Exhibit 10.4

PERFORMANCE
RESTRICTED STOCK RIGHTS AWARD AGREEMENT
PNM RESOURCES, INC. SECOND AMENDED AND RESTATED
OMNIBUS PERFORMANCE EQUITY PLAN
 
PNM Resources, Inc., a New Mexico corporation, (“PNMR” or the “Company”) hereby
awards to «First» «Last», (the “Grantee”), a Participant in the PNM Resources,
Inc. Second Amended and Restated Omnibus Performance Equity Plan (the “Plan”),
as it may be amended, a Performance Restricted Stock Rights Award (the “Award”)
for the number of shares of common stock of Company (“Stock”) noted below.  The
grant is made effective as of the 9th day of March, 2009 (the “Grant Date”).
 
Capitalized terms used in this Performance Restricted Stock Rights Award
Agreement (the “Agreement”) and not otherwise defined herein shall have the
meanings given to such terms in the Plan.
 
1.     Grant.  Company hereby awards Grantee an opportunity to earn Restricted
Stock Rights at the Threshold, Target or Maximum Award level listed in
Section 5, based upon Company’s performance over the Performance Period (as
defined in Section 4), in accordance with and subject to the terms and
conditions set forth in this Agreement.  In no event will the Award exceed the
Maximum Award level indicated in Section 5.  If Grantee is a Covered Employee,
the Award is intended to be a Performance-Based Award granted pursuant to
Section 12 of the Plan.
 
2.     Award Subject to Plan.  This Award is granted pursuant to the Plan, the
terms of which are hereby incorporated by reference.
 
3.     Shareholder Approval Required.  Grantee understands and agrees that
Company has adopted the amended and restated Plan subject to shareholder
approval.  If the shareholders of Company do not approve the Plan at the annual
shareholders meeting on May 19, 2009 or any extensions thereof, the Award and
this Agreement shall automatically be withdrawn and cancelled and no amounts
will be payable to Grantee hereunder.
 
4.     Performance Period.  The Performance Period for this Award begins on
January 1, 2009 and ends on December 31, 2009.
 
5.     Performance Goals; Number of Restricted Stock Rights Earned.  Grantee
will earn Restricted Stock Rights based upon the level of Company’s Adjusted
Cash Earnings during the Performance Period as set forth below:
 
If Company’s Adjusted Cash Earnings over the Performance Period are:
The number of Restricted Stock Rights awarded to Grantee will be:
At least $250 MM (but not $260 MM)
__________ (the Threshold Award), adjusted as described below.
 
At least $260 MM (but not $275 MM)
__________ (the Target Award), adjusted as described below.
 
$275 MM or more
__________ (the Maximum Award)
 

 

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If Company’s Adjusted Cash Earnings for the Performance Period are less than
$250,000,000, no Restricted Stock Rights will be due pursuant to the
Agreement.  If Company’s Adjusted Cash Earnings for the Performance Period
exceed $250,000,000 but are less than $260,000,000, the number of Restricted
Stock Rights to which Grantee is entitled will be interpolated between the
Threshold and Target Award levels.  If Company’s Adjusted Cash Earnings for the
Performance Period exceed $260,000,000 but are less than $275,000,000, the
number of Restricted Stock Rights to which Grantee is entitled also will be
interpolated between the Target and Maximum Award levels.
 
6.     Adjusted Cash Earnings.  Company’s “Adjusted Cash Earnings” for the
Performance Period is the  amount of Company’s net cash flow from operating
activities (as reflected on Company’s cash flow statement) adjusted by the
following:  (a) adding amounts received by Company as principal payments on the
Palo Verde lessor notes; (b) adding amounts received by Company as Palo Verde 3
toll revenue; (c) adding amounts received by Company attributable to the Optim
Energy, LLC, cash earnings; (d) subtracting the changes in Company’s working
capital; and (e) subtracting the taxes paid by Company on the Gas Asset
Transaction.  For purposes of this Agreement, the term “Gas Asset Transaction”
means the sale of various assets of the Gas Division by Public Service Company
of New Mexico pursuant to the Asset Purchase Agreement by and among Public
Service Company of New Mexico, Continental Energy Systems LLC and New Mexico Gas
Company, Inc. dated January 12, 2008.
 
