16

         8.11.    Headings for Convenience Only.............................16

         8.12.    Severability..............................................16

         8.13.    Conflicts.................................................16

SECOND RESTATED AND AMENDED

PNM RESOURCES, INC.

EXECUTIVE SAVINGS PLAN

The Public Service Company of New Mexico Executive Savings Plan was originally effective as of July 1, 1998. Most recently, the Plan was amended and restated in its entirety, effective as of November 16, 2001. PNM Resources, Inc. (the "Company" or "PNM") became the parent holding company for Public Service Company of New Mexico as of December 31, 2001. Effective as of November 27, 2002, the Company assumed the sponsorship of the Public Service Company of New Mexico Executive Savings Plan and renamed it as the PNM RESOURCES, INC. EXECUTIVE SAVINGS PLAN (the "Plan"). The Plan is maintained solely for the purpose of permitting certain key employees of the Company and its affiliates who participate in the PNM Resources, Inc. Master Employee Savings Plan (the "MESP") to defer compensation and receive credits under this Plan without reference to the limitations on contributions in the MESP or those imposed by the Internal Revenue Code of 1986, as amended. By this document, the Company amends and restates the Plan in its entirety, effective as of January 1, 2003.

ARTICLE I
DEFINITIONS

When a word or phrase appears in this Plan with the initial letter capitalized, and the word or phrase does not begin a sentence, the word or phrase shall generally be a term defined in this Article I. The following words and phrases used in the Plan with the initial letter capitalized shall have the meanings set forth in this Article I, unless a clearly different meaning is required by the context in which the word or phrase is used:

1.1. "Committee" means the committee appointed pursuant to Section 6.1 to assume certain designated responsibilities in connection with the Plan.

1.2. "Benefits Department" means the organizational unit of the Company with responsibility for administering benefit programs.

1.3. "Board" means the Board of Directors of the Company, or any authorized committee of the Board.

1.4. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.

1.5. "Company" means PNM Resources, Inc., or any affiliate of the Company that is authorized by the Board of Directors to adopt the Plan and which has adopted the Plan, and, to the extent provided in Section 8.8 below, any successor corporation or other entity resulting from a merger or consolidation into or with the Company or a transfer or sale of substantially all of the assets of the Company. Affiliates that adopted the Plan prior to the assumption of the sponsorship of the Plan by the Company, including Public Service Company of New Mexico, shall continue to participate in the Plan.

1.6. "Company Stock" means common stock issued by the Company.

1.7. "Company Stock Fund" means the Investment Fund described in Section 4.3.

1.8. "Compensation," for purposes of determining the Supplemental Matching and Employer Credits, means the Participant's base salary and other elements of compensation that are considered under the MESP (as it may be amended from time to time) for purposes of calculating the Participant's MESP Employer and Matching Contributions, respectively. For purposes of determining the amount of a Participant's permissible Supplemental Deferrals, "Compensation" means the Participant's base salary and other elements of compensation that are considered under the MESP (as it may be amended from time to time) for purposes of calculating the Participant's MESP pre-tax contributions.

1.9. "Distribution Election Form" means the election form by which a Participant elects the manner in which his accounts shall be distributed pursuant to Section 5.2(b).

1.10. "Investment Fund" means the hypothetical investment fund or funds established by the Plan Administrator pursuant to Article IV.

1.11. "MESP" means the PNM Resources, Inc. Master Employee Savings Plan established effective January 1, 1975, as it may be amended from time to time.

1.12. "MESP Employer Contribution" means the Employer (Nonelective) Contributions made by the Company for the benefit of a Participant under and in accordance with the terms of the MESP in any Plan Year.

1.13. "MESP Employer Contribution Account" means the Matching Contributions Account and/or the Employer Contributions Account established for a Participant under the MESP.

1.14. "MESP Matching Contribution" means the Matching Contributions made by the Company for the benefit of a Participant under and in accordance with the terms of the MESP in any Plan Year.

1.15. "Participant" means an employee of the Company or any affiliate who has been designated or selected for participation in the Plan pursuant to Section 2.2 and to whom or with respect to whom amounts may be credited under the Plan.

1.16. "Plan" means the PNM Resources, Inc. Executive Savings Plan, as adopted herein.

1.17. "Plan Administrator" means the Company. Any action to be taken by the Plan Administrator may be taken by the Company's senior human resources officer.

1.18. "Plan Year" means the calendar year.

1.19. "Recordkeeper" means the entity selected by the Company to keep Plan records and to adjust accounts pursuant to Section 4.1 of the Plan.

1.20. "Supplemental Deferral Account" means the account maintained under the Plan to record amounts deferred under Section 3.2 of the Plan.

1.21. "Supplemental Deferral Agreement" means the written deferral agreement described in Section 3.1 that is entered into by a Participant with the Company pursuant to this Plan.

1.22. "Supplemental Deferrals" means the deferrals made by a Participant in accordance with Section 3.2.

1.23. "Supplemental Employer Account" means the account maintained under the Plan to record the amounts credited to a Participant in accordance with Section 3.3.

1.24. "Supplemental Employer Credits" means the Employer Credits allocated to a Participant's Supplemental Employer Account in accordance with Section 3.3.

1.25. "Supplemental Matching Credits" means the Matching Credits allocated to a Participant's Supplemental Employer Account in accordance with Section 3.3.

1.26. "Valuation Date" shall mean each business day of the Plan Year.

ARTICLE II
ELIGIBILITY; ADOPTION BY AFFILIATES

2.1. The Eligible Class. The purpose of the Plan is to provide deferred compensation to a select group of management or highly compensated employees. This group of eligible employees is sometimes referred to as the "top hat group."

2.2. Selection of Participants. Any employees of the Company or an adopting affiliate who are Participants in the Plan on the date of adoption of this amended and restated Plan document will continue as such, subject to the provisions of Section 2.3. Effective January 1, 2002 (or such later date as may be established by the Plan Administrator), any employee who is classified as an "officer" of the Company or an adopting affiliate, shall be a Participant. For this purpose, an "officer" is someone who occupies the position of Vice President or higher. The Plan Administrator, in the exercise of its discretion, and with the concurrence of the Company and/or its Board of Directors, may select as Participants any other employees of the Company or an adopting affiliate who the Plan Administrator concludes, in the exercise of its discretion, are properly included in the top hat group. As noted in Section 2.1, this Plan is intended to provide benefits only to members of the top hat group. The Company has determined that all of the current officers are properly includible in the top hat group.

2.3. Discontinuance of Participation. As a general rule, once an individual is a Participant, he will continue as such for all future Plan Years until his retirement or other termination of employment. The Plan Administrator shall discontinue an individual's participation in the Plan if the Plan Administrator concludes, in the exercise of its discretion, that the individual is no longer properly included in the top hat group. If an individual's participation is discontinued, the individual will no longer be eligible to make deferrals or receive credits under this Plan. The individual will not be entitled to receive

a distribution, however, until the termination of his employment, unless the Plan Administrator, in the exercise of its discretion, directs that a distribution be made as of an earlier date, in which case the individual's accounts shall be distributed on the same basis as if the individual's employment had been terminated. The Participant's accounts will continue to be adjusted to reflect hypothetical investment earnings or losses in accordance with Section 4.1 until the accounts are distributed.

2.4. Adoption by Affiliates. An employee of an affiliate may not become a Participant in the Plan unless the affiliate has previously adopted the Plan. An affiliate of the Company may adopt this Plan only with the approval of the Board. By adopting this Plan, the affiliate shall be deemed to have agreed to assume the obligations and liabilities imposed upon it by this Plan, agreed to comply with all of the other terms and provisions of this Plan, delegated to the Plan Administrator, the Benefits Department, and the Committee the power and responsibility to administer this Plan with respect to the affiliate's employees, and delegated to the Company the full power to amend or terminate this Plan with respect to the affiliate's employees.

ARTICLE III
SUPPLEMENTAL DEFERRALS AND CREDITS

3.1. Supplemental Deferral Agreement. In order to make Supplemental Deferrals, a Participant must execute a Supplemental Deferral Agreement in the form prescribed by the Benefits Department from time to time. In the Supplemental Deferral Agreement, the Participant shall agree to reduce his Compensation in exchange for a Supplemental Deferral in the same amount. The Supplemental Deferral Agreement shall be delivered to the Benefits Department by the time specified in Section 3.2(b).

3.2. Supplemental Deferrals.

(a) Amount. Any Participant may elect to defer, pursuant to a Supplemental Deferral Agreement, the receipt of all or any portion (designated in whole percentages) of the Compensation otherwise payable to him or her by the Company or an adopting affiliate in any Plan Year. The amount deferred pursuant to this paragraph (a) shall be allocated to the Supplemental Deferral Account maintained for the Participant for such Plan Year.

(b) Timing of Elections. As a general rule, the Supplemental Deferral Agreement shall be signed by the Participant and delivered to the Benefits Department prior to January 1 of the Plan Year in which the Compensation to be deferred is otherwise payable to the Participant. The Supplemental Deferral Agreement will indicate whether it is to be effective for a single Plan Year or will remain in effect until properly changed by the Participant. For the Plan Year in which a Participant first becomes eligible to participate in the Plan, the Participant may elect to make Supplemental Deferrals from Compensation otherwise payable in the future during the then current Plan Year by signing and delivering a Supplemental Deferral Agreement within 30 days after the date on which he or she is notified by the Benefits Department that he or she is eligible to participate. Subject to the following, an election made by a Participant shall be irrevocable with respect to the Plan Year covered by the election. One time per Plan Year, a Participant may modify or revoke the election effective for the

subsequent calendar quarters of the Plan Year by delivering to the Benefits Department a written instrument prior to the first day of the next calendar quarter of the Plan Year (i.e., April 1, July 1, or October 1) for which such modification or revocation is to be effective. Notwithstanding the foregoing sentence, the elections contained in a Supplemental Deferral Agreement shall be irrevocable for the Plan Year covered by the election for purposes of the election to defer Compensation attributable to annual bonuses, awards, or incentive compensation paid to a Participant.

3.3. Supplemental Matching and Employer Credits. Each Plan Year (or more frequently), the Recordkeeper shall allocate Supplemental Matching and Employer Credits to the Participant's Supplemental Employer Account.

(a) Supplemental Matching Credit. The Supplemental Matching Credit shall be in an amount equal to 75% of the first six percent of Compensation deferred by the Participant to the Plan pursuant to a Supplemental Deferral Agreement.

(b) Supplemental Employer Credit. The Supplemental Employer Credit shall equal (i) the MESP Employer Contribution that would have been made on the Participant's behalf to the MESP for the Plan Year if the contributions were not limited by the Code (including, particularly, the limitations imposed by Sections 401(a)(17) and 415 of the Code), reduced by (ii) the MESP Employer Contributions actually made to the MESP on behalf of the Participant in the Plan Year.

3.4. Benefits Not Contingent. Deferrals and credits for any Participant under this Plan are not increased or decreased to the extent a Participant makes or does not make deferrals under the MESP. The Plan should be interpreted and administered in a manner that is consistent with this Section 3.4.

3.5. Allocation Among Affiliates. Each affiliate that participates in the Plan shall bear the costs and expenses of providing benefits accrued by its employee-Participants during periods while they are employed by that affiliate. Such costs and expenses shall be allocated among the participating affiliates in accordance with (a) agreements entered into between the Company and any participating affiliate, or (b) in the absence of such an agreement, procedures adopted by the Company.

ARTICLE IV
INVESTMENT OF ACCOUNTS

4.1. Adjustment of Accounts. Except as otherwise provided elsewhere in the Plan, as of each Valuation Date, each Participant's accounts will be adjusted to reflect deferrals and credits under Article III and the positive or negative rate of return on the Investment Funds selected by the Participant pursuant to
Section 4.2(b). The rate of return will be determined by the Recordkeeper pursuant to Section 4.2(f) and will be credited or charged in accordance with written policies applied to all Participants. While the accounts will be adjusted as of each Valuation Date, the Recordkeeper shall only post the adjustments as of the last business day of each month.

4.2. Investment Direction.

(a) Investment Funds. Each Participant may direct the hypothetical investment of amounts credited to his accounts in one or more of the Investment Funds. The Investment Funds shall include a Company Stock Fund and such other investment funds as may be available under the MESP. The Investment Funds may be changed from time to time by the Administration Committee, in its discretion.

(b) Participant Directions. Upon becoming a Participant in the Plan, each Participant may direct that all of the amounts attributable to his accounts be invested in a single Investment Fund or may direct that fractional (percentage) increments of his accounts be invested in such fund or funds as he shall desire in accordance with such procedures as may be established by the Committee. Unless the Committee prescribes otherwise, such procedures shall mirror the procedures established under the MESP for participant investment direction. A Participant's ability to direct investments into or out of the Company Stock Fund shall be subject to such procedures as the Company's General Counsel (or his delegate) may prescribe from time to time to assure compliance with Rule 16b-3 promulgated under Section 16(b) of the Securities Exchange Act of 1934, as amended, and other applicable requirements. Such procedures also may limit or restrict a Participant's ability to make (or modify previously made) elections.

(c) Changes and Intra-Fund Transfers. Participant investment directions may be changed, and amounts may be transferred from one hypothetical Investment Fund to another, in accordance with the procedures established by the Committee (or, in the case of the Company Stock Fund, the General Counsel) pursuant to Section
4.2(b). The designation will continue until changed by the timely submission of a new designation.

