EXECUTION VERSION

        

SAN JUAN PROJECT RESTRUCTURING AGREEMENT

AMONG

PUBLIC SERVICE COMPANY OF NEW MEXICO

TUCSON ELECTRIC POWER COMPANY

THE CITY OF FARMINGTON, NEW MEXICO

M-S-R PUBLIC POWER AGENCY

THE INCORPORATED COUNTY OF LOS ALAMOS, NEW MEXICO

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY

CITY OF ANAHEIM

UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS

TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, INC.

PNMR DEVELOPMENT AND MANAGEMENT CORPORATION

July 31, 2015

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EXECUTION VERSION

SAN JUAN PROJECT RESTRUCTURING AGREEMENT

TABLE OF CONTENTS

RECITALS
1

1.
Effective Date and Termination
4

1.1 Effective Date
4

1.2 FERC Filings
4

1.3 Filings with Governmental Agencies
5

1.4 Review of Regulatory Orders
5

1.5 Appellate Decision
6

1.6 Actions not Arbitrable
6

1.7 Termination Date
6

2. Definitions and Rules of Interpretation
6

2.1 Definitions
6

2.2 Rules of Interpretation
15

3. Status of PNMR-D under SJPPA
16

3.1 PNMR-D as Party to SJPPA
16

3.2 Parental Guaranty and Letter of Credit
17

4. Restructuring Fee, Demand Charge and Voting
17

4.1 Restructuring Fee
17

4.2 Payment of Restructuring Fee and Common Participation Shares of Shared Coal
Inventory
18

4.3 Costs of Capital Improvements Invoiced after January 1, 2015
18

4.4 Demand Charge
19

4.5 Voting on Capital Improvements
20

5. Fuel Supply
20

5.1 Certain Cost Allocations
20

5.2 Supply of Coal to Exiting Participants and Remaining Participants
21

5.3 Relinquishment of Coal Inventory
21

5.4 Coal Supply for Exiting Participants
21

5.5 Minimum Purchase Obligations
21

5.6 Existing Participant Dispatch Requirements; Invoicing
21

5.7 Monthly Remaining Participant Coal Invoicing
21

5.8 Section 23.14 Superseded
24

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6. Exit Date and Ownership Conveyances
24

6.1 Transfer of Existing Participants' Rights
24

6.2 Acquisition of Ownership Interests of Existing Participants
24

6.3 Plant Ownership after Acquisition of Ownership Interest of Exiting
Participants
25

6.4 Unit 1 and Unit 2 Ownerships After Exit Date
25

6.5 "AS IS" Conveyances
25

7. Closing of Ownership Conveyances
25

7.1 Closing
25

7.2 Closing Statement
26

7.3 Closing Deliveries by the Exiting Participants
26

7.4 Closing Deliveries by the Acquiring Participants
27

7.5 Conditions Precedent
27

7.6 Prior Notification of Certain Events
28

7.7 Prorations
28

7.8 Governmental Recording and Filing
28

8. Notifications, Consents and Rights-of-First-Refusal
28

9. Operation and Maintenance Expenses
28

10. Replacement Power
29

11. Other Project Agreements
29

11.1 Other Project Agreements Identified
29

11.2 Actions with Respect to Other Project Agreements
29

12. Land Ownership
29

12.1 No Change in Ownership
29

12.2 Relinquishment of Certain Rights
29

12.3 Easement and Right of Entry
29

13. Coal Mine Reclamation Funding
29

14. Decommissioning
29

15. Confidentiality
30

15.1 Confidentiality of Negotiations
30

15.2 Non-confidentiality of Restructuring Agreement
30

16. Taxes
30

16.1 Obligations of Parties
30

16.2 Notification of Taxing Authorities
30

16.3 IRS Exclusion
30

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17. Representations and Warranties; Opinions of Counsel
31

17.1 Requisite Power and Authority
31

17.2 No Violation
31

17.3 Opinions of Counsel
31

18. Relationship of Parties
31

18.1 Several Obligations
31

18.2 No Joint Venture or Partnership
32

19. Establishment of Environmental Baseline
32

19.1 Baseline Environmental Study
32

19.2 Scope of BES and Environmental Audit
32

19.3 Draft Report
33

19.4 Final Report
33

19.5 Remediation or Corrective Action
33

19.6 Further Audit
33

19.7 Subsequently Discovered Environmental Issues
34

19.8 Claims against Predecessors
34

20. Liability and Indemnification
34

20.1 Liabilities Defined
34

20.2 Liabilities Arising Prior to Exit Date
34

20.3 Liabilities Arising After Exit Date
34

20.4 Apportionment of Liabilities
35

20.5 Limitation of Liability for Willful Action
35

20.6 Several Liability
35

20.7 Claims Arising After Exit Date
35

20.8 Claims against Predecessors
37

20.9 PNM Responsibility
37

20.10 Indemnification Procedures
37

20.11 Anti-Indemnity Provisions
39

20.12 Internal Counsel
39

20.13 Willful Action
39

20.14 Damages
39

20.15 Mitigation of Damages
39

20.16 Anaheim and M-S-R
39

20.17 Southern California Public Power Authority
40

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20.18 Farmington and Los Alamos
40

20.19 Utah Associated Municipal Power Systems
40

21. Insurance Coverage for Continuing Obligations
40

21.1 Occurrence-based Policies
40

21.2 Claims-Made Policies
40

21.3 Other Insurance Coverage Matters
42

22. Assignments
42

22.1 Assignment
42

22.2 Assignee Responsibility
43

22.3 Parties not Relieved of Obligations
43

23. Dispute Resolution and Default
43

23.1 Amicable Resolution
43

23.2 Call for Arbitration
44

23.3 Selection of Arbitrators
45

23.4 Arbitration Procedures
46

23.5 Decision of Arbitrators
46

23.6 Enforcement of Arbitration Award
46

23.7 Fees and Expenses
46

23.8 Interest and Penalty Interest
46

23.9 Prompt Resolution
46

23.10 Default
47

23.11 Consequence of Default
47

23.12 Legal Remedies
47

24. Audit Rights; Related Disputes
47

24.1 Right of Audit
47

24.2 Dispute Resolution
47

24.3 Adjusted Billing Procedures
48

24.4 Effectiveness
48

25. Miscellaneous Provisions
48

25.1 Governing Law
48

25.2 Venue
48

25.3 Manner of Giving Notice
48

25.4 Other Documents
51

25.5 Incorporation of Exhibits
51

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EXECUTION VERSION

25.6 Captions and Headings
51

25.7 Prior Obligations Unaffected
51

25.8 Amendment and Modification
51

25.9 Waivers of Compliance
51

25.10 Uncontrollable Forces
51

25.11 No Interpretation against Drafter
52

25.12 No Third Party Beneficiaries
52

25.13 Compliance with Law
52

25.14 Independent Covenants
52

25.15 Invalid Provisions
52

25.16 Parties' Cost Responsibilities
52

25.17 Entire Agreement
53

25.18 Survival of Certain Provisions
53

25.19 No Admission of Liability
53

25.20 Other Rights
53

25.21 Execution in Counterparts
53

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EXECUTION VERSION

List of Exhibits

Exhibit A
Regulatory Approvals
Exhibit B
Other Project Agreements
Exhibit C
Form of Instrument of Sale and Conveyance
Exhibit D
Form of Opinion of Counsel
Exhibit E
Parties’ Pre-Exit Date Ownership Interests in Project Facilities
Exhibit F
SJGS Plant Site
Exhibit G
Form of Instrument Relinquishing Easement and License
Exhibit H
Form of Easement and Right of Entry
Exhibit I
Form of Parental Guaranty
Exhibit J
Form of Letter of Credit
Exhibit K
Form of Bring-Down Opinion
 
 

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EXECUTION VERSION

SAN JUAN PROJECT RESTRUCTURING AGREEMENT

This SAN JUAN PROJECT RESTRUCTURING AGREEMENT (“Restructuring Agreement”) is
executed as of July 31, 2015 (“Execution Date”) by and among PUBLIC SERVICE
COMPANY OF NEW MEXICO, a New Mexico corporation (“PNM”); TUCSON ELECTRIC POWER
COMPANY, an Arizona corporation (“TEP”); THE CITY OF FARMINGTON, NEW MEXICO, an
incorporated municipality and a body politic and corporate, existing as a
political subdivision under the constitution and laws of the State of New Mexico
(“Farmington”); M-S-R PUBLIC POWER AGENCY, a joint exercise of powers agency
organized under the laws of the State of California (“M-S-R”); THE INCORPORATED
COUNTY OF LOS ALAMOS, NEW MEXICO, a body politic and corporate, existing as a
political subdivision under the constitution and laws of the State of New Mexico
(“Los Alamos”); SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY, a joint exercise of
powers agency organized under the laws of the State of California (“SCPPA”);
CITY OF ANAHEIM, a municipal corporation organized under the laws of the State
of California (“Anaheim”); UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS, a political
subdivision of the State of Utah (“UAMPS”); TRI-STATE GENERATION AND
TRANSMISSION ASSOCIATION, INC., a Colorado cooperative corporation
(“Tri-State”); and PNMR DEVELOPMENT AND MANAGEMENT CORPORATION, a New Mexico
corporation (“PNMR-D”). The parties to this Restructuring Agreement are
sometimes referred to individually as a “Party” and collectively as the
“Parties.”

RECITALS

This Restructuring Agreement is made with reference to the following facts,
among others:

A.    The San Juan Project is a four-unit, coal-fired electric generation plant
located in San Juan County, near Farmington, New Mexico, also known as the San
Juan Generating Station (“SJGS” or the “Project”). On the Execution Date, the
owners of the Project are: PNM, TEP, Farmington, M-S-R, Los Alamos, SCPPA,
Anaheim, UAMPS and Tri-State; these entities, as the owners of the Project on
the Execution Date, are sometimes referred to in this Restructuring Agreement as
the “Participants.”

B.    As specified in Sections 6.2.1, 6.2.2 and 6.2.3 of the Amended and
Restated San Juan Project Participation Agreement dated March 23, 2006
(“SJPPA”), as of the Execution Date, SJGS Unit 1 and Unit 2 are owned by PNM
(50%) and TEP (50%); Unit 3 is owned by PNM (50%), SCPPA (41.8%) and Tri-State
(8.2%); and Unit 4 is owned by PNM (38.457%), M-S-R (28.8%), Farmington
(8.475%), Los Alamos (7.2%), Anaheim (10.04%) and UAMPS (7.028%). Equipment and
facilities associated with more than one SJGS Unit are owned in other ownership
percentages, as specified in Sections 6.2.4, 6.2.5 and 6.2.6 of the SJPPA. As
provided in the SJPPA, such ownership interests are undivided interests.

C.    PNM and PNMR-D are wholly-owned subsidiaries of PNM Resources, Inc. PNMR-D
intends, consistent with the provisions of this Restructuring Agreement, to
acquire an

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EXECUTION VERSION

Ownership Interest in the Project on the Exit Date and, prior to the acquisition
of such Ownership Interest in the Project, to assume certain obligations under
this Restructuring Agreement and the SJPPA. PNMR-D is a party to this
Restructuring Agreement but is not as of the Execution Date a Participant in the
Project.

D.    On August 22, 2011, the federal Environmental Protection Agency (“EPA”)
published its Federal Implementation Plan (“FIP”) which included a Best
Available Retrofit Technology (“BART”) determination to meet regional haze
requirements for SJGS. The FIP required the installation of selective catalytic
reduction (“SCR”) technology on all four Units by September 21, 2016.
Thereafter, PNM (in its capacity as SJGS Operating Agent), the Governor of the
State of New Mexico and the New Mexico Environmental Department (“NMED”)
petitioned the United States Court of Appeals for the Tenth Circuit to review
this EPA decision. In subsequent discussions between PNM, NMED, EPA and other
stakeholders, PNM supported an alternative to the FIP (“BART Alternative”) that
would be less costly than the FIP while also achieving significant environmental
benefits. The specific terms of the BART Alternative were set forth in the EPA
Term Sheet, discussed in Recital F.

E.    On February 12, 2013, the Participants, through their Coordination
Committee representatives, voted (with certain abstentions) to adopt a
“Resolution of the San Juan Generating Station Coordination Committee Supporting
the Term Sheet with EPA and NMED for the Settlement of the Dispute Relating to
the U.S. Environmental Protection Agency Best Available Retrofit Technology
Determination for the San Juan Generating Station.” The resolution, among other
things, approved the EPA Term Sheet (addressed below in Recital F) and
contemplated the use of good faith efforts to pursue the approvals necessary to
support the implementation of the EPA Term Sheet.

F.    On February 15, 2013, PNM, NMED and EPA entered into a Term Sheet (the
“EPA Term Sheet”) reflecting the terms of a non-binding “tentative agreement”
for certain actions intended to address pollution control requirements for SJGS
under the federal Clean Air Act’s requirements for regional haze and interstate
transport for visibility. The EPA Term Sheet provided for the retirement of Unit
2 and Unit 3 by December 31, 2017, and the installation of selective
non-catalytic reduction (“SNCR”) technology on Unit 1 and Unit 4 by the later of
January 31, 2016 or fifteen (15) months after EPA approval of the BART
Alternative.

G.    On September 5, 2013, the State of New Mexico approved the BART
Alternative as a revision to New Mexico’s Regional Haze State Implementation
Plan (“RH SIP”) and, thereafter, submitted the revision to EPA. Under the terms
of the RH SIP, Units 2 and 3 will cease operations by December 31, 2017.

H.    By letter dated March 10, 2014, PNM declared in its capacity as Operating
Agent that it needed to commence studies, analysis, assessments and design
related to the installation of the BART Alternative on Unit 4 in order to comply
with the deadlines set forth in the EPA Term Sheet. By letter dated July 14,
2014, PNM declared in its capacity as Operating Agent that it needed to begin
incurring capital expenditures for engineering, analysis, computational fluid
dynamics modeling and geotechnical evaluation, which was the next phase of the
SNCR/balanced draft project for Unit 4. By letter dated March 20, 2015, PNM
declared in its

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EXECUTION VERSION

capacity as Operating Agent that it needed to begin incurring equipment
fabrication and engineering costs necessary to adhere to the RH-SIP compliance
schedule.

I.    On October 9, 2014, the EPA issued a final rule approving the BART
Alternative and New Mexico’s revised RH SIP and issued a separate final rule
withdrawing the FIP. EPA’s rules became effective November 10, 2014.