7.     Determination of Adjusted Cash Earnings and Restricted Stock Rights
Award.  The Committee will determine the Adjusted Cash Earnings for the
Performance Period and Grantee’s corresponding Restricted Stock Rights Award, if
any, on or before February 28, 2010.  The Committee then will submit its
determinations with respect to the Adjusted Cash Earnings and the number of
Restricted Stock Rights to which Grantee is entitled to the Board of Directors
for review and approval.  The date on which the Board of Directors approves the
number of Restricted Stock Rights is referred to below as the “Determination
Date.”  The Restricted Stock Rights to which Grantee is entitled pursuant to
this Section shall vest and become payable at the times described in Sections 8
and 9.
 
8.     Vesting.
 
(a) Except as set forth below, the Restricted Stock Rights to which Grantee is
entitled shall vest in the following manner:  (i) 33% of the Restricted Stock
Rights will vest on the first anniversary of the Determination Date, (ii) an
additional 34% of the Restricted Stock Rights will vest on the second
anniversary of the Determination Date, and (iii) the final 33% of the Restricted
Stock Rights will vest on the third anniversary of the Determination Date.
 
(b) Upon Grantee’s Separation from Service due to death, Disability, Retirement,
Impaction or Change in Control prior to the end of the Performance Period,
Grantee shall vest in a pro rata portion of the Restricted Stock Rights to which
Grantee is entitled at the end of the Performance Period as described in
Subsection 13.1(a)(iii)(3) of the Plan.  The number of Restricted Stock Rights
to which Grantee is entitled hereunder shall be determined at the conclusion of
the Performance Period based upon actual performance during the Performance
Period.
 
(c) Upon Grantee’s Separation from Service due to death, Disability, Retirement,
Impaction or Change in Control after the conclusion of the Performance Period,
 
 
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nonvested Restricted Stock Rights shall become 100% vested in accordance with
Subsection 13.1(a)(iii)(3) of the Plan.
 
(d) Upon Grantee’s involuntary or voluntary Separation from Service for any
reason other than those set forth in Subparagraphs (b) and (c) above, the
Restricted Stock Rights, if not previously vested, shall be canceled and
forfeited immediately.
 
(e) Upon Grantee’s Separation from Service for Cause, all nonvested Restricted
Stock Rights shall be canceled and forfeited immediately.
 
9.     Form and Timing of Delivery of Stock.
 
(a) If any Restricted Stock Rights granted hereunder vest as described in
Section 8(a), Grantee will receive the Stock payable with respect to such vested
Restricted Stock Rights within ninety (90) days following the dates on which the
Restricted Stock Rights vest.
 
(b) If any Restricted Stock Rights granted hereunder vest as described in
Section 8(b), Grantee will receive the Stock within ninety (90) days following
the end of the Performance Period.
 
(c) Except as otherwise provided in Section 9(d), if any Restricted Stock Rights
granted hereunder vest as described in Section 8(c), Grantee will receive the
Stock payable with respect to such Restricted Stock Rights within ninety (90)
days following the date of Grantee’s Separation from Service.
 
(d) The Restricted Stock Rights granted hereunder are subject to the
requirements of Section 409A of the Code.  Accordingly, the restrictions
described in Section 20.4 of the Plan apply to the Restricted Stock Rights.  In
addition, if Grantee is a Specified Employee at the time of Grantee’s Separation
from Service, the six (6) month delay in payments to a Specified Employee upon a
Separation from Service (described in Section 20.3 of the Plan) applies.
 
10.    Adjustments.  Neither the existence of the Plan nor the Award shall
affect, in any way, the right or power of Company to make or authorize: any or
all adjustments, recapitalizations, reorganizations, or other changes in
Company’s capital structure or its business; or any merger or consolidation of
Company; or any corporate act or proceeding, whether of a similar character or
otherwise; all of which, and the resulting adjustments in, or impact on, the
Award are more fully described in Section 5.3 of the Plan.
 