(d) Default Selection. In the absence of any designation, a Participant will be deemed to have directed the investment of his accounts in such Investment Funds as the Committee, in its sole and absolute discretion, shall determine.

(e) Impact of Election. The Participant's selection of Investment Funds shall serve only as a measurement of the value of the Participant's accounts pursuant to Section 4.1 and Section 4.2 and neither the Company nor the Committee are required to actually invest a Participant's accounts in accordance with the Participant's selections.

(f) Rate of Return. Accounts shall be adjusted on each Valuation Date to reflect investment gains and losses as if the accounts were invested in the hypothetical Investment Funds selected by the Participants in accordance with
Section 4.2 and charged with any and all reasonable expenses related to the administration of the Plan including, but not limited to, the reasonable expenses of carrying out the hypothetical investment directions related to each account. The earnings and losses determined by the Recordkeeper in good faith and in its discretion pursuant to this Section shall be binding and conclusive on the Participant, the Participant's beneficiary and all parties claiming through them.

(g) Charges. The Committee may direct the Recordkeeper to charge each Participant's accounts for the reasonable expenses of carrying out investment instructions directly related to such accounts.

4.3. Special Company Stock Fund Provisions.

(a) General. A Participant's interest in the Company Stock Fund shall be expressed in whole and fractional hypothetical units of the Company Stock Fund. As a general matter, the Company Stock Fund shall track an investment in Company Stock in the same manner as the MESP's company stock fund. Accordingly, the value of a unit in the Plan's Company Stock Fund shall be the same as the value of a unit in the MESP's company stock fund.

(b) Dividends and Stock Splits. If a cash dividend is declared on Company Stock, the hypothetical equivalent cash dividends attributable to the notional shares held in the Company Stock Fund shall be "reinvested" into the Company Stock Fund. If a stock dividend or share split is declared with respect to Company Stock, a hypothetical equivalent stock dividend or stock split attributable to the notional shares held in the Company Stock Fund, or any hypothetical securities issued with respect to the Company Stock Fund shall be allocated to the Company Stock Fund. All such hypothetical dividends (cash or stock) or stock splits shall be reflected appropriately in the Participant's accounts.

4.4. Compliance with Securities Laws. Any election by a Participant to hypothetically invest any amount in the Company Stock Fund, and any elections to transfer amounts from or to the Company Stock Fund to or from any other Investment Fund, shall be subject to all applicable securities law requirements, including but not limited to Rule 16b-3 promulgated by the Securities Exchange Commission. To the extent that any election violates any securities law requirement, the election shall be void.

ARTICLE V
DISTRIBUTIONS

5.1. Right to Receive Distribution. Following a Participant's termination of employment for any reason, including death or "Change in Control" (as defined in the Company's Employees' Retirement Plan, or any successor plan), the Participant's interest in this Plan will be distributed to the Participant at the time and in the manner provided in Sections 5.5 and 5.2. A transfer of a Participant from the Company to an affiliate that is authorized by the Board of Directors to adopt the Plan and that has adopted the Plan shall not be deemed a termination and such transfer shall not trigger a distribution of benefits under this Plan.

5.2. Form of Distribution.

(a) Company Stock Fund. Subject to Sections 5.2(c) and 5.4, the portion of a Participant's accounts that is allocated to the Company Stock Fund shall be distributed in a single lump sum payment in whole shares of Company Stock (with fractional shares paid for in cash) unless the Participant elects to receive a cash distribution. The election to receive cash or Company Stock shall be made at the time and in the manner provided in the form prescribed by the Benefits Department from time to time for that purpose. Any election made by a Participant pursuant to this Section with respect to a distribution from the Company Stock Fund shall be subject to all applicable securities law requirements, including but not limited to, Rule 16b-3. Any election that may not be implemented due to the lack of any available exemption shall be void. The

Benefits Department may then make the distribution in any fashion that will not result in a violation of any applicable securities law requirements. The Benefits Department also may delay the distribution if necessary. An exemption to the securities law requirements that is only available with the prior approval of the Board, the shareholders, or some other individual or individuals, shall not be considered to be available unless such approval is actually granted in a timely manner.

(b) Non-Company Stock Investment Funds. Subject to Section 5.2(c), the portion of a Participant's accounts that is not allocated to the Company Stock Fund shall be distributed in cash in a single lump sum payment, installments, or in the form of an annuity. Installments and annuity distributions shall be subject to such uniform rules and procedures as may be adopted by the Plan Administrator from time to time. The method of payment shall be selected by the Participant in the initial Distribution Election Form (which may be contained in a Supplemental Deferral Agreement) submitted by the Participant to the Benefits Department on entry into the Plan or following the adoption of this amended and restated Plan, whichever is later. A Participant may change his distribution election by filing a new Distribution Election Form with the Benefits Department. A revised Distribution Election Form will be honored only if at least one year elapses between (1) the date on which such new Distribution Election Form is filed with the Benefits Department and (2) the date on which the Participant terminates employment with the Company. If a revised Distribution Election Form is not honored because it was not timely filed, distributions shall be made pursuant to the most recent Distribution Election Form filed by the Participant at least one year prior to the Participant's termination. If no valid Distribution Election Form exists (or if the only valid form was filed within the one year period described above), the Participant's accounts will be distributed in a single lump sum.

(c) Limitations on Distributions and Intra-Fund Transfers. Amounts transferred pursuant to Section 4.2(c) to or from the Company Stock Fund shall, for a one-year period, continue to be subject to the distribution elections applicable to such amounts (as adjusted for earnings or losses) pursuant to Sections 5.2(a) and (b) as if no transfer had taken place. For example, if a Participant transfers $25,000 to the Company Stock Fund from other Investment Funds on January 1, 2002, then that transferred $25,000, as adjusted for subsequent earnings or losses, shall continue to be distributable in cash pursuant to the distribution method elected pursuant to Section 5.2(b) until January 1, 2003. If the Participant had transferred $25,000 from the Company Stuck Fund into the other Investment Funds, then the transferred amount, as adjusted for subsequent earnings or losses, would be distributable in cash in the form of a lump sum pursuant to Section 5.2(a) until January 1, 2003. Only amounts actually invested in the Company Stock Fund, for the requisite one-year period, however, shall be distributable in Company Stock.

5.3. Amount of Distribution. The amount distributed to a Participant shall equal the sum of the amounts credited to the Participant's Supplemental Deferral Account and Supplemental Employer Account as of the quarterly Valuation Date next following the Participant's termination of employment. For purposes of this Plan, a "quarterly Valuation Date" is a Valuation Date that coincides with the last business day of a calendar quarter. Shares of Company Stock that are distributed in cash will be valued at the closing price of the Company Stock on the New York Stock Exchange on the relevant quarterly Valuation Date.

5.4. Limits on Distributions of Company Stock. Notwithstanding anything to the contrary in this Plan, no individual officer or director of the Company may receive a distribution of Company Stock that exceeds more than one percent of the Company Stock that was outstanding as of the date of the adoption of this amendment and restatement of the Plan. Moreover, all Company Stock issued under this Plan, shall be limited to the amount of Company Stock that may be issued pursuant to Section 312.03(a)(4)(ii) of the New York Stock Exchange Listed Company Manual (generally, considering all Company plans, five percent of the Company Stock outstanding as of the date of the adoption of this amendment and restatement of the Plan).

5.5. Timing of Distribution. Funds will be distributed within an administratively reasonable period of time (generally ten working days) following the applicable quarterly Valuation Date, unless prohibited by the Company's cash position.

5.6. Accelerated Withdrawals. A Participant who is a current employee may elect to receive an accelerated withdrawal of the entire portion of his accounts that is subject to accelerated withdrawal pursuant to Section 5.6(a) by filing a written election with the Benefits Department. Only one accelerated withdrawal may be elected during any 12-month period. Accelerated withdrawals of amounts allocated to the Company Stock Fund may be limited as described in paragraph
(a). Participants who have terminated employment, regardless of whether they have elected or begun receiving installment or annuity payments pursuant to
Section 5.2(b), may not elect to receive an accelerated withdrawal.

(a) Amount of Withdrawal. An accelerated withdrawal pursuant to this
Section 5.6 shall be limited to the lesser of (1) 50% of the value of the Participant's accounts, including any amounts invested in the Company Stock Fund, or (2) the amount that may be charged against the Participant's accounts pursuant to Section 5.6(d). For purposes of determining the amount to be distributed, the Participant's accounts shall be valued as of the effective date of the withdrawal and shall be paid as soon as reasonably possible thereafter.

(b) Forfeiture. A Participant who elects an accelerated withdrawal pursuant to this Section 5.6 shall forfeit an amount equal to 10% of the amount withdrawn as of the day on which the accelerated withdrawal is distributed to the Participant.

(c) Suspension of Participation. Any Participant who elects to receive an accelerated withdrawal pursuant to this Section 5.6 shall be suspended from making Supplemental Deferrals or receiving Supplemental Matching or Employer Credits for 12 months from the date that the accelerated withdrawal is paid to the Participant. Upon expiration of the 12-month suspension period, the Participant shall be permitted to execute a new Supplemental Deferral Agreement pursuant to Section 3.2(b) and to begin making Supplemental Deferrals as of the first day of the first payroll period in any subsequent calendar quarter of the Plan Year.

(d) Allocation of Amount Withdrawn and Forfeiture. The amount withdrawn and any forfeiture will be charged to the Participant's accounts in accordance with such procedures as may be adopted from time to time by the Plan Administrator. Withdrawals from the Company Stock Fund, however, shall be subject to such procedures as the Company's General Counsel (or his delegate) may prescribe from

time to time to assure compliance with Rule 16b-3 promulgated under Section 16(b) of the Securities Exchange Act of 1934, as amended, and other applicable securities law requirements. If the Participant is unable, pursuant to the preceding sentence, to withdraw amounts invested in the Company Stock Fund, then
(1) no portion of the withdrawal or forfeiture will be charged against the amount allocated to the Company Stock Fund, and (2) the withdrawal and forfeiture shall be limited to the amount of the Participant's accounts that are invested in Investment Funds other than the Company Stock Fund

5.7. Beneficiary Designation. If a Participant should die before receiving a full distribution of his or her Supplemental Deferral and Employer Accounts, distribution shall be made to the beneficiary designated by the Participant. If a Participant has not designated a beneficiary, or if no designated beneficiary is living on the date of distribution, such amounts shall be distributed to those persons entitled to receive distributions of the Participant's accounts under the MESP. The distributions made under this Plan shall be made in a lump sum.

5.8. Withholding. All distributions will be subject to all applicable tax and withholding requirements.

5.9. Deductibility. All amounts distributed from the Plan are intended to be deductible by the Company or the appropriate adopting affiliate. If all or any portion of a distribution will not be deductible, the payment of the nondeductible portion will be postponed until the first year in which it may be deducted. The distribution will be made during the first 60 days of such year. The unpaid amounts will continue to be adjusted pursuant to Article IV until the accounts have been distributed.

ARTICLE VI
ADMINISTRATION OF THE PLAN

6.1. Appointment of Committee. The Company's Benefits Governance Committee, referred to in this Plan as the "Committee," shall have authority to administer the Plan. The Committee shall consist of such members as may be appointed by the Company. The Company may remove any member of the Committee at any time and a member may resign by written notice to the Company. Any vacancy in the membership of the Committee shall be filled by appointment made by the Company, but pending the filling of such vacancy the existing members of the Committee may act hereunder as though they alone constitute the full Committee. The Company may delegate its authority under this Section 6.1 to the Company's Chief Executive Officer.

6.2. Majority Rule and Delegation of Ministerial Acts. Any and all acts and decisions of the Committee shall, if there is more than one member, be by at least a majority of the current members, but the Committee may delegate to any one or more of its members or any other person the authority to sign notices or other documents on its behalf or to perform ministerial acts for it, in which event any other person may accept such notice, document or act without question as having been authorized by the Committee. If the majority of the current members of the Committee are unable to agree to an act or decision, the Committee shall seek instructions from the Company.

6.3. Meetings. The Committee may, but need not, call or hold formal meetings, and any decisions made or actions taken pursuant to written approval of a majority of the current members shall be sufficient. The Committee shall maintain adequate records of its decisions and those records shall be subject to inspection by the Company. Also, the Committee may designate one of its members as Chairman, and one of its members as Secretary, and may establish policies and procedures governing it so long as the same are not inconsistent with the terms of this Plan.

6.4. General Powers and Duties.

(a) General. The Committee shall perform the duties and exercise the powers and discretion given to it in this Plan document and its decisions and actions shall be final and conclusive as to all persons affected thereby. The Company and the adopting affiliates shall furnish the Committee with all data and information that the Committee may reasonably require in order to perform its functions. The Committee may rely without question upon any such data or information.

(b) Disputes. Any and all disputes that may arise involving Participants or beneficiaries shall be referred to the Committee and its decision shall be final. Furthermore, if any question arises as to the meaning, interpretation or application of any provisions of this Plan, the decision of the Committee shall be final.

(c) Conflicts of Interests. Notwithstanding any other provision of this Plan, during any period in which two or more Committee members are acting, no member of the Committee shall vote or act as a member of the Committee upon any matter involving the member's own rights, benefits or other participation hereunder. If a member of the Committee is recused pursuant to the preceding sentence, then the remaining Committee members may act as if they alone constitute the full Committee.