J.    The California legislature has enacted statutes, and the California Energy
Commission has promulgated implementing regulations, limiting the ability of
SCPPA, M-S-R and Anaheim to enter into certain life extension projects for
coal-fired power plants, including SJGS.

K.    As the result of, among other things, the developments described in the
foregoing Recitals, the anticipated costs of environmental compliance at SJGS
and the California laws and regulations referenced above, the Participants
entered into discussions with respect to the restructuring of their respective
rights and obligations in the Project. To accomplish this restructuring, several
of the Participants are willing or desire to divest or terminate their ownership
in the Project while other Participants and PNMR-D are willing or desire to
retain, increase or acquire ownership in the Project.

L.    To facilitate the discussions referenced in Recital K, the Participants
retained the services of an independent mediator. Mediated negotiations
commenced in January 2014. In light of PNMR-D’s willingness to acquire ownership
in the Project, PNMR-D became involved in the mediation in early 2015.

M.    On September 12, 2014, the Participants entered into the San Juan
Generating Station Fuel and Capital Funding Agreement (“Funding Agreement”). The
Funding Agreement was accepted for filing by the Federal Energy Regulatory
Commission (“FERC”) with an effective date of July 1, 2014. The Funding
Agreement terminated by its own terms.

N.    PNM has filed an application with the New Mexico Public Regulation
Commission (“NMPRC”) for approvals required under the New Mexico Public Utility
Act for, among other things, approval to abandon SJGS Units 2 and 3 and for a
certificate of public convenience and necessity for PNM to own 132 MW of
additional capacity in SJGS Unit 4.

O.    Concurrently herewith, the Parties are executing: (i) the Amended and
Restated Mine Reclamation and Trust Funds Agreement (“Mine Reclamation
Agreement”); (ii) the San Juan Decommissioning and Trust Funds Agreement
(“Decommissioning Agreement”); (iii) the SJPPA Restructuring Amendment; and (iv)
the SJPPA Exit Date Amendment.

P.    The Parties desire, by the agreements referenced in Recital O, to
establish a comprehensive set of binding agreements with respect to the
restructuring of Project ownership interests, rights and cost responsibilities.

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EXECUTION VERSION

Q.    The terms, covenants and conditions set out herein are acceptable to each
of the Parties and will promote the ability of each Party to provide adequate,
efficient, reliable and economical service to its customers in a manner
consistent with its legal obligations.

R.    The foregoing Recitals are included to provide background regarding this
Restructuring Agreement, and while certain Recitals may be referenced in this
Restructuring Agreement, they are neither part of nor incorporated into the
terms, covenants and conditions of this Restructuring Agreement.

AGREEMENT

NOW, THEREFORE, for and in consideration of the promises and obligations
reflected in the covenants, terms and conditions in this Restructuring
Agreement, all of which together provide the consideration for this
Restructuring Agreement, the Parties agree as follows:

1.    Effective Date and Termination

1.1    Effective Date. Conditioned upon due execution and delivery of this
Restructuring Agreement by all of the Parties, the effective date of this
Restructuring Agreement (“Effective Date”) is the date of the last to occur of
the following: (i) FERC has approved the FPA Section 203 applications and has
accepted for filing the FPA Section 205 application referenced in Section 1.2.1,
in each case without conditions or with conditions acceptable to the Parties as
provided in Section 1.4; (ii) the NMPRC has granted PNM authority to abandon
Units 2 and 3 and has also granted a certificate of public convenience and
necessity to own an additional interest in Unit 4, without conditions or with
conditions acceptable to the Parties as provided in Section 1.4; or (iii) the
effective date of the CSA.
 
1.2    FERC Filings.

1.2.1    Within fifteen (15) Business Days after the Execution Date (i) PNM and
PNMR-D will file applications with FERC under Section 203 of the FPA for
approval of the transactions provided for in Section 6, with a request for
expedited consideration; and (ii) PNM will file an application with FERC under
Section 205 of the FPA for acceptance of an amendment to the SJPPA incorporating
relevant provisions of this Restructuring Agreement. The aforementioned
amendment to the SJPPA (the “SJPPA Restructuring Amendment”) is being executed
by the Parties concurrently with the execution of this Restructuring Agreement.
PNM will be responsible for the preparation and filing of the Section 205
application, and PNM and PNMR-D will be responsible for the preparation and
filing of their respective Section 203 applications. At least ten (10) Business
Days prior to making the Section 203 and 205 applications referenced in this
Section 1.2.1, PNM and PNMR-D will provide drafts thereof to the other Parties.
PNM’s Section 205 filing of the SJPPA Restructuring Amendment will request that
the effective date for the SJPPA Restructuring Amendment be the effective date
of this Restructuring Agreement; provided, however, that such effective date is
conditioned upon PNM providing notice to FERC that all of the other conditions
for the effectiveness of this Restructuring Agreement, as identified in Section
1.1, have occurred. If necessary, PNM’s filing of the

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EXECUTION VERSION

SJPPA Restructuring Amendment will request any waivers of FERC’s regulations
that may be necessary to request an effective date for such revisions as
specified in the previous sentence of this Section 1.2.1.

1.2.2    Additionally, prior to the Exit Date, PNM will file with FERC a further
amendment to the SJPPA under FPA Section 205 (the “SJPPA Exit Date Amendment”)
to reflect the exit from the Project of the Exiting Participants and to set
forth the terms of the SJPPA under which the Remaining Participants will
continue their participation in the Project, including the Remaining
Participants’ operation and maintenance of Units 1 and 4 after the Exit Date.
The SJPPA Exit Date Amendment is being executed by the Parties concurrently with
the execution of this Restructuring Agreement. PNM will make this Section 205
filing of the SJPPA Exit Date Amendment not less than sixty (60) days nor more
than one hundred twenty (120) days prior to the Exit Date and will request that
the SJPPA Exit Date Amendment become effective on the Exit Date. At least ten
(10) Business Days prior to filing the SJPPA Exit Date Amendment, PNM will
provide a draft thereof to the other Parties.

1.2.3    If PNM and PNMR-D have complied with the obligation to provide drafts
of the Section 203 and 205 filings set forth in Sections 1.2.1 and 1.2.2, and if
such filings are consistent with the terms of this Restructuring Agreement, then
all other Parties will support or not oppose PNM and/or PNMR-D’s FERC filings by
the prompt filing at FERC of certificates or letters of concurrence; by
intervening at FERC in support of the filings; or by not taking any action to
oppose the filings.

1.3    Filings with Governmental Authorities. PNM and PNMR-D will provide each
of the other Parties a copy of the FERC filings referenced in Sections 1.2.1 and
1.2.2, and will keep the other Parties reasonably apprised of the status of all
filings to obtain Regulatory Approvals including copies of any Regulatory
Approvals or other pertinent orders issued by Governmental Authorities with
respect to such filings. PNM and PNMR-D will also provide each of the other
Parties a copy of any motion for rehearing or reconsideration filed with respect
to any Regulatory Approval and any notice of appeal or petition for review filed
with respect to any Regulatory Approval within five (5) Business Days of receipt
thereof, and in the manner provided in Section 25.3.

1.4    Review of Regulatory Orders.

1.4.1    Following issuance of an order by any Governmental Authority with
regard to a Regulatory Approval, each Party will review such order to determine
whether such Governmental Authority has (i) changed or modified a condition,
deleted a condition or imposed a new condition with regard to the filing; or
(ii) conditioned its approval of the filing upon changes or modifications to a
condition, deletion of a condition or imposition of a new condition (the actions
described in Sections 1.4.1(i) and 1.4.1(ii) hereinafter collectively referred
to as “Regulatory Revision”). The Party receiving such order will provide a copy
thereof to the other Parties in the manner provided in Section 25.3 within five
(5) Business Days.

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EXECUTION VERSION

1.4.2    Within ten (10) Business Days after delivery of the copy of the order,
the Parties will provide written notice to each other of their acceptance or
objection to the Regulatory Revision, specifying in such notice in the case of
an objection each Regulatory Revision on which such objection is based and the
reason for the objection. A failure to notify within said ten (10) Business Day
period will be equivalent to a notification of acceptance of the Regulatory
Revision.

1.4.3    If any Party objects to a Regulatory Revision, the Parties will
attempt, in good faith, to renegotiate the terms and conditions of this
Restructuring Agreement to resolve the Regulatory Revision leading to such
objection to the satisfaction of the Parties and obtain necessary Board
approvals within ninety (90) days after the date of notice of objection to such
Regulatory Revision under Section 1.4.2, or such other period as the Parties may
agree upon in writing.

1.4.4    If the Parties reach agreement on renegotiated terms and conditions,
they will thereafter seek to obtain requisite Regulatory Approval of such
renegotiated agreement, with any filings necessary to seek such Regulatory
Approval being made within twenty (20) Business Days after the execution of the
renegotiated agreement.

1.4.5    If the Parties fail to agree on such renegotiated terms and conditions
within the ninety (90) day period referenced in Section 1.4.3, or such other
period as the Parties may agree upon in writing, this Restructuring Agreement
will not take effect.

1.5    Appellate Decision. A Party receiving a copy of an opinion or other
decision affecting a Regulatory Approval or the terms or conditions thereof
(“Decision”) of an appellate court will, within five (5) Business Days and in
the manner provided in Section 25.3, provide a copy thereof to each other Party.
Following receipt of the Decision, each Party will review the Decision to
determine the potential effect of the Decision on the transactions provided for
in this Restructuring Agreement. The Parties will confer in good faith regarding
the effect, if any, of the Decision and will attempt, within seventy-five (75)
days of receipt of a copy of the Decision, or such other period as the Parties
may determine, to mutually agree upon the appropriate course of action in light
of the Decision.

1.6    Actions not Arbitrable. Neither a dispute between or among the Parties
arising under, nor a Party’s action or failure to act under this Section 1, is
arbitrable under Section 23.

1.7    Termination Date. Unless otherwise agreed by the Parties, following the
Effective Date, this Restructuring Agreement will continue until six (6) months
after the later of the termination or expiration of (i) the Mine Reclamation
Agreement; or (ii) the Decommissioning Agreement (the “Termination Date”).

2.    Definitions and Rules of Interpretation

2.1    Definitions. The following terms, when used herein with initial
capitalization, have the meanings specified below:

2.1.1    AAA means the American Arbitration Association.

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EXECUTION VERSION

2.1.2    Acquiring Participants means PNM and PNMR-D.

2.1.3    Affiliate means with respect to any person: (i) each person that,
directly or indirectly, controls or is controlled by or is under common control
with such designated person; (ii) any person that beneficially owns or holds 50%
or more of any class of voting securities of such designated person or 50% or
more of the equity interest in such designated person; and (iii) any person of
which such designated person beneficially owns or holds 50% or more of any class
of voting securities or in which such designated person beneficially owns or
holds 50% or more of the equity interest; provided, however, that members of a
Party will not be deemed to be Affiliates of each such Party. For the purposes
of this definition, “control” (including, with correlative meanings, the terms
“controlled by” and “under common control with”), as used with respect to any
person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person, whether
through the ownership of voting securities or by contract or otherwise; PNM and
PNMR-D are Affiliates.

2.1.4    Arbitration Award means an award of the arbitrators, as provided for in
Section 23.5.

2.1.5    Arbitration Notice has the meaning provided for in Section 23.2.

2.1.6    Arbitration Organization means an organization described in Section
23.3.2.

2.1.7    Available Pre-existing Stockpile Tons has the meaning provided for in
Section 12.1(C)(1) of the CSA.

2.1.8    BART means Best Available Retrofit Technology.

2.1.9    BART Alternative means the alternative to the FIP, as identified in
Recital D.

2.1.10    Baseline Environmental Study or BES means the study provided for in
Section 19.1.

2.1.11    Board means the governing body of a Party.

2.1.12    Business Day means any day other than a Saturday, Sunday or federal
holiday.

2.1.13    Capital Improvements means any property, land or land rights added to
the Project or the substitution, replacement, enlargement or improvement of any
units of property, structures, facilities, equipment, property, land or land
rights constituting a part of the Project, which in accordance with accounting
practice would be capitalized, and also including the costs of removal, salvage
or disposal of any units of property being replaced or substituted.

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EXECUTION VERSION

2.1.14    CCBDA means the existing Coal Combustion Byproducts Disposal Agreement
between PNM, TEP and SJCC.

2.1.15    CCR means ash and gypsum byproducts produced by the Project.

2.1.16    CCRDA means the new Coal Combustion Residuals Disposal Agreement
entered into between PNM and SJCC with an anticipated effective date of January
1, 2016.

2.1.17    Charter Documents means with respect to any Party, the certificate or
articles of incorporation or organization and by-laws, the limited partnership
agreement, the partnership agreement, the limited liability company agreement or
trust agreement, or other organizational documents of such Party.

2.1.18    Claims-Made Policy has the meaning provided for in Section 21.2.1.

2.1.19    Clean Air Act means 42 U.S.C. § 7401 et seq. (1970).

2.1.20    Closing means the closing, as provided for in Section 7, of the
conveyance of the Ownership Interests as provided for in Section 6.

2.1.21    Closing Date means the date of the Closing as provided for in Section
7.1.

2.1.22    Closing Statement has the meaning provided for in Section 7.2.

2.1.23    Coal Tonnage Components means coal tonnage categories as defined in
the CSA and comprised of Pre-existing Stockpile Coal, Force Majeure Tons,
Available Pre-existing Stockpile Tons, Tier 1 Tons, and Tier 2 Tons.

2.1.24    Common Participation Share means a Participant’s share of equipment
and facilities common to all of the Units as set out in Section F in Exhibit E.

2.1.25    Common Participation Share of Shared Coal Inventory means a Party’s
share of equipment and facilities common to all of the Units (as shown in
Section F in Exhibit E) multiplied by the sum of (i) coal tons stockpiled on
SJCC’s property, and (ii) coal tons stockpiled on the SJGS Plant Site.

2.1.26    Condition Precedent means an event that, unless waived, must occur
prior to Closing as provided for in Section 7.5.

2.1.27    Consultant means the consultant retained pursuant to Section 19.1.

2.1.28    Continuing Coverage has the meaning provided for in Section 21.2.2.

2.1.29    Credit Rating means the rating publicly assigned to PNMR’s senior,
unsecured long-term debt obligations (not supported by third-party credit
enhancements)

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by a Rating Agency or, if PNMR does not have a public rating for its senior,
unsecured long-term debt, the rating publicly assigned to PNMR by a Rating
Agency as its corporate credit rating, or long term issuer rating, as
applicable.