11.    Withholding and Deductions.  Company shall have the right to require that
Grantee remit to Company an amount sufficient to satisfy any federal, state or
local taxes of any kind as are required by law to be withheld with respect to
the delivery of shares of Stock as payment for the Restricted Stock Rights
granted hereunder.  Company also shall have the right to take such other actions
as may be necessary in the opinion of Company to satisfy all obligations for
withholding and payment of such taxes.  Company may, in its sole discretion,
permit Grantee to elect to satisfy the minimum statutory tax withholding
obligation which may arise in connection with the Restricted Stock Rights by
requesting that Company withhold shares of Stock having a Fair Market Value on
the date of withholding equal to the amount of the minimum statutory tax
withholding.  Any such election shall be subject to the provisions of applicable
law and to any conditions the Committee may determine to be necessary in order
to
 
 
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comply with all applicable withholding requirements and the applicable
conditions of Rule 16b-3 or its successors under the Exchange Act.
 
12.    Dividend Equivalents.  Grantee will not be entitled to receive a dividend
equivalent for any of the Restricted Stock Rights granted hereunder.
 
13.    Compliance with Exchange Act.  If Grantee is subject to Section 16 of the
Exchange Act, Restricted Stock Rights granted pursuant to this Award are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act.
 
14.    Non-Assignability.  The Award and Grantee’s rights under this Agreement
shall not be transferable other than by will or by the laws of descent and
distribution.  The Restricted Stock Rights are otherwise non-assignable.  (See
Section 14 of the Plan).  The terms hereof shall be binding on the executors,
administrators, heirs and successors of Grantee.
 
15.    Voting Rights.  During the Restricted Period, Grantee will have no voting
rights with respect to nonvested Restricted Stock Rights.
 
16.    Grantee Representation.  As a condition to the receipt of any shares of
Stock hereunder, Company may require a representation from Grantee that the
Stock is being acquired only for investment purposes and without any present
intention to sell or distribute such shares.
 
17.    Employment Agreement.  Notwithstanding anything to the contrary contained
in this Agreement, (a) neither the Plan nor this Agreement is intended to create
an express or implied contract of employment for a specified term between
Grantee and Company and (b) unless otherwise expressed or provided, in writing,
by an authorized officer, the employment relationship between Grantee and
Company shall be defined as “employment at will” wherein either party, without
prior notice, may terminate the relationship with or without cause.
 
18.    Regulatory Approvals and Listing.  Company shall not be required to issue
any certificate for shares of Stock upon the vesting of Restricted Stock Rights
granted under this Agreement prior to satisfying any regulatory approval,
registration, qualification or other requirements of the Securities and Exchange
Commission, the Internal Revenue Service or any other governmental agency which
the Committee, in its sole discretion, shall determine to be necessary or
advisable.  (See Section 20.1 of the Plan).
 
19.    Administration.  This Agreement shall at all times be subject to the
terms and conditions of the Plan and the Plan shall in all respects be
administered by the Committee in accordance with the terms of and as provided in
the Plan.  The Committee shall have the sole and complete discretion with
respect to the interpretation of this Agreement and the Plan, and all matters
reserved to it by the Plan.  The decisions of the majority of the Committee with
respect thereto and to this Agreement shall be final and binding upon Grantee
and Company.  In the event of any conflict between the terms and conditions of
this Agreement and the Plan, the provisions of the Plan shall control.
 
20.    Waiver and Modification.  The provisions of this Agreement may not be
waived or modified unless such waiver or modification is in writing signed by
Company.
 
21.    Validity and Construction.  The validity and construction of this Award
shall be governed by the laws of the State of New Mexico.
 
 
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MANY OF THE PROVISIONS OF THIS AWARD AGREEMENT ARE SUMMARIES OF SIMILAR
PERTINENT PROVISIONS OF THE PLAN.  TO THE EXTENT THIS AGREEMENT IS SILENT ON AN
ISSUE OR THERE IS A CONFLICT BETWEEN THE PLAN AND THIS AGREEMENT, THE PLAN
PROVISIONS SHALL CONTROL.
 
IN WITNESS WHEREOF, Company has caused this Performance Restricted Stock Rights
Award Agreement to be executed on March __, 2009, by a duly authorized
representative.
 
PNM RESOURCES, INC.

By                                                        
                                    
     Alice A. Cobb
     Senior Vice President and
     Chief Administrative Officer

 
 
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