(d) Agents. The Committee may engage agents, including actuaries, to assist it and may engage legal counsel who may be counsel for the Company. The Committee shall not be responsible for any action taken or omitted to be taken on the advice of such counsel, including written opinions or certificates of any agent, counsel, actuary or physician.

(e) Insurance. At the Committee's request, the Company shall purchase liability insurance to cover the members of the Committee in their activities as the Committee.

(f) Allocations. The Committee is given specific authority to allocate and revoke responsibilities among its members. When the Committee has allocated authority pursuant to this paragraph, the Committee is not to be liable for the acts or omissions of the party to whom such responsibility has been allocated.

(g) Records. The Benefits Department shall supervise the establishment and maintenance of records by the Recordkeeper, the Company and each adopting affiliate containing all relevant data pertaining to any person affected hereby and his or her rights under this Plan. In addition, the Committee may, in its discretion, establish a system for complete or partial electronic administration of the Plan and may replace any written documents described in this Plan with electronic counterparts as it deems appropriate.

(h) Interpretations. The Committee, in its sole discretion, shall interpret and construe the provisions of the Plan (and any underlying documents or policies).

The foregoing list of powers and duties is not intended to be exhaustive, and the Committee shall, in addition, exercise such other powers and perform such other duties as it may deem advisable in the administration of the Plan, unless such powers or duties are assigned to another pursuant to the provisions of the Plan.

6.5. Claims. The Benefits Department will be responsible for the initial review of all claims. In the event that a Participant or beneficiary (the "claimant") is denied a claim for benefits under this Plan, the Benefits Department shall provide to the claimant written notice of the denial that shall set forth:

(a) The specific reason or reasons for the denial;

(b) Specific references to pertinent Plan provisions on which the Benefits Department based its denial;

(c) A description of any additional material or information needed for the claimant to perfect the claim and an explanation of why the material or information is needed;

(d) A statement that the claimant may:

(i) Request a review by the Committee upon written application to the Benefits Department;

(ii) Review pertinent Plan documents; and

(iii) Submit issues and comments in writing.

(e) An explanation of the Plan's appeal procedures, and an explanation of the time limits applicable to the Plan's appeal procedures, including a statement of the claimant's right to bring a civil action under Section 502(a) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The explanation should also specify that any appeal the claimant wishes to make of the adverse determination must be in writing and must be delivered to the Committee within 60 days after receipt of the Benefits Department notice of denial of benefits. The Benefits Department notice must further advise the claimant that his failure to appeal the action to the Committee in writing within the 60-day period will render the Benefits Department determination final, binding, and conclusive.

6.6. Appeals.

(a) Within 60 days after receiving the written notice of the disposition of the claim described in Section 6.5, the claimant, or the claimant's authorized representative, may appeal such denied claim. The claimant may submit a written statement of his claim (including any written comments, documents, records and other information relating to the claim) and the reasons for granting the claim.

The Committee shall have the right to request of and receive from the claimant such additional information, documents or other evidence as the Committee may reasonably require. If the claimant does not request an appeal of the denied claim within 60 days after receiving written notice of the disposition of the claim as described in Section 6.5, the claimant shall be deemed to have accepted the disposition of the claim and such written disposition will be final and binding on the claimant and anyone claiming benefits through the claimant, unless the claimant shall have been physically or mentally incapacitated so as to be unable to request review within the 60 day period. The appeal shall take into account all comments, documents, records and other information submitted by the claimant relating to the claim, without regard to whether such documents, records or other information were submitted or considered in the initial benefit determination or the initial review.

(b) A decision on appeal to the Committee shall be rendered in writing by the Committee ordinarily not later than 60 days after the claimant requests review. A written copy of the decision shall be delivered to the claimant. If special circumstances require an extension of the ordinary period, the Committee shall so notify the claimant of the extension with such notice containing an explanation of the special circumstances requiring the extension and the date by which the Committee expects to render a decision. Any such extension shall not extend beyond 60 days after the ordinary period. The period of time within which a benefit determination on review is required to be made shall begin at the time an appeal is filed in accordance with the provisions of paragraph (a) above, without regard to whether all the information necessary to make a decision on appeal accompanies the filing. In the event that a period of time is extended pursuant to this paragraph (b) due to a claimant's failure to submit information necessary to decide a claim, the period for deciding the appeal shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information.

If the appeal to the Committee is denied, in whole or in part, the decision on appeal referred to in the first sentence of this paragraph (b) shall set forth:

(i) the specific reason(s) for denial of the claim;

(ii) reference to the specific Plan provisions upon which the denial is based;

(iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant's claim for benefits; and

(iv) a statement of the claimant's right to bring a civil action under
Section 502(a) of ERISA.

6.7. Right to Examine Plan Documents and to Submit Materials. In connection with the determination of a claim, or in connection with review of a denied claim or appeal pursuant to the Plan, the claimant may examine this Plan and any other pertinent documents generally available to Participants relating to the claim and may submit written comments, documents, records and other information relating to the claim for benefits. The claimant also will be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant's claim for benefits with such relevance to be determined in accordance with Section 6.8.

6.8. Relevance. Documents, records, or other information shall be considered "relevant" to a claimant's claim for benefits if such documents, records or other information:

(a) were relied upon in making the benefit determination;

(b) were submitted, considered, or generated in the course of making the benefit determination, without regard to whether such documents, records or other information were relied upon in making the benefit determination; or

(c) demonstrate compliance with the administrative processes and safeguards required pursuant to this Plan's claims procedures regarding the making of the benefit determination.

6.9. Decisions Final; Procedures Mandatory. To the extent permitted by law, a decision on review or appeal shall be binding and conclusive upon all persons whomsoever. To the extent permitted by law, completion of the claims procedures described in this Plan shall be a mandatory precondition that must be complied with prior to commencement of a legal or equitable action in connection with the Plan by a person claiming rights under the Plan or by another person claiming rights through such a person. The Committee may, in its sole discretion, waive these procedures as a mandatory precondition to such an action.

6.10. Time For Filing Legal Or Equitable Action. Any legal or equitable action filed in connection with the Plan by a person claiming rights under the Plan or by another person claiming rights through such a person must be commenced not later than the earlier of: (1) the shortest applicable statute of limitations provided by law; or (2) two years from the date the written copy of the Committee's decision on review is delivered to the claimant in accordance with
Section 6.6.

ARTICLE VII
AMENDMENT OR TERMINATION

7.1. Amendment or Termination. The Company intends the Plan to be permanent but reserves the right to amend or terminate the Plan when, in the sole discretion of the Company, such amendment or termination is advisable. Any such amendment or termination shall be made pursuant to a resolution of the Board (or its delegate) and shall be effective as of the date of such resolution.

7.2. Effect of Amendment or Termination. Any amendment or termination of this Plan shall apply prospectively only and shall not directly or indirectly reduce the balance of any Plan account as of the effective date of such amendment or termination. Upon termination of the Plan, distribution of amounts in Supplemental Deferral and Supplemental Employer Accounts shall be made to the Participant or his or her beneficiary in the manner and at the time described in Article V of the Plan. No additional credits of Supplemental Deferrals or Supplemental Matching and Employer Credits shall be made to the Supplemental Deferral and Supplemental Employer Accounts of a Participant after termination of the Plan, but the Company may continue to credit or charge gains and losses to the Supplemental Deferral and Supplemental Employer Accounts, until the balance of such Supplemental Deferral and Supplemental Employer Accounts has been fully distributed to the Participant or his or her beneficiary.

ARTICLE VIII
GENERAL PROVISIONS

8.1. Participant's Rights Unsecured. The Plan at all times shall be entirely unfunded and no provision shall at any time be made with respect to segregating any assets of the Company for payment of any distributions hereunder. The right of a Participant or his or her designated beneficiary to receive a distribution hereunder shall be an unsecured claim against the general assets of the Company, and neither the Participant nor a designated beneficiary shall have any rights in or against any specific assets of the Company. All amounts credited to a Participant's Supplemental Deferral and Supplemental Employer Accounts shall constitute general assets of the Company and may be disposed of by the Company at such time and for such purposes as it may deem appropriate. Nothing in this
Section shall preclude the Company from establishing a "Rabbi Trust", but the assets in the Rabbi Trust must be available to pay the claims of the Company's general creditors in the event of the Company's insolvency.

8.2. Funding Upon A Change In Control. No later than immediately prior to the day on which a "Change in Control" (as defined in the Company's Executive Retention Plan, as it may be amended or replaced from time to time) occurs, the Company shall transfer to the trustee of a "Rabbi Trust" an amount equal to the aggregate value of all Participants' accounts. If it is discovered at any time that the amount initially transferred is less than the total amount called for by the initial sentence of this section, the shortfall shall be transferred to the trustee immediately upon the discovery of such error.

8.3. No Guaranty of Benefits. Nothing contained in the Plan shall constitute a guaranty by the Company or any other person or entity that the assets of the Company will be sufficient to pay any benefit hereunder.

8.4. No Enlargement of Employee Rights. No Participant shall have any right to receive a distribution from the Plan except in accordance with the terms of the Plan. Establishment of the Plan shall not be construed to give any Participant the right to be retained in the service of the Company.

8.5. Spendthrift Provision. No interest of any person or entity in, or right to receive a distribution under, the Plan shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor shall any such interest or right to receive a distribution be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims in bankruptcy proceedings. This Section shall not preclude arrangements for the withholding of taxes from deferrals, credits, or benefit payments, arrangements for the recovery of benefit overpayments, arrangements for the transfer of benefit rights to another plan, or arrangements for direct deposit of benefit payments to an account in a bank, savings and loan association or credit union (provided that such arrangement is not part of an arrangement constituting an assignment or alienation).

8.6. Applicable Law. The Plan shall be construed and administered under the laws of the State of New Mexico, except to the extent preempted by the Employee Retirement Income Security Act of 1974, as amended.

8.7. Incapacity of Recipient. If the Benefits Department is served with a court order holding that a person entitled to a distribution under the Plan is incapable of personally receiving and giving a valid receipt for such distribution, the Benefits Department shall postpone payment until such time as a claim therefor shall have been made by a duly appointed guardian or other legal representative of such person. The Benefits Department is under no obligation to inquire or investigate as to the competency of any person entitled to a distribution. Any payment to an appointed guardian or other legal representative under this Section shall be a payment for the account of the incapacitated person and a complete discharge of any liability of the Company and the Plan therefor.

8.8. Successors. This Plan shall be binding upon the successors and assigns of the Company and upon the heirs, beneficiaries and personal representatives of the individuals who become Participants hereunder.

8.9. Unclaimed Benefit. Each Participant shall keep the Benefits Department informed of his or her current address and the current address of his or her designated beneficiary. The Benefits Department shall not be obligated to search for the whereabouts of any person. If the location of a Participant is not made known to the Benefits Department within three years after the date on which payment of the Participant's Supplemental Deferral and Supplemental Employer Accounts may first be made, payment may be made as though the Participant had died at the end of the three year period. If, within one additional year after such three year period has elapsed, or, within three years after the actual death of a Participant, the designated beneficiary of the Participant has not been located, then there shall be no further obligation to pay any benefit hereunder to such Participant or designated beneficiary and such benefit shall be irrevocably forfeited.

8.10. Limitations on Liability. Notwithstanding any of the preceding provisions of the Plan, neither the Plan Administrator, the Benefits Department or the Committee, nor any individual acting as the Plan Administrator's, the Benefits Department's, the Committee's, or the Company's employee, agent, or representative shall be liable to any Participant, former Participant or other person for any claim, loss, liability or expense incurred in connection with the Plan.

8.11. Headings for Convenience Only. The headings and subheadings of this Plan are inserted for convenience and reference only and are not to be used in construing this instrument or any provision herein.

8.12. Severability. If any provision of this Plan is held to be illegal or invalid, such illegality or invalidity shall not affect the remaining provisions of this Plan, and the remaining provisions shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.

8.13. Conflicts. If any person holds a position under this Plan through which he or she is charged with making a decision about his or her own (or any immediate family member's) Plan participation, including, without limitation, eligibility, account valuation, or investments, then such person shall be recused and the decision shall be made by the Committee.

IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly authorized officer on the date and year first above written.

PNM RESOURCES, INC.

By:      /s/ Jeffry E. Sterba
   ----------------------------------------
         Jeffry E. Sterba
         Chairman, President and CEO

In the Matter of Public Service Company      )
of New Mexico's                              )
Transition Plan Filed Pursuant to            )           Utility  Case No. 3137
the Electric Utility Industry                )
Restructuring Act of 1999                    )
                                             )
Public Service Company of New Mexico,        )
                                             )
                             Petitioner      )

The undersigned parties (collectively the "Signatories") have jointly prepared and submit this Stipulated Agreement ("Stipulation") to the New Mexico Public Regulation Commission ("NMPRC" or "Commission") for its approval.