2.1.30    CSA means the new Coal Supply Agreement entered into between PNM and
SJCC with an anticipated effective date of January 1, 2016.

2.1.31    Decision has the meaning provided for in Section 1.5.

2.1.32    Decommissioning Agreement means the San Juan Decommissioning and Trust
Funds Agreement executed concurrently herewith.

2.1.33    Default has the meaning provided for in Section 23.10.

2.1.34    Draft Report means the draft report provided for in Section 19.3.

2.1.35    EAF means “equivalent availability factor” as defined in the North
American Electric Reliability Corporation’s Generating Availability Data System
Data Reporting Instructions.

2.1.36    Effective Date has the meaning provided for in Section 1.1.

2.1.37    Environmental Audit means the audit provided for in Section 19.1.

2.1.38    EPA means the federal Environmental Protection Agency or its successor
agency.

2.1.39    EPA Term Sheet means the term sheet referenced in Recital F.

2.1.40    Escrow Interest has the meaning provided for in Section 23.8.

2.1.41    Execution Date has the meaning provided for in the introductory
paragraph of this Restructuring Agreement.

2.1.42    Exit Date means the date upon which the Exiting Participants transfer
all of their respective rights, titles and interests in and to their Ownership
Interests to the Acquiring Participants as provided in Section 6 and terminate
their active involvement in the operation of the SJGS, except as expressly
provided for in this Restructuring Agreement, the Mine Reclamation Agreement and
the Decommissioning Agreement; the Exit Date is anticipated to be on or about
December 31, 2017.

2.1.43    Exiting Participants means those Participants that will transfer all
of their respective rights, titles and interests in and to their Ownership
Interests to the Acquiring Participants as provided in Section 6, and terminate
their active involvement in the operation of SJGS on the Exit Date, except as
expressly provided for in this Restructuring Agreement, the Mine Reclamation
Agreement and the Decommissioning Agreement; the Exiting Participants are M-S-R,
Anaheim, SCPPA and Tri-State.

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2.1.44    Federal Implementation Plan or FIP has the meaning provided for in
Recital D.

2.1.45    Federal Power Act or FPA means 16 U.S.C. §§ 791a et seq.
 
2.1.46    FERC means the Federal Energy Regulatory Commission or any successor
thereto.

2.1.47    Final Report means the final report provided for in Section 19.4.

2.1.48    Force Majeure Tons has the meaning provided for in Section 12.1(C)(1)
of the CSA.
 
2.1.49    Fuels Committee means the committee established in the SJPPA to
facilitate the discussion of Project coal issues.

2.1.50    Funding Agreement means the San Juan Generating Station Fuel and
Capital Funding Agreement among the Participants, dated September 12, 2014.

2.1.51    Further Audit means the audit provided for in Section 19.6.

2.1.52    Governmental Authority means any federal, state, tribal, local,
municipal or foreign governmental or regulatory authority, department, agency,
commission, body, court or other governmental authority other than a Party.

2.1.53    Guaranteed Parties has the meaning provided for in the form of
Parental Guaranty Agreement attached as Exhibit I.

2.1.54    Indemnified Party means a Party that is seeking or entitled to
indemnification or is being indemnified, as provided in Section 20.10.1.

2.1.55    Indemnifying Party means a Party indemnifying another Party, as
provided in Section 20.10.1.

2.1.56    Initiating Party means a Party initiating an audit as provided for in
Section 24.1.

2.1.57    Law means statutes, rules, regulations, ordinances, orders and codes
of federal, state and local Governmental Authorities.

2.1.58    Legacy Costs means those costs payable under Sections 8.2, 8.3 and 8.4
of the CSA

2.1.59    Letter of Credit has the meaning provided for in Section 3.2.2.

2.1.60    Liability means those liabilities described in Section 20.1.

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2.1.61    Liens and Encumbrances means, as to each Exiting Participant, all
liens, mortgages, claims, assignments, taxes, assessments, governmental charges,
filings, pledges, grants of security interests and any other form of encumbrance
on the Exiting Participant’s Ownership Interest created by each such Exiting
Participant.

2.1.62    Mine Reclamation Agreement means the Amended and Restated San Juan
Mine Reclamation and Trust Funds Agreement, executed concurrently herewith.

2.1.63    Minimum Annual Generation (“MAG”) (expressed in MWh) means Net Maximum
Capacity (“NMC”) (of Unit 3 or Unit 4, as applicable), and expressed in MW,
multiplied by each Participant’s percentage Ownership Interest (“I”) in a Unit
multiplied by 0.85 multiplied by (the Unit 3 Equivalent Availability Factor
(“EAF”) for SCPPA and Tri-State or the Unit 4 EAF for M-S-R and Anaheim)
multiplied by the total annual hours in the calendar year (“AH”). The AH in
calendar year 2016 equals 8784 hours and the AH in calendar year 2017 equals
8760 hours. The foregoing is expressed in the following formula:

2.1.64    Minimum Annual Tonnage Purchase Obligation (“MTO”) means Minimum
Annual Generation multiplied by the Participant’s respective actual average net
unit heat rate (“NUHR”), expressed in Btu/kWh, for the year, divided by two
times the weighted average heat content (“HC”), expressed in Btu/Lb, of coal
delivered by SJCC in the year. The foregoing is expressed in the following
formula:

2.1.65    Minimum Credit Threshold means an investment grade Credit Rating of
both Baa3 from Moody’s and BBB- from S&P.

2.1.66    Moody’s means Moody’s Investors Services, Inc. or its successors.

2.1.67    Net Maximum Capacity means the maximum continuous ability of each Unit
to produce power, as defined by the North American Electric Reliability
Corporation in its Generating Availability Data System Data Reporting
Instructions.

2.1.68    NMED means the New Mexico Environment Department or its successor
agency.

2.1.69    NMPRC means the New Mexico Public Regulation Commission or its
successor agency.

2.1.70    Notice of Dispute has the meaning provided for in Section 23.1.1.

2.1.71    Noticing Party has the meaning provided for in Section 23.1.1.

2.1.72    Operating Agent means the Participant or other entity which has been
selected by the Participants as the entity responsible for the operation and
maintenance of the Project pursuant to the SJPPA; as of the Effective Date, PNM
is the Operating Agent.

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Unless otherwise specifically provided for, when in this Restructuring Agreement
a reference is made to the “agent” of a Party, such reference will not be deemed
to include reference to the Operating Agent.

2.1.73    Operating Insurance means policies of insurance secured or to be
secured by the Operating Agent as provided for in the SJPPA.

2.1.74    Operating Work means engineering, contract preparation and
administration, purchasing, repair, supervision, training, expediting,
inspection, testing, protection, operation, use, management, replacement,
retirement, reconstruction and maintenance of and for the benefit of the
Project, including the administration of the SJPPA, environmental compliance
activities and the procurement of fuel and water and other necessary materials
and supplies.

2.1.75    Operation and Maintenance (“O&M”) Expenses means expenses incurred by
the Operating Agent in the performance of Operating Work and chargeable to the
Parties pursuant to the SJPPA and this Restructuring Agreement.

2.1.76    Other Project Agreements means agreements entered into between or
among one or more of the Parties and/or other persons prior to the Execution
Date in connection with the Parties’ respective purchases of Ownership Interests
in the Project or the operation of the Project; the Other Project Agreements
that have been identified by the Parties are listed in Exhibit B.

2.1.77    Ownership Interest means a Party’s percentage undivided ownership
interest in a Unit and in common equipment and facilities and as increased,
decreased, acquired or transferred as provided in this Restructuring Agreement,
and rights incidental thereto.

2.1.78    Parental Guaranty has the meaning provided for in Section 3.2.1.

2.1.79    Participant means any one of PNM, TEP, Farmington, M-S-R, Los Alamos,
SCPPA, Anaheim, UAMPS or Tri-State.

2.1.80    Participant Coal Consumption means each Participant’s total San Juan
Project coal consumption in tons as determined by the Operating Agent. A
Participant’s Coal Consumption is comprised of its share of coal consumed in its
Unit(s) plus its share of coal consumed for common loads, auxiliary loads and
start-up for all Units.

2.1.81    Party means any one of the Participants as well as PNMR-D.

2.1.82    Penalty Interest means interest awarded by the arbitrators pursuant to
Section 23.8.

2.1.83    PNMR means PNM Resources, Inc., a New Mexico corporation.

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2.1.84    Predecessor means any person, including a Party, that, at any time
prior to the Execution Date, held ownership of the Ownership Interest of a Party
that is seeking indemnity or contribution for environmental Liability under
Sections 19 or 20.

2.1.85    Pre-existing Stockpile Coal means coal that as of the Effective Date
is stockpiled on SJCC property.

2.1.86    Project has the meaning described in Recital A.

2.1.87    Project Coal Inventory means the sum of coal in coal storage piles,
silos, conveying systems, hoppers and all other coal storage at the Project as
accounted in FERC Account 151.

2.1.88    Protest has the meaning provided for in Section 23.1.2.

2.1.89    Protesting Party means a Party making a protest in accordance with
Section 23.1.2.1.

2.1.90    Rating Agency means Moody’s or S&P.
 
2.1.91    Refined Coal Supply Agreement means the Refined Coal Supply Agreement
by and between San Juan Fuels, LLC and PNM dated June 21, 2013.

2.1.92    Regulatory Approval means an authorization, consent, license,
certificate, permit, waiver, privilege, acceptance or approval issued or granted
by a Governmental Authority. Regulatory Approvals identified by the Parties as
required in connection with this Restructuring Agreement are set out in Exhibit
A.

2.1.93    Regulatory Revision has the meaning provided for in Section 1.4.1.

2.1.94    Remaining Participants means those Parties that will continue
participation, or acquire an Ownership Interest, in the Project on and after the
Exit Date; the Remaining Participants are PNM, TEP, Farmington, UAMPS, Los
Alamos and PNMR-D.

2.1.95    Restructuring Agreement has the meaning provided for in the
introductory paragraph of this agreement.

2.1.96    RH SIP has the meaning provided for in Recital G.

2.1.97    RSA means the new Reclamation Services Agreement entered into between
PNM and SJCC with an anticipated effective date of January 1, 2016.

2.1.98    SCR means selective catalytic reduction.

2.1.99    SJCC means San Juan Coal Company, a Delaware corporation, or its
successors or assigns.

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2.1.100    SJCC Environmental Force Majeure has the meaning provided for in
Section 12.1(C)(1) of the CSA.

2.1.101    SJGS means the San Juan Generating Station.

2.1.102    SJGS Plant Site means what are identified as Parcels A, B, D, E and F
in Exhibit F.

2.1.103    SJPPA means the Amended and Restated San Juan Project Participation
Agreement, dated March 23, 2006.

2.1.104    SJPPA Exit Date Amendment means the amendment to the SJPPA as
provided for in Section 1.2.2.
 
2.1.105    SJPPA Restructuring Amendment means the amendment to the SJPPA as
provided for in Section 1.2.1.
 
2.1.106    SNCR means selective non-catalytic reduction.

2.1.107    S&P means the Standard & Poor’s Financial Services, LLC (a subsidiary
of McGraw-Hill Companies) or its successor.
 
2.1.108    Termination Date has the meaning provided for in Section 1.7.

2.1.109    Tier 1 Tonnage Allocation means a schedule allocating Tier 1 Tons on
a monthly basis based on the SJGS monthly planned coal consumption.

2.1.110    Tier 1 Tons means, with respect to: (i) each of 2016 and 2017, 5.750
million tons; (ii) each of 2018 and 2019, 2.8 million tons; (iii) each of 2020
and 2021, 2.65 million tons; and (iii) 2022, 1.4 million tons.
 
2.1.111    Tier 2 Tons means all tons delivered to and accepted by SJGS in a
year in excess of Tier 1 Tons.

2.1.112    UG-CSA means the Underground Coal Sales Agreement between PNM, TEP
and SJCC executed on August 31, 2001.

2.1.113    UG-CSA Termination Agreement means the Underground Coal Sales
Agreement Termination and Mutual Release Agreement among PNM, TEP, SJCC and BHP
Billiton New Mexico Coal.

2.1.114    Uncontrollable Forces has the meaning provided for in Section 25.10.

2.1.115    Unit means Unit 1, Unit 2, Unit 3 or Unit 4 of the Project.

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2.1.116    Willful Action means: (i) action taken or not taken by a Party (or
the Operating Agent), at the direction of its directors, members of its Board,
officers or employees having management or administrative responsibility
affecting its performance under this Restructuring Agreement, which action is
knowingly or intentionally taken or not taken with conscious indifference to the
consequences thereof or with intent that injury or damage would probably result
therefrom; or (ii) action taken or not taken by a Party (or the Operating Agent)
at the direction of its directors, members of its Board, officers or employees
having management or administrative responsibility affecting its performance
hereunder, which action has been determined by final arbitration award or final
judgment or judicial decree to be a material default hereunder and which action
occurs or continues beyond the time specified in such arbitration award or
judgment or judicial decree for curing such default, or if no time to cure is
specified therein, occurs or continues beyond a reasonable time to cure such
default; or (iii) action taken or not taken by a Party (or the Operating Agent),
at the direction of its directors, members of its Board, officers or employees
having management or administrative responsibility affecting its performance
hereunder, which action is knowingly or intentionally taken or not taken with
the knowledge that such action taken or not taken is a material default
hereunder. The phrase “employees having management or administrative
responsibility,” as used in this Section 2.1.116, means employees of a Party who
are responsible for one or more of the executive functions of planning,
organizing, coordinating, directing, controlling and supervising such Party’s
performance under this Restructuring Agreement; provided, however, that, with
respect to employees of the Operating Agent acting in its capacity as such and
not in its capacity as a Party, but only during such time as any one of Unit 1,
2, 3 or 4 is commercially producing electrical power, such phrase refers only
to: (x) the senior employee of the Operating Agent on duty at the Project who is
responsible for the operation of the Units, and (y) anyone in the organizational
structure of the Operating Agent between such senior employee and an officer.
After such time as none of Unit 1, 2, 3 or 4 is commercially producing
electrical power, the phrase “employees having management or administrative
responsibility” as used in this Section 2.1.116 will mean employees of any Party
(including the Operating Agent), who are responsible for one or more of the
executive functions of planning, organizing, coordinating, directing,
controlling and supervising such Party’s performance under this Restructuring
Agreement. Willful Action does not include any act or failure to act which is
merely involuntary, accidental or negligent.

2.2    Rules of Interpretation.
Unless a clear contrary intention appears, this Restructuring Agreement will be
construed and interpreted as follows:

2.2.1    Any reference to a person includes any individual, partnership, firm,
company, corporation, joint venture, trust, association, organization,
governmental entity or other entity;

2.2.2    Any reference to a day, week, month or year is to a calendar day, week,
month or year, unless otherwise specified as a Business Day;

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2.2.3    Any act required to occur by or on a certain day is required to occur
before or on that day unless the day falls on a Saturday, Sunday or federal
holiday, in which case the act must occur before or on the next Business Day;

2.2.4    The singular includes the plural and vice versa;

2.2.5    Reference to the feminine, masculine or neutral gender includes
reference to all other genders;

2.2.6    Reference to any person includes such person’s successors and assigns
but, in the case of a Party, only if such successors and assigns are permitted
by this Restructuring Agreement;

2.2.7    Unless expressly stated otherwise, reference to any agreement
(including this Restructuring Agreement), document, instrument or tariff means
such agreement, document, instrument or tariff as amended, supplemented,
replaced or modified and in effect from time-to-time;

2.2.8    Reference to any Law means such Law as amended, modified, codified
supplemented or reenacted, in whole or in part, and in effect from time-to-time,
including, if applicable, rules and regulations promulgated thereunder;

2.2.9    Unless expressly stated otherwise, reference to any article, section,
exhibit or appendix means such article, section, exhibit or appendix of this
Restructuring Agreement, as the case may be;

2.2.10    “Hereunder,” “hereof,” “herein,” “hereto” and words of similar import
are deemed references to this Restructuring Agreement as a whole and not to any
particular provision hereof;

2.2.11    “Including,” “include” and “includes” are deemed to be followed by the
phrase “without limitation” and will not be construed to mean the examples given
constitute an exclusive list of the matters covered;

2.2.12    Relating to the determination of any period of time, “from” means
“from and including,” “to” means “to but excluding” and “through” means “through
and including”; and

2.2.13    Whenever an act is required to be performed by a particular time of
day, prevailing Mountain Time will be the standard by which performance is
measured.

3.    Status of PNMR-D under SJPPA

3.1    PNMR-D as Party to SJPPA.    As reflected in this Restructuring
Agreement, PNMR-D will not acquire an Ownership Interest in the Project until
the Exit Date. However, the SJPPA will be amended to provide that PNMR-D will be
a party to the SJPPA upon the Effective Date. The purpose of adding PNMR-D as a
party to the SJPPA is to set out certain

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financial obligations PNMR-D will assume, and rights it will have, in
contemplation of its acquisition of an Ownership Interest on the Exit Date as
described in Sections 6.1 and 6.2.

3.2    Parental Guaranty and Letter of Credit.

3.2.1    Parental Guaranty. As a condition of PNMR-D becoming a party to the
SJPPA as provided in Section 3.1, PNMR-D’s parent company, PNM Resources, Inc.
(“PNMR”), will enter into, on or before the Execution Date, a parental guaranty
of PNMR-D’s obligations under the Restructuring Agreement, the Decommissioning
Agreement, the Mine Reclamation Agreement and the SJPPA (“Parental Guaranty”).
The form of the Parental Guaranty is attached hereto as Exhibit I.

3.2.2    Letter of Credit. If PNMR’s Credit Rating falls below the Minimum
Credit Threshold, then PNMR will provide the Operating Agent with a letter of
credit (the “Letter of Credit”) in the amount of ten million dollars
($10,000,000) with the Operating Agent as the beneficiary. The form of the
Letter of Credit is attached hereto as Exhibit J. PNMR will deliver the Letter
of Credit to the Operating Agent for the benefit of the Guaranteed Parties
within ten (10) Business Days following: (i) the effective date of the Credit
Rating downgrade that results in PNMR not meeting the Minimum Credit Threshold;
or (ii) the withdrawal of PNMR from being rated by one or more of the Rating
Agencies. Upon a failure of PNMR to make payment under the Parental Guaranty or
a failure of PNMR to procure a conforming replacement Letter of Credit no later
than twenty (20) days before expiration of the existing Letter of Credit, the
beneficiary will promptly draw upon the Letter of Credit. If appropriate, the
Operating Agent will prorate among the Guaranteed Parties the funds drawn
against the Letter of Credit. If the issuer of the Letter of Credit notifies the
Operating Agent that the issuer’s long term obligation rating has fallen below
the rating established in the Letter of Credit, PNMR will have twenty-five (25)
days within which to replace the Letter of Credit with a new letter of credit
from an issuer that meets the minimum long term obligation rating established in
the Letter of Credit. If PNMR fails to procure a new letter of credit as
provided in the previous sentence, the beneficiary will draw upon the Letter of
Credit for the benefit of the Guaranteed Parties.

4.    Restructuring Fee, Demand Charge and Voting

4.1    Restructuring Fee. In consideration of costs to restructure the ownership
of the Project as provided for herein and for the restructuring of rights and
obligations of the Parties in relation to the Project, the Exiting Participants
will pay and the Remaining Participants will accept a restructuring fee in the
amount of eight million eight hundred thousand dollars ($8,800,000)
(“Restructuring Fee”).

4.1.1    The responsibility to pay the Restructuring Fee is allocated among the
Exiting Participants in the following percentages: M-S-R – 32.22%; Anaheim –
11.48%; SCPPA – 47.08%; and Tri-State – 9.22%.

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4.1.2    The receipt of the Restructuring Fee is allocated as follows: PNM – 0%;
TEP – 0%; Farmington – 17.24%; LAC – 22.20%; UAMPS – 22.20%; and PNMR-D –
38.36%.

4.2    Payment of Restructuring Fee and Common Participation Shares of Shared
Coal Inventory.
Payment of the Restructuring Fee, and payment for the Common Participation
Shares of Shared Coal Inventory pursuant to Section 5.3, will occur on the same
date, in the manner agreed upon by the Parties, which date will be no later than
thirty (30) days after the Effective Date. Each Exiting Participant will pay its
proportionate share of the Restructuring Fee as set forth in Section 4.1.1 to
the Remaining Participants entitled to receive such payment as provided in
Section 4.1.2.

4.3    Costs of Capital Improvements Invoiced after January 1, 2015. The
provisions of Section 7 of the SJPPA, Capital Improvements and Retirements of
San Juan Project and Participants’ Solely Owned Facilities, are modified by this
Section 4.3 as follows:

4.3.1    The Remaining Participants are responsible for the costs of Capital
Improvements invoiced after January 1, 2015, and the Exiting Participants have
no ownership interest in such Capital Improvements. The Exiting Participants
will have no responsibility for costs of the SNCR/balanced draft project to be
placed on Units 1 and 4. Costs of Capital Improvements invoiced after January 1,
2015, are allocated to the Remaining Participants as follows:

4.3.1.1     For Unit 4 and for all equipment and facilities directly related to
Unit 4 only, in accordance with the following percentages:

4.3.1.1.1    PNM:            64.482%
4.3.1.1.2    Farmington:         8.475%
4.3.1.1.3    LAC:             7.200%    
4.3.1.1.4    UAMPS:         7.028%
4.3.1.1.5    PNMR-D        12.815%

4.3.1.2     For equipment and facilities common to Units 3 and 4 only, in
accordance with the following percentages:

4.3.1.2.1    PNM:            64.482%
4.3.1.2.2    Farmington:         8.475%
4.3.1.2.3    LAC:             7.200%
4.3.1.2.4    UAMPS:         7.028%
4.3.1.2.5    PNMR-D        12.815%

4.3.1.3    For equipment and facilities common to all of the Units in accordance
with the following percentages:

4.3.1.3.1    PNM:            58.671%
4.3.1.3.2    TEP:            20.068%

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4.3.1.3.3    Farmington:         5.076%
4.3.1.3.4    LAC:             4.309%
4.3.1.3.5    UAMPS:         4.203%
4.3.1.3.6    PNMR-D:         7.673%

4.3.2    The modifications to Section 7 of the SJPPA set out in Section 4.3.1
replace and supersede the provisions of Section 7.13 of the SJPPA accepted for
filing as PNM Rate Schedule No. 144 and currently on file with the FERC.

4.4    Demand Charge. For the period July 1, 2014, through December 31, 2017,
the Exiting Participants will pay a Demand Charge for the use of new Capital
Improvements implemented on Unit 4, facilities common to Units 3 and 4, and
facilities common to all Units.

4.4.1    The total Demand Charge is six million two hundred thousand dollars
($6,200,000) of which five million three hundred fourteen thousand two hundred
eighty-six dollars ($5,314,286) remains unpaid. The Demand Charge will be paid
regardless of the output of Unit 3 or 4. The Exiting Participants will be
invoiced by the Operating Agent for and will pay the unpaid balance of the
Demand Charge in monthly amounts of no less than 1/36th of the unpaid balance;
provided, the sum of the monthly amounts which would have accrued between
January 1, 2015 and the Effective Date will be paid within forty-five (45) days
of the Effective Date.

4.4.2    The Exiting Participants will pay the Demand Charge as follows:

4.4.2.1        M-S-R        71.650%
4.4.2.2        Anaheim    25.000%
4.4.2.3        SCPPA     2.800%
4.4.2.4        Tri-State     0.550%

4.4.3    The Remaining Participants will be paid the Demand Charge as follows
from July 1, 2014 through December 31, 2014:

4.4.3.1
PNM         0.000%

4.4.3.2
TEP         0.000%

4.4.3.3
Farmington 55.600%

4.4.3.4
LAC        22.200%

4.4.3.5
UAMPS    22.200%

4.4.3.6
PNMR-D     0.000%

4.4.4    The Remaining Participants will be paid the Demand Charge as follows
from January 1, 2015 through December 31, 2017:

4.4.4.1        PNM         0.000%
4.4.4.2        TEP         0.000%
4.4.4.3        Farmington     17.24%
4.4.4.4        LAC         22.20%

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4.4.4.5        UAMPS     22.20%
4.4.4.6        PNMR-D     38.36%

4.4.5    With respect to any Demand Charges paid or received between July 1,
2014 and December 31, 2014, any Exiting Participant that made such a Demand
Charge payment and any Remaining Participant that received a Demand Charge
payment and did not return it will be credited the amount of that payment or
receipt as follows: the amount of any such payment will be proportionately
offset against the amount of the Demand Charge payment each such Exiting
Participant is obligated to pay under Sections 4.4.1 through 4.4.4, and the
amount of any such receipt by a Remaining Participant will be proportionately
offset against the amount of the Demand Charge payment each such Remaining
Participant is entitled to receive under Sections 4.4.1 through 4.4.4. The
Demand Charge payments made by Exiting Participants to the Operating Agent
between July 1, 2014, and December 31, 2014, were as follows: M-S-R - $634,614;
Anaheim - $221,429; SCPPA - $24,800; and Tri-State - $4,871. The Demand Charge
payments received by the Remaining Participants between July 1, 2014, and
December 31, 2014, and not returned to the Operating Agent were as follows:
Farmington - $492,457. For a Remaining Participant that returned Demand Charge
payments received between July 1, 2014 and December 31, 2014, such Remaining
Participant will receive a disbursement from the Operating Agent constituting
the Remaining Participant’s entire proportionate share of Demand Charge payments
as set forth in Sections 4.4.1, 4.4.3 and 4.4.4.

4.5    Voting on Capital Improvements. As of the Effective Date, for purposes of
the application of the double voting procedures set out in Section 18.4 of the
SJPPA, the Ownership Interests and the number of individual Parties required to
approve a Capital Improvement will be as provided in Section 4.3.1.

5.    Fuel Supply

5.1
Certain Cost Allocations. Payment obligations for coal supply, reclamation and
CCR disposal will be allocated as follows:

5.1.1    For payments under the UG-CSA, the CCBDA, the UG-CSA Termination
Agreement and the CCBDA Termination Agreement, Sections 23.1 through 23.13 of
the SJPPA (as those sections were in effect on March 23, 2006) will apply.

5.1.2    Sections 23.1 through 23.13 of the SJPPA (as those sections were in
effect on March 23, 2006) will apply for allocation of any fuel-related payments
(other than for coal) incurred through December 31, 2017 and chargeable to FERC
Account 501, including limestone, fuel oil, CCR disposal, fuel handling or
start-up or auxiliary power and energy.

5.1.3    For payments arising under the CSA and the CCRDA, Sections 5.2 through
5.7 of this Restructuring Agreement will apply.

    

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5.1.4    Payments arising under the RSA will be allocated as determined under
the Mine Reclamation Agreement.

5.2
Supply of Coal to Exiting Participants and Remaining Participants. Beginning on
January 1, 2016, PNM will supply coal to (i) the Exiting Participants under the
provisions of Sections 5.3 through 5.6; and (ii) the Remaining Participants
under the provisions of Section 5.7. PNM will have all cost obligations under
the CSA for coal supplied to the Exiting Participants and PNM will have all
rights to the Exiting Participants’ inventory relinquished to PNM under Section
5.3.

5.3
Relinquishment of Coal Inventory. The Exiting Participants will relinquish to
PNM their Common Participation Shares of Shared Coal Inventory that exist as of
January 1, 2016, at the following values: (i) $16.88/ton for coal tons
stockpiled on SJCC’s property and $22.69/ton for coal tons stockpiled on the
SJGS Plant Site. The total sum paid by PNM for Common Participation Shares of
Shared Coal Inventory will be allocated as follows:

5.3.1
M-S-R        32.22%

5.3.2
Anaheim         11.48%

5.3.3
SCPPA        47.08%

5.3.4
Tri-State         9.22%

5.4
Coal Supply for Exiting Participants. From January 1, 2016 through the Exit
Date, the Exiting Participants will receive coal monthly to meet their
Participant Coal Consumption from PNM at a cost of $50/ton in 2016 and 2017.
This $50/ton covers all payment obligations for coal supplied to the Exiting
Participants that might otherwise be due under (i) this Restructuring Agreement;
(ii) the CSA, including Legacy Costs, taxes and royalties; and (iii) gross
receipts taxes under the Refined Coal Supply Agreement or otherwise. This
$50/ton does not include payments for reclamation costs under the RSA or
disposal costs under the CCRDA.