2) In 2001, the New Mexico Legislature adopted changes to the Restructuring Act. Laws 2001, ch. 5, ("Senate Bill 266"). Among other things, Senate Bill 266 postpones the implementation of customer choice under the Restructuring Act until January 1, 2007 for residential and small commercial customers and certain schools, and until July 1, 2007 for all other customers. NMSA 1978, ss. 62-3A-4(A) (2001).
3) Senate Bill 266 further provides for, among other things, New Mexico utilities' activities in respect to generating plants not intended to provide retail electric service to New Mexico customers. The kind of generating plant described in NMSA 1978, ss. 62-3A-8(C) (2001) is referred to here as "Merchant Plant." For purposes of this Stipulation, Merchant Plant also includes transmission, switchyards, or other non-generation facilities required by the transmission provider as a condition to interconnect the generation plant, but no other non-generation facilities. Facilities are no longer Merchant Plant after PNM divests its interest in the plant or the plant receives a certificate of public convenience and necessity pursuant to NMSA 1978, ss.62-9-1 (2001). Palo Verde Nuclear Generating Station Unit 3 ("PVNGS Unit 3") is not "Merchant Plant" under this Stipulation. "Merchant Plant Participation" in this Stipulation shall mean to invest in, acquire, construct or operate specific Merchant Plant by PNM. Merchant Plant Participation does not include issuance of securities by PNM.
4) After passage of Senate Bill 266, the NMPRC initiated an inquiry into issues concerning PNM's plans for Merchant Plant and utility generation resources in Utility Case No. 3137, which is pending.
5) The New Mexico Public Utility Act ("PUA")ss.ss. 62-3-1 et seq. has been repealed effective July 1, 2003. Laws 1998, ch. 108, ss. 82.

6) The Signatories seek to resolve issues concerning retail electric rates, retail customer choice in New Mexico, PNM's Merchant Plant Participation, energy supply and resources available to retail customers, the pending repeal of the PUA and related matters. Negotiations began in the autumn of 2001 and have culminated in this Stipulation.
7) In consideration of their mutual promises and of the benefits they and their respective constituents will receive, the Signatories, through their undersigned authorized representatives, stipulate and agree as follows:

RETAIL ELECTRIC RATES

8) RATE PATH AND RATE REDUCTIONS: PNM shall reduce current New Mexico jurisdictional retail electric base rates in two phases as shown on Attachment A, except as otherwise provided in this Stipulation. First, PNM shall reduce each element of current New Mexico base rates by 4% effective with service rendered on and after September 1, 2003 ("Phase One Rates"). Next, PNM shall reduce New Mexico base rates from the levels in place at the time this Stipulation is entered by an additional 2.5% effective with service rendered on and after September 1, 2005 ("Phase Two Rates") except as provided in Paragraph 33 (Effect of No Repeal). Provided however, that the Integrated System Streetlighting and Floodlighting Service (PNM Rate Schedule 19), Integrated System Streetlighting and Floodlighting Service - New Installations (PNM Rate Schedule 20) and Private Area Lighting Service (PNM Rate Schedule 6) shall receive a Phase One Rate reduction of 2.5% effective with service rendered on and after September 1, 2003 and through at least December 31, 2007, and no Phase Two Rate reduction, as reflected on Attachment A. The Phase Two rate reduction applicable to Special Contract Service for Large Customers is reflected on Rate 23 in Attachment

D. The reductions shall not apply to: (a) franchise fee rates or tax rates recovered through a tax adjustment clause authorized by Commission Rule 330, NMAC, 17.1.330, and (b) the Palo Verde refinancing credit approved in NMPRC Case No. 2837. The rates described in this Paragraph 8 (Rate Path and Rate Reductions) shall be referred to here as the "Stipulated Rates." PNM will file an Advice Notice for the Stipulated Rates approved by the NMPRC prior to the effective dates of September 1, 2003 for Phase One Rates and September 1, 2005 for Phase Two Rates, appended to this Stipulation as Attachments H and I, and prior to the effective dates for the other rates approved in this Stipulation.
9) OTHER RATE ISSUES: In PNM's next general rate adjustment proceeding, COA service under PNM Rate Schedules 19 and 20 shall be treated as a separate customer class. A new 70 watt streetlight option shall be added to Rate 20 upon approval of this Stipulation, reflected on Attachment G. 10) RATE CHANGE MORATORIUM: Except as otherwise provided in Paragraph 33 (Effect of No Repeal) and elsewhere in this Stipulation and regardless of changed circumstances, the Phase One Rates shall remain in effect until August 31, 2005 and the Phase Two Rates shall remain in effect until at least December 31, 2007 in accordance with Paragraph 8 (Rate Path and Rate Reductions). The Signatories will not seek to initiate by their own motion or other filing a change in the Stipulated Rates that would take effect prior to January 1, 2008, unless allowed in Paragraph 11 (Rate Change Moratorium Exceptions). The Signatories will not seek prior to September 1, 2006 to initiate by their own motion or other filing a general rate adjustment proceeding to set rates that would take effect upon expiration of the Rate Change Moratorium on December 31, 2007 or thereafter. While final approval of this Stipulation is pending before the NMPRC, the Signatories will not seek to initiate by their own motion or other filing

any electric general rate adjustment proceeding, except if the approval is still pending before the NMPRC on April 1, 2003, the Signatories are free to file. If a non-Signatory or the Commission initiates a proceeding to change the Stipulated Rates contrary to these provisions, the Signatories who participate in that proceeding will indicate their support for the provisions of this Stipulation and the continuation of the Stipulated Rates.
11) RATE CHANGE MORATORIUM EXCEPTIONS: The Rate Change Moratorium in this Stipulation shall apply except as follows:
a) PNM may seek a general rate adjustment if the financial impact to PNM during the Rate Change Moratorium in order to comply with new or changed environmental or tax laws or regulations, or a new broader application of existing environmental or tax laws or regulations will compromise PNM's financial integrity during the Rate Change Moratorium. If there is a general rate adjustment under this Paragraph 11(a), the Rate Change Moratorium in Paragraph 10 and the Rate Path and Rate Reductions in Paragraph 8 shall no longer apply.
b) Nothing in this Stipulation shall affect:
i) The continued adjustment of charges for recovery of taxes payable under the Gross Receipts and Compensating Tax Act ("GRCTA") or a substitute or successor tax to the GRCTA as authorized by Commission Rule 330. NMAC 17.1.330;
ii) Charges for franchise fees as a separate line item on bills to customers located within the jurisdiction of the government authority imposing the fee;

iii) Recovery of "excess costs" for underground power lines mandated by a local government authority as permitted by the Final Order in NMPRC Case No. 3295 (Rate 22), or as may be modified on remand after appeal.
c) Neither this Stipulation nor changes or deletions in the proposed 4000B tariff shall prejudice, bind or serve as an admission by any Signatory regarding the historic application or availability of PNM's current tariffs to specific customers or regarding the provision of electric generation/transmission to the United States Executive Agencies facilities by the Western Area Power Administration or affect in any way the proceedings in NMPRC Case No. 3135 or FERC Docket No. TX00-1-00, now on appeal to the Tenth Circuit Federal Court of Appeals.
d) PNM may propose to modify tariffs, riders and terms and conditions of rate schedules that do not increase customers' rates or charges. PNM may also propose to implement additional tariffs. The Signatories shall not oppose such proposals on the basis that they involve "piecemeal ratemaking." These proposals are limited to:
i) Economic development or load retention rates requested pursuant to NMSA 1978, ss. 62-6-26 (1999);
ii) New rates for new large customers who do not qualify under existing PNM rate schedules;
iii) Rates for new services not covered in any existing PNM rate schedule or service agreement;
iv) PNM's Uranium Mining/Milling Load Rider applicable to PNM Rate Schedule 4(B), (PNM Rider 7);

v) Rates for Cogeneration and Small Power Production Facilities under NMPRC Rule 570 (Rate Schedule No. 12);
vi) A tariff for customers voluntarily purchasing renewable energy which PNM may offer in the future pursuant to Paragraph 12 (Renewable Energy Cost Recovery).

12) RENEWABLE ENERGY COST RECOVERY: PNM may seek recovery of the costs of renewable energy resources (either purchased or from owned resources) acquired pursuant to, or used to satisfy, a mandate by any governmental authority only through base rates, and not through any rate rider or adjustment clause. PNM shall be authorized to capitalize all the reasonable costs of mandatory renewable energy resources including an after-tax cost of capital of 8.64% to be recorded concurrently with the deferral of such costs. Each month's capitalized costs shall be considered a separate Regulatory Asset. For Regulatory Assets recorded prior to December 31, 2004, PNM must seek recovery in a general rate adjustment proceeding filed within 54 months of recording a Regulatory Asset, or will be deemed to have waived its right to seek recovery of that Regulatory Asset. For Regulatory Assets recorded after December 31, 2004 but prior to December 31, 2007, PNM must seek recovery in a general rate adjustment proceeding filed within 48 months of recording of a Regulatory Asset, or will be deemed to have waived its right to seek recovery of that Regulatory Asset. For Regulatory Assets recorded after December 31, 2007, PNM must seek recovery in a general rate adjustment proceeding filed within 36 months of recording a Regulatory Asset, or will be deemed to have waived its right to seek recovery of that Regulatory Asset. PNM shall be permitted to recover Regulatory Assets accrued during the pendency of a general rate adjustment proceeding as an outcome of that proceeding. For owned resources required by or used to

satisfy such a mandate, all the reasonable costs, including a return on and a return of such capital expenditure, will accrue from the later of the in-service date of the resource or the effective date of the mandate. This Paragraph 12 will remain in effect until at least one year after the conclusion of PNM's second general rate adjustment proceeding filed after December 31, 2007, and thereafter until otherwise ordered by the Commission. PNM retains the right to offer a tariff providing renewable energy resources to customers willing to subscribe voluntarily, and the Signatories agree that the Commission should address any such filing in an expedited proceeding so that a final order may be issued within 60 days from the date of filing. Costs incurred to provide the voluntary renewable energy tariff shall be charged only to the tariff's subscribers. Renewable energy resources acquired pursuant to, or used to satisfy, a government mandate or for the voluntary renewable energy tariff shall be added to PNM's portfolio of included New Mexico jurisdictional generating resources identified in Attachment C, Page 1.
13) SURFACE COAL MINE DECOMMISSIONING COSTS: PNM shall be authorized to recover in these Stipulated Rates and future retail rates its New Mexico jurisdictional share of the decommissioning costs associated with the San Juan, La Plata and Navajo Surface Coal Mines as shown on Attachment B. PNM shall be authorized to recover up to $100 million of the costs shown on Attachment B, composed of approximately $69 million in surface coal mine reclamation costs paid to BHP, Navajo Coal Company and San Juan Coal Company ("Reclamation Costs") and approximately $31 million of contract buyout costs paid to San Juan Coal Company and San Juan Transportation Company ("Contract Buyout Costs"). The costs shall be amortized over 17 years commencing September 1, 2003 and in equal amounts each year after 2004 as shown on Attachment B. PNM will not seek to recover a return on the

unamortized Reclamation Costs, but PNM may seek in future rate adjustment proceedings to recover a return on the unamortized Contract Buyout Costs remaining as of December 31, 2007. The Signatories agree not to oppose recovery of the $100 million Reclamation Costs and Contract Buyout Costs shown on Attachment B through retail rates. The recovery of these costs shall only be subject to verification by the Signatories of the amounts actually spent. The Signatories' agreement to allow cost recovery under this paragraph shall not be used as a basis to support PNM's claim for recovery of a return on Contract Buyout Costs after December 31, 2007. Non-PNM Signatories reserve their right to challenge PNM's recovery of a return on Contract Buyout Costs on any basis. PNM shall file verification of the actual amounts spent and the estimate to complete reclamation with the annual filing described in Paragraph 27 (Informational Filings). 14) NUCLEAR DECOMMISSIONING COSTS: The Signatories acknowledge that the Stipulated Rates shall be deemed to provide for full recovery of nuclear decommissioning costs accrued in accordance with the estimates in the most current Decommissioning Cost Study prepared by TLG Services, Inc. during the period the rates are in effect for PNM's interests in PVNGS Units 1 and 2.
15) OFF SYSTEM SALES: The Signatories acknowledge that the Stipulated Rates meet all the requirements of NMSA 1978, ss.62-3A-8(C)(2001) during the period of the Rate Change Moratorium. The risks and benefits of all off-system sales, other than the dollar amounts of those already embedded in the Stipulated Rates, inure solely to PNM's shareholders during the period of the Rate Change Moratorium. To the extent that PNM is permitted by the NMPRC to purchase energy resources from or through a PNM affiliate, the Signatories agree not to argue at the FERC that retail customers are inadequately protected from improper exercise of market power or affiliate abuse during the period of the Rate Change Moratorium.

16) TRANSITION COSTS: PNM will not seek recovery of transition costs as defined in NMSA 1978, ss. 62-3A-3(CC)(2001) incurred through the date of approval of this Stipulation, including but not limited to all costs characterized as transition costs by PNM in NMPRC Case No. 3137.