5.5
Minimum Purchase Obligations. The Exiting Participants will not have any
take-or-pay or minimum purchase obligations under the CSA; provided, however,
the Exiting Participants must comply with the dispatch requirements described in
Section 5.6.

5.6
Exiting Participant Dispatch Requirements; Invoicing. The Exiting Participants
will dispatch their respective shares of the Units to no less than their Minimum
Annual Generation. The Exiting Participants will be billed monthly based on
their Participant Coal Consumption. At the end of each of 2016 and 2017, any
Exiting Participant that has not met its Minimum Annual Tonnage Purchase
Obligation will be billed at $50/ton for the difference between its actual
Participant Coal Consumption and its Minimum Annual Tonnage Purchase Obligation;
provided, in the event that at any time during 2016 or 2017 PNM is unable to
supply coal to the Exiting Participants as provided in Section 5.4, then the
Minimum Annual Tonnage Purchase Obligation will be proportionately reduced to
account for any such period of time in which PNM is unable to supply coal.

 
5.7
Monthly Remaining Participant Coal Invoicing. For purposes of the calculations
in this Section 5.7, PNM’s Common Participation Share will include the Exiting
Participants’

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EXECUTION VERSION

Common Participation Share, and PNM’s Participant Coal Consumption will include
the Exiting Participants’ Participant Coal Consumption. SJCC will invoice PNM
monthly as provided under the CSA. PNM will invoice each Remaining Participant
monthly by Coal Tonnage Component and such Coal Tonnage Component will be paid
for as follows:

5.7.1    Pre-existing Stockpile Coal Tons. Pre-existing Stockpile Coal tons as
invoiced by SJCC will be allocated by a Remaining Participant’s Common
Participation Share as of the Effective Date and will be paid for by each
Remaining Participant at the price per ton charged by SJCC in its monthly
invoicing to PNM.

5.7.2    Tier 1 Tons. Each year, PNM will develop a monthly Tier 1 Tonnage
Allocation schedule with SJCC in the annual operating plan process as provided
for in Section 7.2 of the CSA. With input from the Remaining Participants, PNM
will develop a monthly allocation by Remaining Participant of such Tier 1 Tons
(such individual allocation, its “Tier 1 Tonnage Allocation”). Such monthly Tier
1 Tonnage Allocation will be paid for by Remaining Participants whether or not
their Participant Coal Consumption exceeded their Tier 1 Tonnage Allocation in
the month. Monthly, for each Remaining Participant, its Tier 1 Tonnage
Allocation, net of its invoiced Pre-existing Stockpile Coal for such month will
be paid for at the then-existing price for Tier 1 Tons under the CSA. In each of
2016 and 2017, five million six hundred thousand (5,600,000) tons will be
allocated by Remaining Participant Share, and then PNM will be allocated an
additional one hundred fifty thousand (150,000) tons in each of those years. In
each of 2018 and 2019, two million eight hundred thousand (2,800,000) tons will
be allocated by Remaining Participant Share. In each of 2020 and 2021, two
million eight hundred thousand (2,800,000) tons will be allocated by Remaining
Participant Share, and then PNM’s allocation will be reduced by one hundred
fifty thousand (150,000) tons in each of those years. In 2022, one million four
hundred thousand (1,400,000) tons will be allocated by Remaining Participant
Share.

5.7.3    Tier 2 Tons. To the extent that a Remaining Participant’s Participant
Coal Consumption in a month exceeds its Tier 1 Tonnage Allocation for such
month, PNM will invoice such Remaining Participant such excess as Tier 2 Tons to
be paid for at the then existing price for Tier 2 Tons under the CSA.

5.7.4    Legacy Costs. Legacy Costs as invoiced monthly by SJCC will be
allocated using a Remaining Participant’s Common Participation Share for that
year.

5.7.5    Reclamation Bond Premium. Cost for SJCC’s reclamation bond premium
invoiced through the CSA will be allocated using a Remaining Participant’s
Common Participation Share for that year.

5.7.6    Weight-based Taxes. Weight-based taxes will be applied to the tonnages
as invoiced by PNM to each Remaining Participant at the then-existing rates
applicable to SJCC invoices.

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5.7.7    Revenue-based Taxes and Royalties. Revenue-based taxes and royalties
will be applied to the tonnages and total coal costs as invoiced by PNM to each
Remaining Participant at the then-existing rates applicable to SJCC invoices.

5.7.8    SJCC Environmental Force Majeure. In the event of an SJCC Environmental
Force Majeure, then Available Pre-existing Stockpile Tons will be allocated in
the same manner as Pre-existing Stockpile Coal tons, and Force Majeure Tons will
be allocated in the same manner as Tier 1 Tons unless otherwise approved by the
Remaining Participants in the Fuels Committee. Such calculations will be on an
annual basis.

5.7.9    Other Costs. Any other costs billed by SJCC under the CSA and not
specifically addressed in this Section 5.7 will be apportioned among and paid
for by the Remaining Participants on the basis of Remaining Participant’s Common
Participation Share for that year unless otherwise annually approved by the
Remaining Participants in the Fuels Committee.

5.7.10    Annual Year-End Reconciliation Process.    

5.7.10.1    At the end of each year, the Operating Agent will reconcile the sum
of each Remaining Participant’s monthly CSA-related payments to a properly
allocable share of annual Tier 1 Tons, Tier 2 Tons, Pre-existing Stockpile Coal
tons, and cost associated with any change in Project Coal Inventory and invoice
or refund any such reconciliation amounts to each Remaining Participant.

5.7.10.2    Any net consumption of Project Coal Inventory tons will be charged
to FERC Account 501 and apportioned among and paid for by the Remaining
Participants on the basis of the percentage that each Remaining Participant’s
annual Tier 2 Tons after the reconciliation process bears to the total annual
Tier 2 Tons consumption after the reconciliation process for all Units. The
price for such tons will be determined by dividing the total recorded cost in
FERC Account 151 by the total number of tons of coal in Project Coal Inventory,
both as recorded on January 1 of said year. The total amount of any such payment
for consumed Project Coal Inventory tons will subsequently be credited to FERC
Account 151 and apportioned to the Remaining Participants based on the Remaining
Participant’s Common Participation Share for that year.
    
5.7.10.3    The costs of any net addition to Project Coal Inventory tons, as
invoiced by SJCC, will be charged to FERC Account 151 and apportioned to and
paid for by the Remaining Participants based on the Remaining Participant’s
Common Participation Share for that year.

5.7.10.4    If, at the end of any year, the Operating Agent has collected
amounts in excess of those due SJCC under the CSA, such over-collection will be
refunded to the Remaining Participants. The refund to each Remaining Participant
will be an amount equal to the total amount of the over-collection multiplied by

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EXECUTION VERSION

the tons each Remaining Participant’s Coal Consumption was less than its total
annual Tier 1 Tonnage Allocation divided by the total amount by which all such
Remaining Participants’ Coal Consumption was less than their Tier 1 Tonnage
Allocation.

5.8
Section 23.14 Superseded. The provisions of this Section 5 replace and supersede
the provisions of Section 23.14 of the SJPPA accepted for filing as PNM Rate
Schedule No. 144 and currently on file with the FERC.

6.    Exit Date and Ownership Conveyances

6.1    Transfer of Exiting Participants’ Rights. The Exiting Participants will
each transfer all of their respective rights, titles and interests in and to
their Ownership Interests to the Acquiring Participants as specified in Section
6.2 and terminate their active involvement in the operation of SJGS on the Exit
Date, except as expressly provided for in this Restructuring Agreement, the Mine
Reclamation Agreement and the Decommissioning Agreement. The Remaining
Participants will purchase fuel oil inventory from the Exiting Participants at
book value on the Exit Date. On the first monthly invoice following the Exit
Date, the Operating Agent will credit each of the Exiting Participants for its
share of the book value for fuel oil inventory, and charge each of the Remaining
Participants for its share of such book value. Each Exiting Participant’s share
of fuel oil inventory will be calculated using its Common Participation Share
prior to the Exit Date. Each Remaining Participant’s share will be calculated
using its Common Participation Share after the Exit Date.

6.2    Acquisition of Ownership Interests of Exiting Participants. On the Exit
Date and in accordance with this Restructuring Agreement and with all other
instruments referenced herein:

6.2.1    SCPPA and Tri-State will convey all of their respective rights, titles
and interests in and to their Ownership Interests to PNM, and PNM (an “Acquiring
Participant”) will acquire all of SCPPA’s and Tri-State’s respective rights,
titles and interests in and to their Ownership Interests; and

6.2.2    M-S-R and Anaheim will convey all of their respective rights, titles
and interests in and to their Ownership Interests to PNM and PNMR-D, and PNM and
PNMR-D (“Acquiring Participants”) will acquire all of M-S-R’s and Anaheim’s
respective rights, titles and interests in and to their Ownership Interests,
including approximately 132 MW of Unit 4 in the case of PNM (an additional
26.025% ownership of Unit 4) and approximately 65 MW of Unit 4 in the case of
PNMR-D (a 12.815% ownership of Unit 4).
  
6.2.3    TEP, Los Alamos, Farmington and UAMPS will not acquire any ownership of
Unit 3 or any additional Ownership Interest in Unit 4; and PNMR-D will not
acquire any ownership of Unit 3, but all Remaining Participants will have shares
of plant common and Unit 3 and 4 common as set forth in Section 6.3.

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6.3    Plant Ownership after Acquisition of Ownership Interests of Exiting
Participants.
Upon completion of the transfers provided for in Section 6.2, the Remaining
Participants will hold the following Ownership Interests in Units 3 and 4, Unit
3 and 4 common and in plant common equipment and facilities, which change in
Ownership Interests will be reflected in the SJPPA Exit Date Amendment:
 
Unit 3
 
Unit 4
 
Unit 3&4 Common
 
Plant Common
PNM
100.00
%
 
64.482
%
 
64.482
%
 
58.671
%
PNMR-D
0.000
%
 
12.815
%
 
12.815
%
 
7.673
%
TEP
0.000
%
 
0.000
%
 
0.000
%
 
20.068
%
Farmington
0.000
%
 
8.475
%
 
8.475
%
 
5.076
%
LAC
0.000
%
 
7.200
%
 
7.200
%
 
4.309
%
UAMPS
0.000
%
 
7.028
%
 
7.028
%
 
4.203
%
Exiting
Participants
0.000
%
 
0.000
%
 
0.000
%
 
0.000
%
Total
100.00
%
 
100.000
%
 
100.000
%
 
100.000
%

6.4    Unit 1 and Unit 2 Ownerships After Exit Date. This Restructuring
Agreement does not alter the ownership of Units 1 and 2. After the Exit Date,
Units 1 and 2 will continue to be owned 50% by PNM and 50% by TEP.

6.5    “AS IS” Conveyances. Except as otherwise provided in this Restructuring
Agreement: (i) THE TRANSFERS PROVIDED FOR IN THIS SECTION 6 ARE TO BE ON AN “AS
IS,” “WHERE IS” AND “WITH ALL FAULTS” BASIS; (ii) NO EXITING PARTICIPANT MAKES
ANY REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY AS TO THE VALUE,
QUANTITY, CONDITION, SALABILITY, OBSOLESCENCE, MERCHANTABILITY, FITNESS OR
SUITABILITY FOR USE OR WORKING ORDER OF, ALL OR ANY PART OF THE OWNERSHIP
INTERESTS TO BE TRANSFERRED HEREUNDER OR AS TO ANY PORTION OF THE PROJECT; AND
(iii) NO EXITING PARTICIPANT REPRESENTS OR WARRANTS THAT THE USE OR OPERATION OF
AN OWNERSHIP INTEREST OR ANY PORTION OF THE PROJECT WILL NOT VIOLATE OR CONFLICT
WITH ANY PATENT, TRADEMARK OR SERVICE MARK RIGHTS OF ANY THIRD PARTY. EACH
ACQUIRING PARTICIPANT ACCEPTS ALL SUCH TRANSFERS IN ACCORDANCE WITH THE TERMS
AND CONDITIONS OF THIS RESTRUCTURING AGREEMENT.

7.    Closing of Ownership Conveyances

7.1    Closing. The date of Closing of the conveyances provided for in Section
6.2 (“Closing Date”) will take place on or before the Exit Date at a time and
place agreeable to the Exiting Participants and the Acquiring Participants, will
be effective as of the Exit Date and may occur via the exchange of
electronically transmitted signatures contained in counterpart signature pages
for any required Closing documents. Closing will occur after all conditions to
Closing set

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EXECUTION VERSION

forth in this Restructuring Agreement (other than actions to be taken or items
to be delivered at Closing) have been satisfied or waived.

7.2    Closing Statement. At least sixty (60) days prior to the anticipated
Closing Date, the Exiting Participants and the Acquiring Participants will have
jointly prepared a preliminary closing statement setting out relevant details
concerning the Closing and relevant post-Closing items; and at least seven (7)
days prior to the anticipated Closing Date, the Exiting Participants and the
Acquiring Participants will have jointly prepared a final closing statement
(“Closing Statement”). Copies of the preliminary closing statement and the
Closing Statement will be provided to all of the Parties.

7.3    Closing Deliveries by the Exiting Participants. At the Closing, the
Exiting Participants will deliver, or will cause to be delivered, to the
Acquiring Participants, each of the following:

7.3.1    Instruments of Sale and Conveyance in substantially the form of Exhibit
C, duly executed by the Exiting Participants.

7.3.2    Evidence, in form and substance reasonably satisfactory to the
Acquiring Participants and their counsel, of the Exiting Participants’ receipt
of: (i) Board approvals authorizing the conveyance of the Exiting Participants’
Ownership Interests in SJGS to the Acquiring Participants; (ii) any required
Regulatory Approvals; and (iii) the release of all Liens and Encumbrances
(exclusive of taxes and charges that are prorated as of the Exit Date).

7.3.3    A certificate by each Exiting Participant, duly executed by an
authorized officer or agent of the Exiting Participant, identifying the name and
title and bearing the signatures of the representatives of each Exiting
Participant authorized to execute and deliver documents at the Closing.

7.3.4    A bring-down opinion by each Exiting Participant’s counsel, in form and
substance reasonably acceptable to the Acquiring Participants and their counsel,
in the form set forth in Exhibit K.

7.3.5    As provided in Section 12.2, an appropriate instrument in the form of
Exhibit G, relinquishing their easements and license rights in lands associated
with the Project.

7.3.6    All such other agreements, documents, instruments and writings required
by the Acquiring Participants to be delivered at or prior to the Closing Date
pursuant to this Restructuring Agreement or necessary to sell, assign, convey,
transfer and deliver all of the Exiting Participants’ rights, titles and
interests in and to Ownership Interests to be transferred pursuant to and in
accordance with this Restructuring Agreement and, where necessary and desirable,
in recordable form.

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EXECUTION VERSION

7.4    Closing Deliveries by the Acquiring Participants. At the Closing, the
Acquiring Participants will deliver, or will cause to be delivered, to the
Exiting Participants, each of the following:

7.4.1    Evidence, in form and substance reasonably satisfactory to the Exiting
Participants and their counsel, of the Acquiring Participants’ receipt of: (i)
Board approvals authorizing the acquisition of the Exiting Participants’
Ownership Interests in SJGS; and (ii) any required Regulatory Approvals.

7.4.2    A certificate by each Acquiring Participant, duly executed by an
authorized officer or agent of the Acquiring Participant, identifying the name
and title and bearing the signatures of the representatives of each Acquiring
Participant authorized to execute and deliver documents at the Closing.

7.4.3    A bring-down opinion by each Acquiring Participant’s counsel, in form
and substance reasonably acceptable to the Exiting Participants and their
counsel, in the form set forth in Exhibit K.

7.4.4    An instrument as described in Section 12.3, the form of which is shown
in Exhibit H, by which PNM and TEP provide to the Exiting Participants all
access and use rights necessary to exercise their rights, protect their
interests and fulfill their obligations under this Restructuring Agreement, the
Mine Reclamation Agreement and the Decommissioning Agreement.

7.4.5    All such other agreements, documents, instruments and writings required
by the Exiting Participants to be delivered at or prior to the Closing Date
pursuant to this Restructuring Agreement or necessary to acquire, accept, own
and operate all of the Acquiring Participants’ rights, titles and interests to
be acquired pursuant to and in accordance with this Restructuring Agreement and,
where necessary and desirable, in recordable form.

7.5    Conditions Precedent. The obligations of the Exiting Participants to
complete the Closing are subject to the satisfaction or waiver, on or prior to
the Closing Date, of each of the following conditions precedent by the Acquiring
Participants (each a “Condition Precedent”); and the obligations of the
Acquiring Participants to complete the Closing are subject to the satisfaction
or waiver, on or prior to the Closing Date, of each of the following Conditions
Precedent by the Exiting Participants. To the extent any Condition Precedent has
not been satisfied or waived, the Party required to satisfy the condition will
take prompt steps to do so.

7.5.1    All Acquiring Participants and Exiting Participants have performed or
complied in all material respects with all covenants, agreements and conditions
contained in this Restructuring Agreement, the Mine Reclamation Agreement and
the SJPPA.

7.5.2    All Acquiring Participants and Exiting Participants have received
Regulatory Approvals required for the Closing to occur.

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7.5.3    The representations and warranties of the Acquiring Participants and
Exiting Participants set forth in Section 17 are true and correct in all
material respects as of the Closing Date, in each case as though made as of the
Closing Date.

7.5.4    All consents or approvals to the Closing that may be required from any
lender or creditor of an Acquiring Participant or an Exiting Participant have
been obtained and all requirements related to the Closing have been satisfied in
respect of master indentures or other financing instruments or arrangements to
which such Acquiring Participant or Exiting Participant may be parties.

7.6    Prior Notification of Certain Events. No later than ninety (90) days
prior to the scheduled or anticipated Closing Date, if as a result of
uncertainties resulting from pending judicial or regulatory proceedings, a Party
is uncertain of its ability to satisfy the conditions for Closing as referenced
in Sections 7.3, 7.4 or 7.5, such Party will provide written notice to the other
Parties of such uncertainty. Upon receipt of any notification given pursuant to
this Section 7.6, the Parties will confer in good faith regarding the
circumstances set out in the notification and will attempt, within seventy-five
(75) days of receipt of the notification, or such other period as the Parties
may determine, to mutually agree upon the appropriate course of action in light
of the notification, including negotiating a layoff agreement with Unit 4
Exiting Participants, such layoff agreement to be effective between January 1,
2018, and the Closing Date or the expiration of the SJPPA, whichever occurs
first.

7.7    Prorations. Except as may otherwise be provided in this Restructuring
Agreement, all of the ordinary and recurring items normally charged to the
Participants, including property taxes, insurance premiums and O&M Expenses in
any period prior to the Exit Date relating to the operation of the Project, as
provided for in the SJPPA, will be prorated and charged as of the Exit Date. All
Parties will be liable for their prorated share of such expenses to the extent
such items relate to all time periods prior to the Exit Date and the Remaining
Participants will be liable to the extent such items relate to all time periods
on and after the Exit Date.

7.8    Governmental Recording and Filing. To the extent required, and as
addressed in the Closing Statement, the Exiting Participants and the Acquiring
Participants will cause appropriate releases, terminations, conveyances, deeds
and other instruments reflecting the transfers provided for in Section 6 to be
filed in a timely manner in the real estate records of San Juan County, New
Mexico and/or in the offices of other appropriate Governmental Authorities.

8. Notifications, Consents and Rights-of-First-Refusal. To effectuate the
transfers provided for in Section 6, all Parties hereby expressly: (i) give any
and all prior notifications and grant any and all required consents that they
have or may have a right to give or grant under the SJPPA (including under
Section 10 of the SJPPA) or under any other agreements; and (ii) waive,
relinquish or decline to exercise, any rights they have or may have under
Section 11 of the SJPPA or under any other agreements with respect to the
exercise of any right-of-first-refusal in connection with the transfers provided
for in Section 6.

9. Operation and Maintenance Expenses. Through December 31, 2017, the Exiting
Participants will continue to pay all O&M Expenses associated with their
Ownership

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EXECUTION VERSION

Interests in accordance with Section 28 of the SJPPA and will have no
responsibility for ongoing O&M work thereafter, except as required by Section
19.

10. Replacement Power. Each Participant will be solely responsible for its own
replacement power requirements resulting from: (i) in the case of the Exiting
Participants, the Exiting Participant’s exit from active involvement in the
operation of SJGS; or (ii) in the case of all affected Participants, the
retirement of Unit 2 or Unit 3.

11.    Other Project Agreements

11.1    Other Project Agreements Identified. The Other Project Agreements are
shown in Exhibit B.

11.2    Actions with Respect to Other Project Agreements. Each Party will
undertake an analysis of those Other Project Agreements to which it is a party
and will address with each counterparty to each Other Project Agreement whether
such Other Project Agreement should be retained, amended, terminated or
superseded. The affected Parties that are parties to Other Project Agreements
will act in a timely fashion prior to the Exit Date to execute any requisite
instruments to amend, terminate or supersede such Other Project Agreements and
to seek and obtain any requisite Regulatory Approvals in regard thereto.

12.    Land Ownership

12.1    No Change in Ownership. Nothing in this Restructuring Agreement will be
construed to effect a change of ownership interests in real property, as
provided in Section 6.1 of the SJPPA, except as may be provided in Sections
7.3.5, 7.4.4, 12.2 and 12.3 of this Restructuring Agreement.

12.2    Relinquishment of Certain Rights. Upon the transfer of Ownership
Interests on the Exit Date, the Exiting Participants will deliver appropriate
instruments in the form of Exhibit G relinquishing their easements and license
rights in lands associated with the Project, as provided in Section 7.3.5.

12.3    Easement and Right of Entry.     Upon the transfer of the Ownership
Interests on the Exit Date, PNM and TEP will deliver an instrument in the form
of Exhibit H to each of the Exiting Participants providing them all access and
use rights necessary to exercise their rights, protect their interests and
fulfill their obligations under this Restructuring Agreement, the Mine
Reclamation Agreement and the Decommissioning Agreement, as provided in Section
7.4.3.

13. Coal Mine Reclamation Funding. The arrangements under which mine reclamation
will be undertaken, and the Parties’ agreed funding responsibilities for mine
reclamation, will be as provided in the Mine Reclamation Agreement.
 
14. Decommissioning. The arrangements under which Project decommissioning will
be undertaken, and the Parties’ agreed funding responsibilities for
decommissioning, will be as

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EXECUTION VERSION

provided in the Decommissioning Agreement, and such agreement will become
effective as of the Exit Date.

15.    Confidentiality

15.1    Confidentiality of Negotiations. The Parties’ discussions and
negotiations that led to the development of this Restructuring Agreement, the
Decommissioning Agreement, the Mine Reclamation Agreement, the SJPPA
Restructuring Amendment and the SJPPA Exit Date Amendment, including discussions
taking place in the context of mediation, were conducted in confidence and will
remain confidential; provided, that nothing herein will prevent a Party from
making disclosures pursuant to a requirement of Law (including laws related to
the inspection of public records and securities), including subpoena or
discovery request. If any Party determines that it is legally obligated to make
a disclosure, the Party obligated to make such disclosure will make reasonable
efforts to notify the other Parties prior to such disclosure and will reasonably
cooperate with any other Party in seeking an order of a Governmental Authority
preventing or limiting such disclosure; provided further, however, that the
Party seeking any such order to prevent or limit disclosure will be responsible
for all costs for seeking such an order. Prior to making disclosure, a Party
will, as available or appropriate, attempt to utilize a confidentiality
agreement to protect the confidentiality of the information disclosed.

15.2    Non-confidentiality of Restructuring Agreement. While negotiations were
and remain confidential as addressed in Section 15.1, neither this Restructuring
Agreement nor any version of it publicly disclosed pursuant to applicable Law is
confidential.

16.    Taxes

16.1    Obligations of Parties. All taxes or assessments levied against each
Party’s Ownership Interest, excepting those taxes or assessments levied against
an individual Party on behalf of other Parties, will be the sole responsibility
of the Party upon whom said taxes and assessments are levied, subject to
proration as set forth in Section 7.7. If any taxes or assessments are levied
and assessed in a manner other than specified in this Section 16.1, it will be
the responsibility of the Parties to establish equitable standard practices and
procedures for the apportionment among the Parties of such taxes and assessments
and the payment thereof.

16.2    Notification of Taxing Authorities. In conjunction with the Closing, the
Acquiring Participants and the Exiting Participants will work together to
provide timely notification to taxing authorities of the Closing and will use
commercially reasonable efforts to have any taxing authority imposing any taxes
or assessments on or with respect to the Project assess and levy such taxes or
assessments directly against each Party in accordance with its respective
Ownership Interest in the property taxed. The manner of making such
notifications will be addressed in the Closing Statement.

16.3    IRS Exclusion. The Parties hereby elect to be excluded from the
application of Subchapter “K” of Chapter 1 of Subtitle “A” of the Internal
Revenue Code of 1986, or such portion or portions thereof as may be permitted or
authorized by the Secretary of the Treasury or

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its delegate insofar as such subchapter, or any portion or portions thereof, may
be applicable to the Parties hereunder.

17.    Representations and Warranties; Opinions of Counsel

17.1    Requisite Power and Authority. Each Party represents and warrants to the
other Parties that it has the requisite power and authority to execute this
Restructuring Agreement and that the person executing this Restructuring
Agreement on its behalf has the requisite authority to do so and, subject to the
receipt of requisite Regulatory Approvals, to perform its obligations set out in
this Restructuring Agreement; the execution and delivery of this Restructuring
Agreement and the performance of the obligations set out herein have been duly
authorized by all necessary action on the part of each Party; and the
obligations set out herein are valid and binding obligations of such Party,
enforceable against such Party in accordance with the terms and conditions
hereof, except to the extent that enforceability hereof or thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws generally affecting creditors’ rights and by equitable
principles, regardless of whether enforcement is sought in equity or at law.

17.2    No Violation. Each Party, to the best of its knowledge and upon
reasonable inquiry, represents and warrants to the other Parties that the
execution and delivery of this Restructuring Agreement by such Party, and the
performance by such Party of all of its obligations hereunder, will not violate
any term, condition or provision of its Charter Documents; any applicable Law by
which the Party is bound; any applicable court or administrative order or
decree; or any agreement or contract to which it is a party. Further, each Party
represents and warrants to the other Parties that, to the best of its knowledge
and upon reasonable inquiry, there is no claim pending or threatened against it
which seeks a writ, judgment, order or decree restraining, enjoining or
otherwise prohibiting or making illegal any of the transactions contemplated by
this Restructuring Agreement or which could result in the filing of any
mechanic’s or materialman’s lien against the SJGS Plant Site, other than a
disclosed appeal of a Regulatory Approval.

17.3    Opinions of Counsel. On or before the Execution Date, counsel for each
Party will provide its opinion to each of the other Parties, in form and
substance reasonably acceptable to the Party to which such opinion is delivered,
that the Party is in compliance with the representations and warranties given in
this Section 17. The form of such opinion of counsel is provided in Exhibit D.

18.    Relationship of Parties

18.1    Several Obligations. The covenants, obligations and liabilities of the
Parties are, except as otherwise specifically provided herein, intended to be
several and not joint or collective. At no time will a non-defaulting Party be
responsible for making payments required under this Restructuring Agreement on
behalf of any other Party. Each Party will be individually responsible for its
own covenants, obligations and liabilities as provided for herein.

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18.2    No Joint Venture or Partnership. Nothing in this Restructuring Agreement
will be construed to create an association, joint venture, trust or partnership,
or to impose a trust or partnership covenant, obligation or liability on or with
regard to any one or more of the Parties. No Party or group of Parties will be
under the control of or will be deemed to control any other Party or the Parties
as a group. Except as expressly provided in this Restructuring Agreement, the
Mine Reclamation Agreement, the Decommissioning Agreement and the SJPPA, no
Party will be the agent of or have a right or power to bind any other Party
without its express written consent.