GENERATION RESOURCES

17) RESOURCES REQUIRED TO SERVE NEW MEXICO JURISDICTIONAL RETAIL LOAD AND
WHOLESALE FIRM REQUIREMENTS LOAD: Upon approval of the Stipulated Rates by the NMPRC, the portion of San Juan Generating Station Unit 4 previously treated as an excluded resource from PNM's New Mexico retail rates shall be included as a generation resource to serve PNM's New Mexico retail and wholesale firm requirements customers' load. PNM's contracts to purchase power from Tri-State Generation and Transmission Association, Inc., Delta Person Limited Partnership and the 72 MW of firm power from Southwestern Public Service Company shall also now be included as generation resources to serve PNM's New Mexico retail and wholesale firm requirements customers' load until each contract expires. The resulting portfolio of total generation resources consists of PNM's interests in the plants and contracts in the capacity amounts listed on Attachment C, Page 1, as such resources may change pursuant to this Paragraph 17, and Paragraphs 12 and
18 (Renewable Energy Cost Recovery and Resource Additions for Retail Load). PNM's current projected load and resource table is shown as Attachment C, Page 2. The Signatories acknowledge that the generation resources reflected on Attachment C, Page 1, as they may change pursuant to this Paragraph 17, and Paragraphs 12 and 18 (Renewable Energy Cost Recovery and Resource

Additions for Retail Load), serve PNM's retail customer and wholesale firm requirements customer loads, and that, consistent with the agreement in Paragraph 15 (Off-system Sales), excess capacity or energy from such resources also may be used for off-system sales. The generation resources on Attachment C, Page 1, as they may change pursuant to this Paragraph 17, and Paragraphs 12 and 18 (Renewable Energy Cost Recovery and Resource Additions for Retail Load), that are used to serve New Mexico retail load and included in New Mexico retail rates are subject to the jurisdiction of the NMPRC and regulation under the PUA. PVNGS Unit 3 shall continue to be treated as excluded plant as described in the Final Orders of the Commission in NMPRC Case Nos. 2146 Part II and 2296. Nothing in this Stipulation shall affect the allocation of fuel costs among the three PVNGS Units approved in NMPRC Case No. 2087, or the allocation of costs to retail and wholesale loads.
18) RESOURCE ADDITIONS FOR RETAIL LOAD: The Signatories agree that PNM should apply to the NMPRC for all necessary regulatory approvals to add New Mexico jurisdictional generation resources in sufficient quantity and at the appropriate time to maintain a total projected system reserve requirement which is the lesser of approximately 15 percent or the applicable planning reserve level established by the Western Electricity Coordinating Council ("WECC"). Provided that PNM can obtain all necessary regulatory approvals to do so, PNM commits to add load-side generation resources to serve New Mexico jurisdictional retail load between the years 2003 through 2007 if it needs additional resources to maintain this reserve requirement. Lordsburg Generating Station ("Lordsburg"), Afton Generating Station ("Afton") and equipment additions including turbines, which can increase PNM's resource portfolio, are eligible to be included as such resources if PNM obtains

approval for such inclusion in accordance with NMSA 1978, ss.62-9-1 (2001), NMPRC Rule 440 17 NMAC 5.440, or Paragraph 21(c)(iii) as applicable. The projected reserve margin will be calculated by dividing total jurisdictional resources less total jurisdictional peak load by total jurisdictional peak load. For purposes of this calculation, total jurisdictional resources will be the sum of resources shown on Attachment C, Page 1, as they may change pursuant to this Stipulation. For purposes of this calculation, total jurisdictional peak load includes New Mexico jurisdictional single coincident peak load and peak wholesale firm requirements load projected to be coincident with jurisdictional peak load and contracted prior to September 2, 2002. For purposes of this calculation, total jurisdictional resources shall only include renewable resources to the extent such resources provide expected capacity on peak. Projected firm loads and projected resources shall be used in this calculation. The load of customers electing the Special Contract Service for Large Customers described in Paragraph 19 shall not be included in developing PNM's resource or reserve requirement under this Paragraph 18. The Signatories acknowledge the reserve requirement may temporarily deviate from the target level due to unexpected changes in loads or imbalances caused by the magnitude of new resource additions to meet load growth requirements. The Signatories reserve their right to challenge the prudence or used and usefulness of any of PNM's resource additions, but will not challenge the decision to acquire load-side resources as opposed to non-load-side resources. Load-side resources are resources that do not rely primarily on transmission from or through the Four Corners area for delivery to load. The Signatories acknowledge that PNM may in the future also apply to the NMPRC for all necessary regulatory approvals to include Merchant Plant in rate base pursuant to Paragraph 21 (c)(iii) as facilities subject to the jurisdiction of the NMPRC. The Signatories reserve their

right to oppose the granting of such approvals for including Merchant Plant in rate base. The retail cost limitation set forth in NMSA 1978, ss.62-3A-8(C) (2001) and in Paragraph 21(c)(iv) of this Stipulation do not apply if PNM has no investment in Merchant Plant. The Signatories agree that this interpretation shall apply regardless of whether ss.62-3A-8(C) is recodified or amended.
19) SPECIAL CONTRACT SERVICE FOR LARGE CUSTOMERS: PNM shall implement a new, optional tariff, Special Contract Service for Large Customers (Rate 23). This tariff is attached as Attachment D. The Signatories acknowledge that Special Contract Service for Large Customers is not subject to the cost limitation described at Paragraph 21(c)(iv). For purposes of implementing this tariff, on or before December 31, 2005, and on or before December 31 of each year thereafter, PNM will file with the NMPRC a statement of its growth in retail load between the peak of the prior year and the peak of the current year. Service under the tariff shall begin on July 1, 2005, except as provided in Paragraph 33 (Effect of No Repeal). Rate 23 incorporates the following provisions without which Rate 23 would not be just and reasonable or in the public interest:
a) Rate 23 sets a minimum 1MW load at a single service location to assure that small customers are not exposed to the price risks inherent in the rate, to match load requirements of power suppliers, and to make the rate administrable without unreasonable additional cost.
b) Rate 23 excludes loads which lack predictability and therefore cause load imbalances.
c) Rate 23 limits the total participating load so as not to jeopardize the utility's ability to recover the cost of, including a reasonable return on, generation facilities and other generation resources acquired to serve New Mexico jurisdictional customers, or to cause such costs to be borne by customers taking service under other retail rates.

d) Rate 23 makes permanent and irrevocable the request for service under that rate once PNM has entered into the initial contract for generation supply, so that PNM is not required to plan for, construct or acquire rate-based generation resources to serve such customers, thereby preventing service under Rate 23 from becoming a financial burden on PNM or other retail customers. The Signatories agree that they shall not at any time propose modifications to Rate 23, except as to the level of the specified rates, if PNM opposes such modifications, and, in any proceeding before the NMPRC in which the Signatories participate, that they shall oppose any modification to Rate 23, except to the level of the specified rates, if proposed by a non-Signatory, and if PNM opposes such modification. This provision does not limit the right of any Signatory to oppose any modification that is proposed by any Signatory or non-Signatory. The Signatories further agree that, to the extent the Commission modifies Rate 23 over the opposition of the Signatories in a manner that would allow customers eligible for Rate 23 to avoid costs already embedded in PNM's cost of service to jurisdictional customers, such costs shall not be considered to be imprudent, inefficient, wasteful, excess or not used and useful and such costs shall be recoverable by PNM under applicable rates established by the Commission. By agreeing to provide Rate 23 to customers eligible under its provisions (Attachment D), PNM does not waive its right to oppose any modifications to Rate 23 on any basis.

MERCHANT PLANT

20) MERCHANT PLANT PARTICIPATION APPROVAL: NMPRC approval shall be required as provided in this Stipulation for issuance of securities associated with Merchant Plant and for location approval of Merchant Plant under NMSA 1978,
Section 62-9-3 (2001). No NMPRC approval or other authorization from the NMPRC shall be required for PNM's Merchant Plant Participation as long as PNM meets the following conditions:
a) PNM shall not invest more than $1.25 billion in Merchant Plant, which includes its investment in Lordsburg and Afton.
b) PNM shall have an Investment Grade (as hereinafter defined) credit rating on a stand alone basis and on a consolidated basis with PNM Resources as evidenced by Standard & Poor's ("S&P") letter commitment, provided to the Signatories. The letter commitment shall also provide that PNM's Merchant Plant Participation will not cause PNM's credit rating (stand alone or consolidated) to fall below Investment Grade. In the event S&P no longer provides this type of letter commitment as a business practice, PNM may provide the needed letter commitment from Moody's or Fitch. For purposes of this Stipulation, "Investment Grade" means that all PNM's senior debt is rated BBB- or better by S&P or the equivalent level if rated by another agency. The determination date for Investment Grade status ("Determination Date") shall be the date the letter commitment is delivered to the Signatories but:
i) no later than ten (10) days after receipt by PNM; and
ii) no earlier than 360 days and no later than 30 days prior to scheduled ground-breaking if Merchant Plant is being constructed; or

iii) no earlier than 180 days and no later than 30 days prior to scheduled closing of the transaction if an interest in Merchant Plant is being acquired through purchase or other financial transaction.
c) PNM shall spend at least $60 million per year in gas and electric utility, non-Merchant Plant infrastructure needed to maintain adequate and reliable service unless PNM demonstrates and the PRC determines that a lesser expenditure is better for customers. The utility portion of capital expenditures made by PNM Resources for PNM infrastructure shall be included in meeting this requirement if the costs are for infrastructure items that have historically been provided by PNM. Staff and the Signatories do not waive any rights to challenge the prudence or reasonableness of any specific items of the $60 million in expenditures. 21) MERCHANT PLANT FINANCINGS: PNM shall file an application for NMPRC financing approval prior to issuing securities designated for financing Merchant Plant ("Merchant Plant Financing"), which, except as otherwise provided in Paragraph 33 (Effect of No Repeal), shall be granted on an expedited basis under subparagraph (e) of this Paragraph 21 pursuant to the following terms, conditions and procedure:
a) PNM shall provide a letter commitment by S&P that PNM has a credit rating of Investment Grade and that PNM's credit rating will remain Investment Grade after the financing occurs both on a stand alone basis and on a consolidated basis with PNM Resources. If S&P no longer provides both types of rating commitments as a business practice, then PNM must obtain the missing commitment from either Moody's or Fitch.
b) PNM shall provide an affidavit from a knowledgeable officer of PNM

(i) designating the securities as a Merchant Plant Financing;
(ii) describing the purposes for which the proceeds of the securities will be used;
(iii) certifying that the aggregate amount of PNM's securities outstanding and proposed to be outstanding will not exceed the fair value of the properties and business of PNM;
(iv) certifying that, as part of the securities issuance, PNM will not create or assume any lien, security interest or other charge or encumbrance on assets included in its New Mexico retail rates as security for any Merchant Plant Financing;
(v) certifying that PNM will maintain a capital structure with no more than 62% debt, including off-balance sheet debt, after the financing;
(vi) certifying that the Merchant Plant is being financed with at least 50 percent new equity. New equity is PNM retained earnings generated after the approval date of this Stipulation, infusions of additional paid-in-capital from PNM Resources, and new PNM equity issuances. Infusions of additional paid in capital to PNM from PNM Resources are not a financing or a securities issuance and do not need prior Commission approval.
c) PNM shall provide an affidavit from a knowledgeable officer of PNM that Merchant Plant has either a Western Electricity Coordinating Council interconnection or a Southwest Power Pool interconnection deliverable to the New Mexico jurisdiction. PNM will provide testimony in support

of the request for approval of this Stipulation that such interconnections enhance PNM's utility system reliability. The Signatories agree that this affidavit concerning interconnections along with the other benefits specified below demonstrate a direct and nonspeculative utility purpose for a Merchant Plant Financing, and that no proof of those benefits, other than the affidavit, is required. The Signatories agree that other benefits of Merchant Plant to New Mexico retail jurisdictional customers include:
i) To the extent of their availability, these plants can be used as backup for jurisdictional plant;
ii) Merchant Plant enhances the reliability of PNM's system;
iii) PNM may, at its option, apply to the NMPRC for Merchant Plant to become a jurisdictional resource for providing retail electric service to New Mexico customers; if PNM exercises its option and Merchant Plant becomes a New Mexico jurisdictional resource, that Merchant Plant will be included in New Mexico jurisdictional rate base at its depreciated net book value;
iv) Resources acquired by PNM to serve its retail load after January 1, 2001 shall be at a cost of service no higher than the average book cost plus fuel, other operating and maintenance costs and the utility's authorized rate of return on investment of the utility's Merchant Plant constructed or acquired after January 1, 2001 until Merchant Plant is transferred out of PNM.

d) PNM shall provide an affidavit from a knowledgeable officer of PNM that the forward five-year annual average of Merchant Plant generating capacity uncommitted to power sales agreements will not exceed 25 percent and will not exceed 40 percent in any single year during the forward five years. The calculation of the percentage shall include all of Lordsburg and Afton, as well as the TNMP power sale agreement. The percentage of committed capacity is the peak requirement (MW) of all power sale agreements from Merchant Plants divided by the total rated capacity of all Merchant Plants. The percentage of uncommitted capacity is the difference between the percentage of committed capacity and 100%. Additionally, the forward five-year annual average of Merchant Plant energy uncommitted to power sales agreements (as measured by energy availability commitments) will not exceed 59 percent and Merchant Plant energy uncommitted to power sales agreements (as measured by energy availability commitments) will not exceed 67 percent in any single year during the forward five years, as measured by energy not committed divided by total Merchant Plant kilowatt hours assuming 100% availability. PNM shall also notify the Signatories in writing if and when PNM becomes aware of its inability to make this demonstration.
e) PNM shall file the affidavits and rating agency letter commitments described here with its application. Within ten days of such filing the Utility Staff shall report to the NMPRC that the application either does or does not contain the required information and that PNM either has or has not satisfied the requirements set forth in subparagraphs a) through d) above. If it does contain the required information and PNM

has satisfied the specified requirements, Staff will indicate its support for, and the other Signatories will support or not oppose, approval of the Merchant Plant Financing application and the NMPRC acting on the application without a hearing and within 30 days of the date of the application. Merchant Plant Financing applications that meet these requirements shall be deemed to satisfy 17 NMAC 1.2.11(A) and PNM shall be granted a variance from the filing requirements of 17 NMAC 1.2.51(B)(1) through (B)(3) and 17 NMAC 1.2.11(B) except that PNM shall serve notice on the Attorney General in accordance with 17 NMAC
1.2.51(B)(1). Staff and the New Mexico Attorney General may oppose such requests for expedited approval and may obtain a hearing with a prima facie showing of a probable material and adverse impact to customer service or rates as a result of the financing. If PNM's request for approval is denied by the NMPRC after hearing, PNM waives its rights to raise in court that the Commission lacks jurisdiction or statutory authority to issue the order denying PNM's request.
f) If PNM cannot meet the criteria in this Stipulation for expedited financing, PNM may nevertheless request NMPRC approval to issue securities for Merchant Plant Financing pursuant to the procedures and legal standards applicable to issuance of securities under Article 6 of the Public Utility Act and under NMPRC rules, as they exist or may be revised in the future. Non-PNM Signatories may oppose such requests. Prior to 2015, non-PNM Signatories may not argue that a utility purpose is not met if the Merchant Plant meets the criteria described in Paragraph 21 (c) (Merchant Plant Financings). If PNM's request for approval is denied by the NMPRC after hearing, PNM waives its rights to raise in court that the Commission lacks jurisdiction or statutory authority to issue the order denying PNM's request.

22) CREDIT RATING BELOW INVESTMENT GRADE:
a) Reporting: If PNM's credit rating on a stand alone basis falls below Investment Grade as rated by two of S&P, Moody's or Fitch, or if PNM's credit rating on a consolidated basis with PNM Resources falls below Investment Grade by S&P, PNM shall, within 15 business days, file a report with the NMPRC, copied to all Signatories, that includes information on the status of all Merchant Plant Participation, including the following information for each Merchant Plant project: 1) name of project; 2) total estimated cost of project; 3) amount spent to date; 4) percent completed to date; 5) dollar amount needed to complete the project; 6) additional financing needed to complete the project; 7) amount of Merchant Plant capacity and energy contractually committed; and 8) any other information that PNM believes would be relevant. The Signatories agree that this report shall only be provided by PNM to non-PNM Signatories who sign a confidentiality agreement pursuant to a protective order in forms as attached in Attachment E to this Stipulation, which should be issued by the NMPRC as part of the approval of this Stipulation.
b) New Merchant Plant Participation and Financing: If, at the Determination Date, PNM's credit rating on a stand alone basis is rated below Investment Grade by two of S&P, Moody's or Fitch or if PNM's credit on a consolidated basis with PNM Resources is rated below Investment Grade by S&P, PNM shall apply to the NMPRC for approval to

initiate new Merchant Plant Participation and new Merchant Plant Financing pursuant to Paragraph 21(f). If PNM's request for approval is denied by the NMPRC after hearing, PNM waives its rights to raise in court that the Commission lacks jurisdiction for statutory authority to issue an order denying PNM's request.
c) Ongoing Merchant Plant Development. "Ongoing Merchant Plant Development" is defined to mean the building or purchasing of Merchant Plant for which the Determination Date has passed. If PNM's credit on a stand alone basis is rated below Investment Grade by two of S&P, Moody's or Fitch, or if PNM's credit on a consolidated basis with PNM Resources is rated below Investment Grade by S&P, PNM may provide to the Signatories a rating agency letter commitment from at least one of the agencies that listed PNM below investment grade determining the credit rating impact of PNM's completion of all or a portion of the Ongoing Merchant Plant Development. PNM shall then be authorized to continue Ongoing Merchant Plant Development as proposed to the rating agency as follows:
i) If PNM delivers a rating agency letter commitment demonstrating a High Outcome as shown on the chart in Attachment F and that PNM's credit rating on a stand-alone basis or on a consolidated basis with PNM Resources will return to investment grade, PNM may continue the Ongoing Merchant Plant Development as proposed to the rating agency without Commission approval and without limitation on the amount of expenditure other than that set forth in Paragraph 20(a) (Merchant Plant Participation Approval).

ii) If PNM delivers a rating agency letter commitment demonstrating a High Outcome as shown on the chart in Attachment F, PNM may spend up to $150 million to continue the Ongoing Merchant Plant Development as proposed to the rating agency and the Signatories agree not to oppose the continuation up to $150 million by filing a petition to stop it or in a proceeding initiated otherwise. PNM may request NMPRC approval to spend more than $150 million, which non-PNM Signatories may oppose.
iii) If PNM delivers a rating agency letter commitment demonstrating a Medium Outcome as shown on the chart in Attachment F, PNM may spend up to $75 million to continue the Ongoing Merchant Plant Development as proposed to the rating agency and the Signatories agree not to oppose the continuation up to $75 million by filing a petition to stop it or in a proceeding initiated otherwise. PNM may request NMPRC approval to spend more than the $75 million, which non-PNM Signatories may oppose.
iv) If PNM delivers a rating agency letter commitment demonstrating a Low Outcome as defined by the chart in Attachment F, PNM must obtain NMPRC approval to continue the Ongoing Merchant Plant Development, which non-PNM Signatories may oppose.

v) If the Commission denies PNM's request for approval to spend more than the limits set forth above, or to otherwise continue Ongoing Merchant Plant Development as described in this Paragraph 22
(c)(ii) through (iv), PNM waives its rights to raise in court that the Commission lacks jurisdiction or statutory authority to issue the order denying PNM's request.
d) The Signatories who participate in a proceeding on PNM's application for approval for new Merchant Plant Participation or Merchant Plant Financing under Paragraph 22(b) or to continue Ongoing Merchant Plant Development under Paragraph 22(c)(ii) and 22(c)(iii) will support or not oppose expedited consideration of the application so that a Final Order may be issued no later than 90 days from the date of the application.
e) If PNM regains its Investment Grade credit rating so that it has an Investment Grade rating on a stand-alone basis from any two of S&P, Moody's or Fitch and on a consolidated basis with PNM Resources from S&P, the provisions of Paragraphs 20 and 21 of this Stipulation addressing expedited Merchant Plant Participation and Merchant Plant Financings, will again be applicable.

23) TRANSFER OF MERCHANT OR EXCLUDED PLANT:
a) NMPRC approval shall not be required for PNM to transfer its interests or any part thereof in Merchant Plant or PVNGS Unit 3 from time to time to any other legal entity, provided that the following conditions are met: 1) PNM's debt to capital ratio will not exceed 65% after giving effect to the transfer; and 2) PNM provides a letter commitment from

S&P to the Signatories 30 days before a transfer stating that the plant transfer will not cause PNM's credit rating on a stand-alone basis to fall below Investment Grade at the time of transfer. Notwithstanding the foregoing, NMPRC approval shall be required before PNM accepts any conditions imposed by an agency other than the NMPRC relating to PNM's application to transfer Merchant Plant or associated wholesale power sales agreements as defined in Paragraph 23(d) if the conditions could impair or diminish the NMPRC's jurisdiction or authority to regulate PNM's transmission and distribution service or non-Merchant Plants.
b) PNM further agrees that it will transfer all its interests in Merchant Plant out of PNM by January 1, 2010. PNM will accelerate the mandatory transfer to a date one year after PNM has completed expenditure of $1.25 billion (including Afton and Lordsburg) on Merchant Plant. PNM may seek a variance from the NMPRC at any time prior to January 1, 2010 to extend or vacate the time or terms and conditions requiring the transfer but not beyond January 1, 2015. Provided, however, that notwithstanding the foregoing deadlines, in no event shall PNM be required to transfer Merchant Plant if it cannot obtain necessary FERC or NMPRC approval. Non-PNM Signatories agree not to petition the Commission to order the transfer of Merchant Plant by PNM before the dates or under different terms and conditions than those set out here. Non-PNM Signatories agree not to support any attempt by a non-Signatory or the NMPRC to force PNM to transfer the Merchant Plant before the dates or under different terms and conditions than those set out here. PNM may voluntarily transfer Merchant Plant at any time prior to 2015

pursuant to the terms of Paragraph 23(a) (concerning voluntary transfer). PNM does not waive any legal arguments or rights it may have to seek judicial relief from any NMPRC order requiring that it transfer Merchant Plant at a time earlier than that provided for in this Stipulation.
c) Any PNM debt associated with Merchant Plant or PVNGS Unit 3 that is transferred will either be retired or transferred along with the plant. Debt associated with PVNGS Unit 3 is one-third of the debt associated with PVNGS. The debt associated with PVNGS Unit 3 is currently approximately $32 million. In addition, any other PNM financial liabilities that are identifiable to the transferred Merchant Plant or PVNGS Unit 3 will either be satisfied or transferred along with the Merchant Plant or PVNGS Unit 3. Any such transfer of debt or financial liabilities will also include the release of PNM from responsibility for the debt or financial liability.
d) The transfer of Merchant Plant described in this Paragraph shall mean the transfer of the physical assets or PNM's ownership interest in physical assets constituting the Merchant Plant and the wholesale power sales agreements associated with the Merchant Plant. All wholesale power sales agreements entered into by PNM after September 1, 2002, but not those entered into prior to that date and not those associated with PVNGS 3 if it remains owned by PNM, shall be considered agreements associated with Merchant Plant that must be transferred for purposes of this Paragraph. If PNM seeks to transfer utility employees other than employees who are full time Merchant Plant operators to the new Merchant Plant owner, PNM shall notify the non-PNM Signatories of the employees to be transferred 30 days prior to the transfer. If any

non-PNM Signatory objects within 15 days after notice is given, PNM shall obtain NMPRC approval for the transfer of those employees that were the subject of the objection. In any event, PNM will make a compliance filing at the NMPRC confirming that the notice procedure was followed.
24) LETTER COMMITMENTS GENERALLY: PNM agrees to provide all rating agency letter commitments obtained for purposes of Paragraphs 20, 21, 22 and 23 to the non-PNM Signatories within 10 days of their receipt by PNM. The Signatories agree that the rating agency letter commitments shall only be provided by PNM to non-PNM Signatories who sign a confidentiality agreement pursuant to a protective order in forms as attached to this Stipulation as Attachment E which should be issued by the NMPRC as part of the approval of this Stipulation.
25) DIVIDEND AND CLASS II RESTRICTIONS: The prohibition against PNM paying dividends in any year in excess of net earnings for that year without prior Commission approval contained in the NMPRC's Holding Company Order, (Recommended Decision at 59, June 28 Order at 14, Errata Notice Aug. 28, 2001) ("Dividend Restriction"), shall apply to transfers of Merchant Plant acquired after July 2002. Provided, however, that PNM can rollover under-utilized dividending capacity in any given year after 2002 to any subsequent period until Merchant Plant is completely transferred out of the utility. The Dividend Restriction does not apply to transfer of Afton, Lordsburg or PVNGS Unit 3. The Dividend Restriction shall not apply to PNM equity infused from PNM Resources, which can be transferred out of PNM without restrictions other than the conditions set forth in Paragraph 23(a)

(concerning voluntary transfer). In addition, to the extent that transfer of Merchant Plant, as limited by Paragraph 23(d), including associated wholesale power sales agreements, or PVNGS Unit 3 by PNM to any PNM affiliate may be a Class II transaction under NMPRC Rule 450 or the Holding Company Order, the Signatories agree that PNM should be granted a variance upon NMPRC approval of this Stipulation from those provisions of the Rule and Order that apply to Class II transactions involving the transfer. If the variance is not granted, the termination provisions of this Stipulation at Paragraph 36 shall be applicable.
26) JOINT DISPATCH:
In the event Merchant Plant or PVNGS Unit 3 is transferred to a PNM affiliate, the question of whether PNM's generation resources and the affiliate's generation resources will be jointly or independently dispatched is at the affiliate's sole discretion until January 1, 2015. The dispatch function shall always reside in the utility and any formation of a dispatch function in the affiliate shall not impair the dispatch capability of the utility in any way. Non-PNM Signatories will support or not oppose PNM's application for any unconditional FERC approvals or authorizations needed to transfer Merchant Plant to an affiliate or to perform joint dispatch. The Signatories agree that PNM should be granted a variance upon approval of this Stipulation from the provisions of the Holding Company Order prohibiting utility employees from routinely providing services to other affiliate corporate entities (Recommended Decision at 60) only to the extent necessary to permit utility employees to engage in joint dispatch. In any NMPRC proceeding to set rates effective after January 1, 2008, the costs and benefits associated with joint dispatch will be equitably shared between customers and shareholders on a prospective basis.

27) INFORMATIONAL FILINGS: PNM will file at the NMPRC by February 1 of each year a report, certified as true and correct by the Chief Executive Officer or Chief Operating Officer of PNM, containing the following information:
a) Projected Merchant Plant financings for the current calendar year;
b) Identification of Merchant Plants completed or acquired in the past calendar year;
c) Summary of completed Merchant Plant Financings for the past calendar year;
d) S&P actual coverage tests for the past calendar year and pro forma coverage tests for the current calendar year.
e) The requirements concerning system supply planning reports contained in the Order Approving Stipulation in NMPRC Case No. 2567 are amended so that only the following information must be filed as follows:
i) PNM's peak loads (including its most recent approved load forecast);
ii) PNM's reserve margins;
iii) The capital and operating costs of the existing base load capacity;
iv) A plan for supply, bi-annual (every other year);
v) Sources and amount of power available for purchase;
vi) Financial information and assumptions used to develop the plan for supply;
vii) Sensitivity analyses of assumptions and estimates;
viii) Information concerning capabilities and limitations of supply alternatives;
ix) Sensitivity analyses based on projected changes in fuel prices, regulation and competition;
x) The types and degrees of uncertainty regarding the price and availability of fuel.
xi) Coalmine reclamation cost verification and estimates to complete.