19.    Establishment of Environmental Baseline

19.1    Baseline Environmental Study. In furtherance of their common interest
with respect to the identification of potential environmental Liabilities, the
Participants have engaged an independent, third-party environmental consultant
(“Consultant”) to complete a confidential baseline environmental self-evaluation
(“Baseline Environmental Study” or “BES”) of SJGS and its operations. Associated
with the BES will be a multi-media compliance audit (“Environmental Audit”) to
determine compliance with applicable environmental requirements from the
previous SJGS audit to the present. The BES and the Environmental Audit will be
funded as Operating Work under the SJPPA. The purpose of the BES and the
Environmental Audit is to establish a baseline of environmental conditions in
anticipation of the Exiting Participants’ exit from active involvement in the
operation of SJGS on the Exit Date. It is the intent of the Participants that
the Consultant’s work and communications be protected to the fullest legal
extent possible under Law, including under any attorney-client privilege,
environmental audit privilege, self-critical analysis privilege and the attorney
work product doctrine. The Consultant has been engaged and is being directed by
counsel jointly representing the Participants. The Consultant’s work and
communications, including the Draft Report, Final Report and Further Audit
addressed below, have been and will continue to be treated as privileged and
confidential pursuant to the retention agreement between the Consultant and the
counsel retained by the Participants pursuant to this Section 19.1, and will be
included as Defense Materials pursuant to the Joint Defense and Confidentiality
Agreement effective December 9, 2009 and the Addendum to Joint Defense and
Confidentiality Agreement effective January 31, 2010.

19.2    Scope of BES and Environmental Audit. The scope of work for the BES and
Environmental Audit has been developed by agreement of all Participants and will
include: (i) review and analysis of data, documents and information, such as
monitoring data for air emissions, surface and groundwater discharges, to
identify potential or actual emissions, spills or leaks related to SJGS; and
(ii) interviews of key past or present Operating Agent personnel (as identified
and agreed upon by all Participants) with knowledge of past and present SJGS
operations. The BES and Environmental Audit may identify environmental issues
that require further assessment or investigation. To the extent possible (based
upon regulatory requirements) and by agreement of all the Participants,
additional environmental assessments such as document review, studies, data
collection, sampling, analysis of soil, surface water, and groundwater sampling
and similar activities may be conducted with a desired completion date of June
30, 2015, or as otherwise agreed by the Participants. Issues of concern that are
already identified and that are the current subject of monitoring, investigative
and remediation activities in accordance with regulatory, permitting or other
legal requirements will be excluded from further

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assessment in the BES; provided, however, that such issues and remediation
activities will be identified and listed in the Final Report.

19.3    Draft Report. The Consultant will prepare and provide a draft
confidential baseline environmental report (“Draft Report”) setting forth the
Consultant’s findings and recommendations, which Draft Report will be
distributed to all the Participants for review and comment.

19.4    Final Report. After receiving and considering the Participants’
comments, the Consultant will prepare a confidential final BES report for SJGS
and its operations (“Final Report”) setting forth the Consultant’s findings and
recommendations, if any, to address any environmental issues in accordance with
any applicable environmental Laws. The Final Report will be directed to all the
Participants and each and all of the Participants may rely on the Final Report.
The Draft Report, Final Report and Further Audit are privileged and confidential
pursuant to this Section 19. If the Operating Agent or a Participant is
requested by an insurance carrier or broker, in connection with an application
for coverage, or renewal of coverage, or in connection with a claim filed by the
Operating Agent or a Participant, to provide information in regard to the
operation or environmental compliance of SJGS, the Operating Agent or the
Participant may provide factual information to the insurance carrier or broker
pertinent to the application for coverage, or renewal of coverage, or the filed
claim, including based upon findings contained in the Draft Report, the Final
Report or the Further Audit but may not provide a copy of the Draft Report,
Final Report or the Further Audit. Any Participant providing such factual
information to an insurance carrier or broker will seek an agreement from the
insurance carrier or broker to maintain the confidentiality of such information.

19.5    Remediation or Corrective Action. If the Final Report identifies any
environmental issues at SJGS that require remediation or corrective action or
similar activities that are not being currently addressed, then, as part of
Operating Work and funded as such, the Operating Agent will to the extent
possible (given any constraints and/or schedule that may be imposed by the
regulatory agency overseeing the remediation) on or before thirty (30) days
prior to the Exit Date remediate, or commence the remediation of, any and all
environmental issues identified in the Final Report, with responsibility for the
cost of such remediation, corrective action, or similar activities to be borne
by Parties or, if applicable, their respective insurance carriers, based on the
Parties’ respective pre-Exit Date Ownership Interests in the facilities giving
rise to the Liability.

19.6    Further Audit. After the Final Report, but prior to the Exit Date, the
Operating Agent will complete an additional environmental audit of SJGS (the
“Further Audit”) to identify environmental issues, if any, that may have arisen
subsequent to the completion of the Final Report. The scope of work for the
Further Audit will be developed by agreement of all the Participants. The
Further Audit will be treated as confidential, as set forth in Section 19.1, and
will be directed to all the Participants (all of whom may rely on the Further
Audit). The Further Audit and any remediation undertaken pursuant to the Further
Audit will be funded as Operating Work, the cost responsibilities for which will
be borne by Parties based on the Parties’ respective pre-Exit Date Ownership
Interests in the facilities giving rise to the Liability. The Final Report may
be supplemented to the extent updates are required by the Further Audit.

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19.7    Subsequently Discovered Environmental Issues. The Parties acknowledge
that: (i) the BES, the Final Report and the Further Audit may not discover or
report all environmental issues that existed prior to the date thereof; and (ii)
there may be exposure to claims for environmental Liabilities for changes in
applicable Law after the Exit Date. Liabilities for environmental issues
identified after the Exit Date will be resolved pursuant to Section 20.

19.8    Claims against Predecessors. Nothing in this Section 19 affects the
right of a Party to seek contribution from or otherwise make claims against any
Predecessor with respect to environmental Liabilities arising from an event
prior to such Party’s acquisition of its Ownership Interest, provided that any
Party seeking such contribution is not relieved of its obligation to pay any
amounts it owes under this Section 19.

20.    Liability and Indemnification

20.1    Liabilities Defined. Except as expressly limited, the term “Liabilities”
as used in this Restructuring Agreement means all liabilities, claims, demands,
actions, damages, fines, penalties, remedial or corrective action costs, and
causes of action whatsoever, including without limitation the reasonable fees
and disbursements of the applicable Party’s external attorneys and their staff,
and costs and expenses, including but not limited to costs of consultants and
experts and other litigation costs reasonably incurred in investigating,
preparing, prosecuting or defending against any litigation or claim, action,
suit, proceeding or demand of any kind or character for which indemnification is
provided hereunder. The term “Liabilities” specifically and expressly includes:
(i) all liabilities of any kind or character arising out of or related to the
contamination of the SJGS Plant Site by any hazardous substance, hazardous waste
or any environmental pollutant or contaminant; or (ii) the violation of any
permit applicable to SJGS; or (iii) the violation of any environmental Law,
including violations of the Comprehensive Environmental Response Compensation
and Liability Act, the Federal Clean Air Act, the Federal Clean Water Act and
the Federal Resource Conservation and Recovery Act; provided, however, that
“Liabilities” under this Restructuring Agreement do not include costs for
planning or implementing decommissioning of the San Juan Project, which are
addressed in the Decommissioning Agreement, or the costs of mine reclamation,
which are addressed in the Mine Reclamation Agreement.

20.2    Liabilities Arising Prior to Exit Date. Except in situations when the
event giving rise to the Liability is the result of Willful Action of the
Operating Agent or a Party, all Parties will be responsible for Liabilities
arising from SJGS plant operations and ownership prior to the Exit Date, based
on the Parties’ respective pre-Exit Date Ownership Interests in the facilities
giving rise to the liability. If the Liability is the result of Willful Action
of the Operating Agent or a Party, the Operating Agent or the Party will be
responsible for such Liabilities within the limitations of the SJPPA.

20.3    Liabilities Arising After Exit Date. Only the Remaining Participants
will be responsible for Liabilities arising from SJGS plant operations or
ownership after the Exit Date based on the Remaining Participants’ respective
post-Exit Date plant ownership interests in the facilities giving rise to the
Liability.

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20.4    Apportionment of Liabilities. It is recognized that some events giving
rise to Liabilities may potentially begin prior to the Exit Date and continue
after the Exit Date; in such event, responsibility will be apportioned based on
the relative time periods before and after the Exit Date and pursuant to the
provisions of Sections 20.2 and 20.3.

20.5    Limitation of Liability for Willful Action. For claims made prior to the
Exit Date, the ten million dollar ($10,000,000) limitation of liability in
Sections 36.6 and 36.9 of the SJPPA will apply. For claims made on or after the
Exit Date, the limitation of liability for each occurrence of Willful Action
will be fourteen million dollars ($14,000,000). As of the Exit Date, all
references in Sections 36.6 and 36.9 of the SJPPA to a limitation of liability
of ten million dollars ($10,000,000) for each occurrence of Willful Action will
be amended to increase that amount to a limitation of liability of fourteen
million dollars ($14,000,000) for each occurrence of Willful Action.

20.6    Several Liability. All Parties’ obligations for Liability and indemnity
hereunder will be several and not joint or collective. Each Party will be
individually responsible for its own covenants, obligations and Liabilities as
provided for herein.

20.7    Claims Arising After Exit Date. If on or after the Exit Date a claim for
Liability arising from SJGS operations or ownership is made against one or more
of the Parties, or by any Party against another Party (in each case, including
the Operating Agent), then the following will occur:

20.7.1    In the event a claim for Liability is brought against any Party
asserting claims for Liability arising from ownership or operation of SJGS, said
Party will notify the other Parties in writing within ten (10) Business Days
after the Party learns of the claim for Liability.
 
20.7.2    The Exiting Participants and the Remaining Participants will confer
promptly to determine if the event giving rise to the Liability occurred prior
to or on or after the Exit Date.

20.7.3    If all the Exiting Participants and the Remaining Participants agree
that the event giving rise to the Liability occurred prior to the Exit Date, all
Parties will bear their respective proportionate shares of any resulting
Liability, based on the Parties’ respective pre-Exit Date Ownership Interests in
the facilities giving rise to the Liability. The Parties’ pre-Exit Date
Ownership Interests in the Project facilities are shown in Exhibit E.

20.7.4    If all the Exiting Participants and the Remaining Participants agree
that the event giving rise to the Liability occurred on or after the Exit Date,
the Remaining Participants, based on their respective post-Exit Date Ownership
Interests in the facilities giving rise to the Liability, will indemnify, defend
and hold harmless the Exiting Participants and their agents, affiliates,
members, officers, directors, commissioners, Boards, employees, successors and
assigns from and against any and all Liabilities of any kind or character
resulting from such claim for Liability arising out of or related to SJGS
operations and ownership on or after the Exit Date.

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20.7.5    If all the Exiting Participants and the Remaining Participants cannot
agree whether the event giving rise to the Liability occurred prior to, on or
after the Exit Date, then the Parties will unanimously agree upon the retention
of an independent third-party consultant (with expertise in the subject matter
giving rise to the liability) who will be tasked with determining whether the
event giving rise to the Liability occurred before or on or after the Exit Date
(or the extent to which the event giving rise to the liability occurred before
or on or after the Exit Date). To the extent permitted by law, the Parties will
provide for the confidentiality of the independent third-party consultant’s
determination and will share equitably in the consultant’s fees and costs. The
determination of the independent third-party consultant will be final and
binding on the Parties except as provided in Sections 20.7.8 and 20.7.9 and is
not arbitrable under Section 23.

20.7.6    To the extent the independent third-party consultant determines that
the event giving rise to the Liability occurred prior to the Exit Date, the
provisions of Section 20.7.3 will apply.

20.7.7    To the extent the independent third-party consultant determines that
the event giving rise to the Liability occurred on or after the Exit Date, the
provisions of Section 20.7.4 will apply.

20.7.8    If all the Parties have agreed, or the independent third-party
consultant has determined, that the event giving rise to the Liability occurred
prior to the Exit Date, but there is a final judicial determination that the
event giving rise to the Liability occurred (fully or partially) on or after the
Exit Date, the Remaining Participants, based on their respective post-Exit Date
plant ownership interests in the facilities giving rise to the Liability, will
indemnify, defend and hold harmless the Exiting Participants and their agents,
affiliates, members, officers, directors, commissioners, Boards, employees,
successors and assigns from and against any and all Liabilities of any kind or
character resulting from such claim for Liability arising out of or related to
SJGS plant operations and ownership on or after the Exit Date (to the extent the
event is judicially determined to have occurred after the Exit Date), including
a refund to the Exiting Participants of sums paid by the Exiting Participants
for any Liability; provided, that no Party will: (a) commence a lawsuit seeking
a judicial determination to reverse the agreement of the Parties or the
determination of the independent third-party consultant as to when the events
giving rise to the Liability occurred; or (b) assert or support a position in a
lawsuit commenced by a third party that would have the effect of reversing the
agreement of the Parties or the determination of the independent third-party
consultant as to when the events giving rise to the Liability occurred. As used
in Sections 20.7.8 and 20.7.9, “final judicial determination” refers to: (x) the
decision of a trial court that has become final by virtue of the appeal period
having expired without an appeal having been taken; or (y) the final decision of
an appellate court from which no rehearing or further appeal may be taken.

20.7.9    If all the Parties have agreed, or the independent third-party
consultant has determined, that the event giving rise to the Liability occurred
on or after the Exit Date,

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but there is a final judicial determination that the event giving rise to the
Liability occurred (fully or partially) before the Exit Date, the Exiting
Participants, based on their pre-Exit Date plant ownership interests in the
facilities giving rise to the Liability, will indemnify, defend and hold
harmless the Remaining Participants and their agents, affiliates, members,
officers, directors, commissioners, Boards, employees, successors and assigns
from and against the Exiting Participants’ individual proportionate shares of
said Liability arising out of or related to SJGS plant operations and ownership
prior to the Exit Date (to the extent the event is judicially determined to have
occurred before the Exit Date), including a refund to the Remaining Participants
of a proportionate share of sums paid by the Remaining Participants for any
Liability; provided, however, that no Party will: (a) commence a lawsuit seeking
a judicial determination to reverse the agreement of the Parties or the
determination of the independent third-party consultant as to when the events
giving rise to the Liability occurred; or (b) assert or support a position in a
lawsuit commenced by a third party that would have the effect of reversing the
agreement of the Parties or the determination of the independent third-party
consultant as to when the events giving rise to the Liability occurred.

20.8    Claims against Predecessors. Nothing in this Section 20 affects the
right of a Party to seek contribution from or otherwise make claims against any
Predecessor with respect to environmental Liabilities arising from an event
prior to such Party’s acquisition of its Ownership Interest, provided that any
Party seeking such contribution is not relieved of its obligation to pay any
amounts it owes under this Section 20.