28) APPLICABILITY: Except as otherwise provided in this Stipulation, the terms and conditions in Paragraphs 20 through 28 concerning Merchant Plant shall remain in force and effect until January 1, 2010, regardless of changed circumstances, unless the Commission grants a variance extending the date for transfer of Merchant Plant or if the NMPRC disallows a transfer under Paragraph 23(b), in which case the Merchant Plant terms and conditions shall continue until the date of transfer. The non-PNM Signatories agree not to seek any changes in those terms and conditions and to not support any non-signatory or the NMPRC seeking such a change. Nothing in this Merchant Plant section shall constitute a waiver by any Signatory of any interpretation or application of NMSA 1978 ss. 62-3A-8(C) unless such waiver is explicitly stated. By agreeing to the approval processes and waivers of certain rights on appeal in this Stipulation, the Signatories do not waive their rights to assert any legal position the Signatory considers meritorious if the provisions of the Merchant Plant Section, Paragraphs 20 through 28, of this Stipulation are no longer applicable.

RESTRUCTURING ACT

29) REPEAL OF RESTRUCTURING ACT: The Signatories, including PNM and PNM Resources through their respective officers, agree to actively and aggressively support legislation that repeals and modifies the Restructuring Act as described in this Paragraph 29 upon approval of this Stipulation by the NMPRC. The Signatories will support passage of such legislation in the Year 2003 Session of the New Mexico Legislature and if

necessary in the Year 2004 Session and beyond until corporate separation occurs under NMSA 1978, ss. 62-3A-8(C) (2001). The Signatories agree that all sections of the Restructuring Act should be repealed except as described in this Stipulation. The Signatories agree that the following language of Section 62-3A-8(C) as modified here should be retained as a provision of the Public Utility Act:

A public utility may invest in, construct, acquire or operate a generating plant that is not intended to provide retail electric service to New Mexico customers, the cost of which is not included in retail rates and which business activities shall not be subject to regulation by the commission pursuant to the Public Utility Act, except as provided by Section 62-9-3 NMSA 1978. Nothing herein shall diminish a public utility's obligation, by the prudent acquisition of resources, to serve its retail load at a cost of service no higher than the average book cost plus fuel, other operating and maintenance costs and the utility's authorized rate of return on investment of the utility's unregulated generation constructed or acquired after January 1, 2001; provided that this provision does not apply to any public utility that does not acquire unregulated generation after January 1, 2001. The commission shall assure that the regulated business is appropriately credited for any off-system sales made from regulated assets. This section only applies to a public utility that began investing in, constructing or acquiring generating plant pursuant to this Section before July 1, 2004. This Section shall continue to apply until the later of January 1, 2015 or the public utility divests its interest in generating plant acquired or constructed under the provisions of this Section or the plant receives a certificate of convenience and necessity in accordance with NMSA 1978 ss.62-9-1.

30) OTHER RETAINED SECTIONS: The Signatories further agree that the Public Utility Act should be amended to retain the following additional portions of the Restructuring Act:
a) Section 62-3A-18 (A) and (B) relating to franchise fees and gross receipts taxes; and
b) The following language from Section 62-3A-8(J) as modified here:

Public utilities that provide both electricity and natural gas distribution services shall not be required to functionally separate their electric and gas transmission, transportation and distribution operations from each other, and any rule or order to the contrary is void; and provided further that nothing in this section shall prevent a combined gas and electric distribution company from selling the natural gas commodity to customers pursuant to tariffs approved by the Commission.

c) The following language from Section 62-3A-3 (CC) and Section 62-3A-7A as modified herein:
Notwithstanding repeal of the Restructuring Act, unless otherwise waived, a public utility shall be entitled to an opportunity to recover its transition costs. Utilities may retain these transition costs as a regulatory asset on their books pending recovery which must be complete by January 1, 2010. Transition costs shall mean for purposes of this section those prudent, reasonable and unmitigable costs other than stranded costs, not recoverable elsewhere under either federally approved rates or rates approved by the commission, that a public utility would not have incurred but for its compliance with the requirements of the Electric Utility Industry Restructuring Act of 1999 and rules promulgated thereunder relating to the transition to open access, and the prudent cost of severance, early and enhanced retirement benefits, retraining, placement services, unemployment benefits and health care coverage to public utility nonmanagerial employees who are laid off on of before January 1, 2003, that are not otherwise recovered as a stranded salary and benefits cost. Transition costs shall not include costs that the public utility would have incurred notwithstanding the Electric Utility Industry Restructuring Act of 1999.

31) HOLDING COMPANY ORDER: PNM acknowledges that repeal of NMSA 1978 ss.62-3A-8(A) through (I) and (K) (2001) and NMSA 1978 ss.62-3A-4(E) (2001) does not affect the enforceability of the Holding Company Order. 32) RURAL ELECTRIC COOPERATIVES AND MUNICIPALITIES: Nothing in this Stipulation shall affect and the Signatories have no agreement concerning the repeal or modification of the provisions of the Restructuring Act or the Public Utility Act applicable only to rural electric cooperative utilities or municipal utilities.

33) EFFECT OF NO REPEAL: This Stipulation shall remain in full force and effect whether or not the Restructuring Act is repealed except as provided in this Paragraph 33 as follows:
a) If a law repealing and modifying the Restructuring Act as set forth in Paragraph 29 (Repeal of Restructuring Act) is not enacted by April 15, 2003, PNM shall not invest more than $400 million in Merchant Plant between April 15, 2003 and March 15, 2004, of which no more than $200 million will be PNM debt.
b) If a law repealing and modifying the Restructuring Act as set forth in Paragraph 29 (Repeal of Restructuring Act) is not enacted by March 15, 2004, the following consequences shall occur:
i) Paragraph 21 (Merchant Plant Financings) shall be suspended and shall remain suspended until the repeal and modifications set forth in Paragraph 29 (Repeal of Restructuring Act) occurs. During the suspension period, PNM shall be required to request NMPRC approval to issue securities for Merchant Plant Financings pursuant to the procedures and legal standards applicable to issuance of securities under Article 6 of the Public Utility Act and under NMPRC rules, as they exist or may be revised in the future. Non-PNM Signatories may not argue that a utility purpose is not met if the Merchant plant meets the criteria described in Paragraph 21(c) (Merchant Plant Financings) incorporated here and made applicable in this subparagraph b of Paragraph 33. Infusions

of paid-in-capital to PNM from PNM Resources are not a financing or securities issuance and do not need prior Commission approval. If PNM's request for approval is denied after hearing, PNM waives its rights to raise in court that the Commission lacks jurisdiction or statutory authority to issue an order denying PNM's request.
ii) The limits in Paragraph 33(a) shall no longer apply and the $1.25 billion total limit on investment in Merchant Plant in Paragraph 20(a) shall apply.
iii) The Signatories shall jointly petition the NMPRC to delay corporate separation and all of the other dates established in the Restructuring Act by one year pursuant to NMSA 1978, Section 62-3A- 17(D) (2001);
c) If a law repealing and modifying the Restructuring Act as set forth in Paragraph 29 (Repeal of Restructuring Act) is not enacted by April 8, 2005, the following two consequences shall occur:
i) The Phase Two Rates shall become effective one month early, i.e., with service rendered on and after August 1, 2005;
ii) Availability of Special Contract Service for Large Customers under Paragraph 19 shall not commence until six months after the Repeal of the Restructuring Act.
PUBLIC UTILITY ACT

34) REPEAL OF REPEAL: The Signatories agree to actively and aggressively support legislation in the 2003 Legislative Session that repeals the delayed repeal of the PUA, as cited in Paragraph 5 of this Stipulation, upon approval of this Stipulation by the NMPRC.

35) AMENDMENTS: Further, the Signatories agree that upon approval of this Stipulation, they will not support in any manner any amendments to the PUA during the 2003 Legislative Session, other than as specifically set forth in Paragraph 32 (Rural Electric Cooperatives and Municipalities) and elsewhere in this Stipulation.

GENERAL PROVISIONS AND FURTHER VARIANCES

36) The Signatories will use their best efforts to obtain expeditious implementation of this Stipulation by the entry of an appropriate final Commission order and will support approval of this Stipulation by the NMPRC by January 1, 2003. This Stipulation assumes the legality and enforceability of the rates and agreements set forth in this Stipulation. Should any rate or agreement set forth in this Stipulation be rejected, modified or directly or indirectly rendered inoperable by Commission or Court decision, any party shall have the right, by filing a notice of withdrawal with the NMPRC within 30 days after the decision, to withdraw from this Stipulation and render this Stipulation of no further force and effect, in which case the Signatories shall attempt in good faith to negotiate an appropriate substitute rate or agreement. If this Stipulation is not approved or is rendered ineffective, the effective date of the Commission's final order, if not stayed or enjoined, in PNM's next general electric rate adjustment proceeding shall be September 1, 2003, provided that the proceeding is initiated by a filing made before June 1, 2003. The effective date shall be applied to service rendered during and after each customer's first full billing cycle after September 1, 2003. To the extent necessary, refunds will be provided through an appropriate billing credit mechanism. Refunds shall commence simultaneously with the change in rates which result from the general rate adjustment proceeding. The Signatories

do not waive any rights they may have to obtain judicial relief from the rate adjustment or any aspect of the final order, including relief by stay, injunction, writ or appeal. If the final order is stayed or enjoined, the effective date of any rate reduction required by a non-appealable final order of the Commission in the same proceeding after affirmance or remand shall be September 1, 2003, shall apply retroactively to service rendered during and after each customer's first full billing cycle after September 1, 2003 and refunded through an appropriate credit mechanism.
37) The rate design, rate design method, the allocation of revenue requirements and the allocation method for setting revenue requirements reflected in the Stipulated Rates are the result of various compromises of the positions of the Signatories in this case for settlement purposes only and shall not constitute an admission of any kind or otherwise bind any signatory or establish any precedent or presumption in any other proceeding, including any proceeding required by the Restructuring Act.
38) The Signatories support PNM being granted, to the extent required by law, variances from any rules, regulations or provisions of prior orders necessary to obtain approval of and implement this Stipulation, except that such variances from the Holding Company Order or NMPRC Rule 450 shall only be granted where explicitly stated in this Stipulation. In the event of any conflict between the terms of this Stipulation and the terms of any prior Commission order, the terms of this Stipulation shall control and the terms of the prior order shall be deemed to have been modified only to the extent necessary to conform to the terms of this Stipulation. Variances should specifically be granted to PNM: 1) from the requirements in NMPRC Rule 530 (NMAC 17.9.530) to file Schedules A through R, the requirement to file a transmittal letter, the requirement to request such variance 30 days before the filing of schedules would be made, and except as the requirements of

NMPRC Rule 530 are met by the cost of service that will be filed with the testimony in support of the Stipulation; 2) from NMPRC Rule 531 (NMAC 17.9.531) until the effective date of the Final Order in PNM's next general rate adjustment proceeding; 3) in this proceeding only, from the Holding Company Order requirement that PNM shall file "royalty related information" (December 18, 2001 Order at P. A(6)); and 4) in this proceeding only from the Holding Company Order requirement that PNM disclose in any base rate filing each service function not fully staffed internally, but for which PNM relies on an affiliate in whole or in part. (Rec'd Dec'n at 60, citing pp. 55-56 of COA Ex.1).
39) This Stipulation shall not prejudice, bind, or affect any party, or be viewed as an admission, except to the extent necessary to give effect to or enforce the terms of this Stipulation or unless otherwise specifically stated herein. In the event this Stipulation is not approved by the Commission in its entirety, nothing in this Stipulation or negotiations leading up to its execution shall be construed as an admission of a Signatory's position on any issue nor be used or offered into evidence by any Signatory in this or any other proceeding.
40) This Stipulation shall remain in effect until terminated or modified by unanimous consent of the Signatories, except as otherwise provided in this Stipulation. This Stipulation expresses the full intent, understanding and entire agreement of the Signatories concerning the subject matter hereof. 41) This Stipulation shall be binding upon and inure to the benefit of the successors and assigns of the Signatories.
42) Signatories may agree to the terms of this Stipulation through the execution of a separate signature page.

43) Approval of this Stipulation shall be entered as a Final Order in the "Merchant Plant" phase of Utility Case 3137, and as a Final Order dismissing the remainder of Utility No. Case 3137.
44) El Paso Electric Company, Southwestern Public Service Company and Texas-New Mexico Power Company are parties to this case but are not Signatories to this Stipulation (herein the "Non-Signatory Utility Parties".) Except for the provisions of this Stipulation addressed to modification of the Restructuring Act with respect to recovery of transition costs, the Non-Signatory Utility Parties have not agreed to the provisions of this Stipulation and will have no affirmative obligations as a result of this Stipulation but the Non-Signatory Utility Parties do not oppose adoption of this Stipulation by the Commission.
45) Nothing contained in this Stipulation shall create any affirmative obligation for the Non-Signatory Utility Parties or create any precedent in other cases involving those Non-Signatory Utility Parties, except as expressly provided in this Stipulation.

Respectfully submitted,

         /s/ Joanne Reuter
---------------------------------------------
Public Service Company of New Mexico
Joanne Reuter, Assistant General Counsel




         /s/ Jeff Taylor
---------------------------------------------
New Mexico Attorney General
Jeff Taylor, Esq., Assistant Attorney General




         /s/ Dahl Harris
---------------------------------------------
New Mexico Public Regulation Commission Staff
, Esq., Staff Counsel




         /s/ Steven S. Michel
---------------------------------------------
New Mexico Industrial Energy Consumers
Steven S. Michel, Esq.

In the Matter of Public Service Company of New       )
Mexico's Transition Plan Filed Pursuant to the       )
Electric Utility Industry Restructuring Act of 1999  )    Utility Case No. 3137
                                                     )
Public Service Company of New Mexico,                )
                                                     )
                           Petitioner.               )
-----------------------------------------------------)

COME NOW the Signatories to the Stipulated Agreement ("Stipulation") filed herein on October 10, 2002 and The Regents of the University of New Mexico ("UNM") and stipulate as follows:

1. UNM and Public Service Company of New Mexico ("PNM") have agreed upon the terms and conditions of a Service Agreement, to become effective with the implementation of Phase One tariffs in September 2003, which includes a form of Interconnection Agreement and Interconnection Requirements and Safety Standards for UNM's planned new Customer-Owned Generation facility, and these agreements constitute additional consideration for UNM's agreement to the Stipulation through this Amendment.

2. By executing this Amendment, UNM joins in and becomes a Signatory to the Stipulation, as amended herein.

3. Pages 4 and 10 of Attachment A to the Stipulation are withdrawn and amended pages 4 and 10 of Attachment A (Exhibit 1 hereto), which modify only the information concerning Schedule 15B, are substituted.

4. Page 6 of Attachment D to the Stipulation is withdrawn and amended page
6 (Exhibit 2 hereto), which modifies only the information concerning Schedule 15B, is substituted.

5. Rate Schedule 15B, included as part of Attachment H (Phase One Tariffs) to the Stipulation, and Rate Schedule 15B, included as part of Attachment I (Phase Two Tariffs) to the Stipulation, are withdrawn and Amended Rate Schedules 15B (Exhibits 3 and 4 hereto) are substituted, respectively.

6. The first two sentences of Paragraph 29 of the Stipulation are amended with the underlined language to read as follows: The Signatories, including PNM and PNM Resources through their respective officers, agree to actively and aggressively support and UNM agrees not to oppose legislation that repeals and modifies the Restructuring Act as described in this Paragraph 29 upon approval of this Stipulation by the NMPRC. The Signatories will support and UNM agrees not to oppose passage of such legislation in the Year 2003 Session of the New Mexico Legislature and if necessary in the Year 2004 Session and beyond until corporate separation occurs under NMSA 1978, ss. 62-3A-8(C) (2001).

7. The first sentence of Paragraph 34 of the Stipulation is amended to read as follows:

The Signatories agree to actively and aggressively support and UNM agrees not to oppose legislation in the 2003 Legislative Session that repeals the delayed repeal of the PUA, as cited in Paragraph 5 of this Stipulation, upon approval of this Stipulation by the NMPRC.

8. Except as modified herein, the Stipulation remains in full force and effect.

9. Agreement to the terms of this Amendment may be indicated by the execution of a separate signature page.

Dated this 18th day of October, 2002

Respectfully submitted,

              /s/ Joanne Reuter
--------------------------------------------
Public Service Company of New Mexico
Joanne Reuter, Assistant General Counsel



              /s/ Jeff Taylor
---------------------------------------------
New Mexico Attorney General
Jeff Taylor, Esq., Assistant Attorney General



              /s/ Dahl Harris
---------------------------------------------
New Mexico Public Regulation Commission Staff
Dahl Harris, Esq., Staff Counsel



              /s/ Stephen S. Michel
---------------------------------------------
New Mexico Industrial Energy Consumers
Stephen S. Michel, Esq.



              /s/ Nann Houliston
---------------------------------------------
City of Albuquerque
Nann Houliston, Esq.

NMPRC Case No. 3137
Amendment to Stipulated Agreement

              /s/ Julie C. Weaks
---------------------------------------------
The Regents of the University of New Mexico
by: Julie C. Weaks Gutierrez
    Vice President for Business & Finance
    The University of New Mexico

NMPRC Case No. 3137
Amendment to Stipulated Agreement

EXHIBIT 10.87

UNUM PROVIDENT

PNM Resources, Inc.

Your Group Long Term Care Plan

Policy No. 574573

Underwritten by Unum Life Insurance Company of America

01-2003

Policy Excerpt:

Unum Life Insurance Company of America
2211 Congress Street
Portland, Maine 04122

This Certificate of Insurance is a part of the entire contract. This certificate is subject to the terms and conditions stated on the attached pages, all of which are part of the Policy. The Policy is intended to be a qualified Long Term Care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986.

Policy Number 574573

Caution: If you completed an Application for Long Term Care Insurance which included evidence of insurability, the issuance of this long term care insurance certificate was based upon your responses to the questions on your application. A copy of your Application for Long Term Care Insurance was retained by you when you applied. If your answers are incorrect or untrue, Unum may have the right to deny benefits or rescind your coverage. The best time to clear up any questions is now, before a claim arises! If, for any reason, any of your answers are incorrect, contact Unum at this address: Unum Life Insurance Company of America, 2211 Congress Street, Portland, Maine 04122.

o You are entitled to examine a copy of the Policy during regular office hours at the Policyholder's place of business.

o You have a 30 day right to examine this certificate.

If, after examining this certificate, you are not satisfied for any reason, you may withdraw your enrollment in this plan by returning this certificate within 30 days of its delivery to you. The certificate, to be there with a written request for such withdrawal, must be sent to the Policyholder's plan Administrator.

Upon receipt, your insurance will be deemed void from its effective date and any premium contribution(s) paid will be returned.

THIS CERTIFICATE IS NOT A MEDICARE SUPPLEMENT CERTIFICATE. If you are eligible for Medicare, review the guide to health Insurance for people with Medicare available from Unum.

Unum is not representing Medicare, the federal government or any state government.

NOTICE TO BUYER: This certificate may not cover all of the costs associated with long term care incurred by you during the period of coverage. You are advised to review carefully all coverage limitations.

Throughout this certificate:

"You" or "your" means an "insured" or "covered" Active Employee and "insured" or "covered" Family Member.

"Unum" or "we" means Unum Life Insurance Company of America, and

"Policyholder" means PNM Resources, Inc. and its and its covered divisions, covered divisions, subsidiaries, and affiliated companies.

/s/ J. Harold Chandler
---------------------------
President

                                      Available                         Available
                                      January 1, 2003                   March 1, 2003

                                      Active Employees-                 Family members
                                      At the Employer's expense         At your expense
                                      -------------------------         ---------------

Monthly Benefit Maximum

Long Term Care (LTC) Facility            $4,000                         $4,000 to $6,000 in
-----------------------------                                           $1,000 increments

Assisted Living Facility                 100% of the LTC                100% of the LTC
------------------------                 Facility amount                Facility amount


Professional Home Care Services          100% of the LTC                100% of the LTC
-------------------------------          Facility amount                Facility amount

                                                                                   OR

Total Home Care                                                         100% of the LTC
---------------
                                                                        Facility amount

Uncapped Compound Inflation Protection   5% compounded annually         5% compounded
--------------------------------------                                  annually

Nonforefeiture Benefit                                                  YES
----------------------

Lifetime Maximum                         36X the LTC                    36X the LTC
----------------
Amount                                   Facility amount                Facility amount
------

                                                                                 OR

                                                                        72X the LTC
                                                                        Facility amount

                                                                                  OR

                                                                        Unlimited


Elimination Period                       90 consecutive days            90 consecutive days
------------------

                                        Available
                                        March 1, 2003
                                        Active Employees-
                                        At your expense
                                        ---------------

Monthly Benefit Maximum

Long Term Care (LTC) Facility            $1,000 to $2,000
-----------------------------            additional coverage
                                         in $1,000 increments

Total Home Care                          100% of the LTC
---------------                          Facility amount


                           Other Coverage Options

Nonforefeiture Benefit                   YES
----------------------

Lifetime Maximum                         72 the LTC
----------------                         Facility amount
Amount
                                               OR

                                         Unlimited

EXHIBIT 10.88

YOUR EMPLOYEE
BENEFIT PLAN

PNM RESOURCES, INC.

LONG TERM DISABILITY

ALL EXECUTIVES

GROUP NUMBER: 34505

EFFECTIVE DATE: JANUARY 1, 2003

Policy excerpt:

Group Policy No.: 34505-G

MetLife(R)

Metropolitan Life Insurance Company
One Madison Avenue, New York, New York 10010-3690

CERTIFICATE OF INSURANCE
for the Employees of

PNM Resources, Inc.
(called the Employer)

This is your Certificate of insurance for long Term Disability Insurance as long as you are insured under This Plan. The Group Policy and this Certificate may be changed or canceled according to the terms, conditions and provisions of the Group Policy. This Certificate describes the benefits under the Plan in effect as of January 1, 2003. Any prior Certificate relating to the coverage set forth herein is void.

MetLife in its discretion has authority to interpret the terms, conditions, and provisions of the entire contract. This includes the Group Policy, Certificate and any Amendments.

The Group policy is delivered in and administered according to the laws of the governing jurisdiction.

Whenever a reference to "you" or "your" is made in this Certificate of Insurance, it means the covered Employee. Reference to "we", "us" or "our" means MetLife. Reference to "This Plan" means that part of the Employer's plan of employee benefits that is insured by Met Life.

/s/ Robert H. Benmosche
--------------------------------------------------
Robert H. Benmosche
Chairman, President and Chief Executive Officer

PLAN HIGHLIGHTS

This Plan Highlights section is a summary of your Long Term Disability Benefits and provisions. See the rest of your Certificate for more information.

It is important to read the rest of your Certificate. It describes your benefits as well as any exclusions and limitations that apply to these benefits. Please read it carefully. You should talk with your Employer if you have any questions.

You will notice that some of the terms used in your Certificate begin with capital letters. These terms have special meanings. They are explained in this Certificate.

EMPLOYEE ELIGIBILITY

Eligible Employee: All officers working at least 32 hours each week. However, if you do not have regular work hours you will be an Eligible Employee if you have worked at least an average of 32 hours a week during the preceding 12 calendar months (or during your period of employment if less than 12 months).

Eligibility Waiting Period:

Active Employees on and after January 1, 2003: 6 months of continuous service as an Employee

Eligibility Date: January 1, 2003 or the date you complete the Eligibility Waiting Period, whichever is later.

LONG TERM DISABILITY BENEFITS

Monthly Benefit: 66.67% of the first $25,000 of your Predisability Earnings, reduced by Other Income Benefits. Other Income Benefits are described in
Section B. of Long Term Disability Benefits.

Maximum Monthly Benefit: $15,000

Minimum Monthly Benefit: $100. The Minimum Monthly Benefit will not apply if you are in an Overpayment situation or are receiving income from employment.

Elimination Period: 90 days of continuous Disability

Maximum Benefit Duration: The duration shown below:

   Age on Date                      Maximum Benefit
Disability Starts                       Duration
-----------------                       --------

  Less than 60                         To age 65
       60                              60 months
       61                              48 months
       62                              42 months
       63                              36 months
       64                              30 months
       65                              24 months
       66                              21 months
       67                              18 months
       68                              15 months
   69 and over                         12 months

Work Incentive:

Work while Disabled: No offset for employment earnings during the first 24 months after you have satisfied your Elimination period. However, your Monthly Benefit may be reduced if that total income you are receiving (including Rehabilitation Incentive and Family Care Expenses) exceeds 100% of your Predisability Earnings or Indexed Predisability Earnings.

Rehabilitation Incentive: Your Monthly Benefit, before reduction for Other Income Benefits, is increased by 10% while participating in an approved Rehabilitation Program.

Family Care Expenses: While participating in an approved Rehabilitation Program, up to $250 per month incurred for Eligible Family Care Expenses for each Eligible Family Member during the first 24 months after you have satisfied the Elimination Period.

Survivors Benefit: A lump sum equal to 3 times the Monthly Benefit before reductions for Other Income Benefits.

LIMITATIONS

Limitation for Pre-existing Conditions: begins 12 months after your Effective Date of coverage.

Limitation For Disabilities Due to Particular Conditions

Limitation for Disability due to (i) Mental or Nervous Disorders or Diseases; or (ii) Neuromusculoskeletal and Soft Tissue Disorder; or
(iii) Chronic Fatigue Syndrome:

24 Monthly Benefits in your lifetime, or the Maximum Benefit Duration, whichever is less. Benefits may be paid beyond 24 months as described in the provision, subject to certain requirements.

Limitation for Drug, Alcohol or Substance Abuse or Dependence:

One period of Disability in your lifetime for up to: 24 Monthly Benefits; your successful completion of an approved rehabilitative program; your ceasing or refusing the participate in a rehabilitative program; or the Maximum Benefit Duration; whichever is less.

CONTRIBUTIONS

Your Long Term Disability Benefits are paid for by your Employer.