20.9    PNM Responsibility. PNM will defend, indemnify and hold harmless the
other Parties and their agents, affiliates, members, officers, directors,
commissioners, Boards, employees, successors and assigns from and against
Liabilities to the extent arising from the development, operation and/or
ownership by PNM (or PNM’s affiliate, assignee, successor, licensee or lessee)
of any new future use of property at or adjacent to the SJGS Plant Site,
including the development, operation or ownership of any future gas-fueled
electric generating plant to be developed by PNM (or PNM’s affiliate, assignee,
successor, licensee or lessee) at or adjacent to the SJGS Plant Site.

20.10    Indemnification Procedures.

20.10.1    A Party seeking indemnification hereunder (the “Indemnified Party”)
will give prompt written notice to the Party from whom indemnification is sought
(the “Indemnifying Party”) of the assertion of any Liability for which
indemnification is sought. The notice will set forth in reasonable detail the
factual basis asserted for the Liability and the claimed or estimated amount of
the Liability. Notwithstanding the foregoing, the failure or delay of the
Indemnified Party to so notify the Indemnifying Party will not relieve the
Indemnifying Party of its indemnification obligations under this Restructuring
Agreement unless, and only to the extent that, such failure or delay materially
and adversely prejudiced the Indemnifying Party. Nothing in this Section 20.10.1
is intended nor will be construed to toll or otherwise affect the operation of
any applicable statute of limitations.

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20.10.2    With respect to any Liability as to which indemnification is sought,
if the Indemnifying Party has acknowledged in writing its indemnification
obligations under this Restructuring Agreement without qualification or
reservation of rights, the Indemnifying Party has the right at its own expense
to conduct and control the defense, compromise or settlement of such Liability,
utilizing counsel of its choice, subject to the limitations set forth in this
Section 20.10. Such counsel must be reasonably acceptable to the Indemnified
Party. The Indemnified Party may participate at its own expense in such defense,
compromise or settlement utilizing its own counsel. Notwithstanding the
foregoing, the Indemnified Party has the right to conduct and control the
defense, compromise or settlement of any Liability with counsel of its choice
and at the Indemnifying Party’s expense if: (i) the Indemnifying Party has not
delivered the written acknowledgement of indemnification obligations and given
notice of its decision to conduct and control the defense of such Liability
within thirty (30) days after notice of such Liability is served; (ii) the
Indemnifying Party fails to conduct such defense diligently and in good faith;
(iii) the Indemnified Party reasonably determines, based upon the advice of
counsel (including in-house counsel), that the use of counsel selected by the
Indemnifying Party to represent the Indemnified Party would present such counsel
with an actual or potential conflict of interest to which the Indemnified Party
and, if necessary, the Indemnifying Party has not consented in writing; (iv) the
claim for Liability seeks injunctive or other non-monetary relief against the
Indemnified Party; or (v) the Liability relates to or otherwise arises in
connection with any criminal or regulatory proceeding.

20.10.3    The Indemnifying Party and the Indemnified Party will, and will cause
their respective Affiliates and representatives to, cooperate with the defense
or prosecution of any claim. Such cooperation includes furnishing such records,
information and witnesses and attending such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested by the Indemnifying
Party of the Indemnified Party or the Indemnified Party of the Indemnifying
Party in connection with the defense or prosecution of any claim.

20.10.4    Except as set forth below, no claim may be settled or compromised by
the Indemnified Party without the prior written consent of the Indemnifying
Party or by the Indemnifying Party without the prior written consent of the
Indemnified Party, in each case which consent will not be unreasonably withheld,
conditioned or delayed. Notwithstanding the foregoing, the Indemnified Party has
the right to pay, settle or compromise any Liability, provided that the
Indemnified Party waives all rights against the Indemnifying Party to
indemnification under this Section 20 with respect to such Liability unless the
Indemnified Party sought the consent of the Indemnifying Party to such payment,
settlement or compromise but the Indemnifying Party unreasonably withheld,
conditioned or delayed such consent. The Indemnifying Party has the right to
consent to the entry of a judgment or enter into a settlement with respect to
any Liability without the prior written consent of the Indemnified Party, if the
judgment or settlement (i) involves only the payment of money damages to be paid
in full by the Indemnifying Party concurrently with the effectiveness of such
judgment of settlement; (ii) does not contain any restriction or condition that
would reasonably be expected to have a future adverse effect on the Indemnified
Party or the conduct of its business; (iii) does not

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include any admission of wrongdoing; (iv) includes in any settlement documents
and/or release a statement that the matter is being settled without agreement of
the Indemnified Party as allowed by this Section 20.10.4; and (v) includes, as a
condition to any settlement or other resolution, a complete and irrevocable
release of the Indemnified Party from all liability for the claim on which the
judgment or settlement is based.

20.11    Anti-Indemnity Provisions. The Parties acknowledge the potential
applicability of NMSA 1978, §§ 56-7-1 and 56-7-2. Any agreement to indemnify
contained herein will be enforced only to the extent it requires the
Indemnifying Party to indemnify and hold harmless the Indemnified Party,
including its agents, affiliates, members, officers, directors, commissioners,
Boards, employees, successors and assigns, against liabilities: (i) only to the
extent that the liabilities are caused by, or arise out of, the acts or
omissions or negligence of the Indemnifying Party or its agents, affiliates,
members, officers, directors, commissioners, Boards, employees, successors and
assigns; and (ii) except to the extent such liabilities arise out of the
negligence, actions or omissions of an Indemnified Party or such Indemnified
Party’s agents or employees or independent contractors.

20.12    Internal Counsel. There will be no indemnification with respect to fees
or expenses of internal counsel of a Party.

20.13    Willful Action. No Party (including the Operating Agent) committing
Willful Action will be indemnified or held harmless by the other Parties for the
consequences of the Party’s Willful Action.

20.14    Damages. Notwithstanding Section 20.1, in no event will any Party be
liable under any provision of this Restructuring Agreement for any indirect,
punitive or incidental damages or costs of any other Party (including loss of
revenue, cost of capital and loss of business reputation or opportunity),
whether based in contract, tort (including, without limitation, negligence or
strict liability), or otherwise, and the Parties hereby waive, release and
discharge one another from all such indirect, punitive and incidental damages
and costs; provided, that this Section 20.14 does not affect or negate the
provisions of Section 23.8 regarding Penalty Interest or the provisions of
Section 20 regarding obligations to indemnify.
    
20.15    Mitigation of Damages. Each Party will take appropriate and prudent
actions reasonably to mitigate any damages such Party may suffer as a result of
the conduct or Default of another Party.

20.16    Anaheim and M-S-R. Anaheim (which includes its Public Utilities
Department) and M-S-R are governmental entities whose liability is limited by
the California Government Claims Act (Government Code §§ 810 – 998.3) and any
Liability or indemnity assumed by Anaheim or M-S-R in this Restructuring
Agreement will be limited by the provisions of the California Government Claims
Act. Nothing in this Restructuring Agreement is intended to create or will be
construed or applied to create any obligation, agreement, covenant or promise to
indemnify, hold harmless or defend which is against public policy, void and
unenforceable. Notwithstanding any other provision of this Restructuring
Agreement, the payment for all purchases, fees or charges made by Anaheim or
M-S-R under this Restructuring Agreement will

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be made from the legally available revenues of M-S-R or the legally available
revenues of the Anaheim Electric System. In no event will the obligation to pay
under this Restructuring Agreement be considered an obligation against the
general faith and credit or general taxing power of Anaheim or of M-S-R or any
of the members of M-S-R.

20.17    Southern California Public Power Authority. SCPPA is a joint exercise
of powers agency organized under the laws of the State of California, created to
acquire, construct, finance, operate and maintain generation and transmission
projects on behalf of its members. In no event will the obligation to pay under
this Restructuring Agreement be considered an obligation against the general
faith and credit or taxing power of any member of SCPPA.
 
20.18    Farmington and Los Alamos. Farmington (and the Farmington Electric
Utility System) and Los Alamos are governmental entities whose liability is
limited by the New Mexico Tort Claims Act, NMSA 1978, §§ 41-4-1 through 41-4-27,
and any liability or indemnity assumed by Farmington and the Farmington Electric
Utility System or Los Alamos in this Restructuring Agreement will be limited by
the provisions of the New Mexico Tort Claims Act. Notwithstanding any other
provisions of this Restructuring Agreement, the payment for all purchases, fees
or charges made by Farmington and Los Alamos under this Restructuring Agreement
will be made from the legally available revenues of Farmington’s and/or Los
Alamos’s Electric Utility System. In no event will the obligation to pay under
this Restructuring Agreement be considered an obligation against the general
faith and credit or general taxing power of Farmington or Los Alamos.

20.19    Utah Associated Municipal Power Systems. UAMPS is a joint action agency
organized under the laws of the State of Utah, created to acquire, construct,
finance, operate and maintain generation and transmission projects on behalf of
its members. In no event will the obligation to pay under this Restructuring
Agreement be considered an obligation against the general faith and credit or
taxing power of any member of UAMPS.

21. Insurance Coverage for Continuing Obligations

21.1    Occurrence-based Policies. All occurrence-based policies of Operating
Insurance required by the SJPPA will be in effect on the Exit Date (auto
liability, workers’ compensation, general liability, crime and property). The
Exiting Participants will not be eligible for inclusion in occurrence-based
Operating Insurance renewed after the Exit Date.

21.2    Claims-Made Policies.

21.2.1    Except as provided in Section 21.2.2, after the Exit Date the Exiting
Participants will not be eligible for inclusion in the Operating Insurance
policies that are claims-made policies (environmental liability, excess
liability, fiduciary liability and employment practices liability) (each a
“Claims-Made Policy”) and, as of the Exit Date, all obligations of the Operating
Agent to procure Claims-Made Policies for the benefit or protection of the
Exiting Participants will cease.

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21.2.2    If an Exiting Participant desires to purchase continuing or
stand-alone “tail” coverage (collectively, “Continuing Coverage”) under a
Claims-Made Policy that would or may provide coverage for risks insurable under
the insurance coverage form in effect at the time of a covered loss, for which
the Exiting Participant has potential responsibility, the Operating Agent will,
upon timely written notice from the Exiting Participant, work with the Exiting
Participant to provide the Exiting Participant the opportunity to obtain such
Continuing Coverage. Continuing Coverage may be procured through the purchase of
a stand-alone Claims-Made Policy issued to the Exiting Participant or by one or
more endorsements on Claims-Made Policies purchased by the Operating Agent. If
requested in writing by an Exiting Participant, the Operating Agent will provide
an analysis to the Exiting Participant as to coverage options. The availability,
if any, of Continuing Coverage is dependent on market conditions. Upon the
renewal of a Claims-Made Policy under which an Exiting Participant has
Continuing Coverage, the Operating Agent, upon written request, will provide the
Exiting Participant a copy of the policy with all endorsements demonstrating
compliance with this Section 21.2.2; provided, however, that if in the judgment
of the Operating Agent portions of a policy are proprietary, confidential or
otherwise not disclosable, and these portions of the policy do not impact the
premium allocated or relate specifically to the SJGS Plant Site, including
exposures, loss experience, severity and frequency of loss, then the Operating
Agent may redact such portions with a full explanation to the Exiting
Participant of the reason for the redaction.

21.2.3    Each Exiting Participant electing Continuing Coverage under a
Claims-Made Policy procured by the Operating Agent for or on behalf of the
Exiting Participant will pay for the Continuing Coverage during the period in
which the Continuing Coverage is or will be in effect as set forth below.

21.2.3.1    If Continuing Coverage is procured by the purchase of a stand-alone
Claims-Made Policy issued to the Exiting Participant, the Exiting Participant
will pay the associated premium to the Operating Agent.

21.2.3.2    If Continuing Coverage is procured by one or more endorsements on
Claims-Made Policies purchased by the Operating Agent, the Exiting Participant
will pay its allocated share of the premium associated with the Continuing
Coverage. The determination of the allocated share will be based on factors
customarily employed, including the property affected, exposures, loss
experience and severity and frequency of loss.
 
21.2.3.3    With respect to Continuing Coverage procured as provided in Section
21.2.3.2, the Operating Agent will invoice the allocated share of the premium to
the Exiting Participant, with necessary and sufficient supporting information,
and will timely provide all additional supporting information as the Exiting
Participant may reasonably request. If there is a dispute between the Operating
Agent and the Exiting Participant as to the Exiting Participant’s allocable
share of the premium, the Exiting Participant will pay the invoice and the
disputing Parties will retain the services of a mutually agreed independent

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third party (broker or other consultant) with expertise in insurance matters to
resolve the dispute. The fees and expenses of the independent third party will
be shared equally among the disputing Parties. Upon the resolution of the
dispute, an appropriate adjustment will be made to the invoice, if required. Any
disputes under this Section 21.2.3 are not arbitrable under Section 23.

21.2.4    Nothing in this Section 21.2 prevents an Exiting Participant that may
wish to purchase Continuing Coverage from doing so on its own, and at its own
expense, without involvement of the Operating Agent. The Operating Agent will
reasonably cooperate with the Exiting Participant in its efforts to obtain
Continuing Coverage.

21.2.5    In the event an Exiting Participant that has obtained Continuing
Coverage no longer desires to have Continuing Coverage under any Claims-Made
Policy procured by the Operating Agent, the Exiting Participant must give the
Operating Agent at least one hundred and fifty (150) days written notice prior
to the next incepting coverage term of the Claims-Made Policy.

21.3    Other Insurance Coverage Matters. Prior to the Exit Date, if requested
by an Exiting Participant, the Operating Agent will consult with the Exiting
Participant in reference to insurance issues related to the departure of the
Exiting Participants, including insuring physical property on a cash value
basis.

21.4    Obligation to Maintain Policies. The Operating Agent and the Remaining
Participants will continue to obtain and maintain Operating Insurance as
provided for in the SJPPA, and the Operating Agent will, upon written request,
including email, provide within five (5) Business Days an Exiting Participant a
certificate of insurance as proof of continued coverage. For insurance policies
required to be provided by vendors or service providers whose services, in the
reasonable opinion of the Operating Agent, could expose a Party to Liability,
then, where permitted by such policies, such Party will be included as an
additional insured on such policies, including all applicable endorsements.  
 
22.    Assignments

22.1    Assignment. This Restructuring Agreement and the rights, duties and
obligations hereunder may not be assigned or delegated by any Party without the
prior written consent of the other Parties (such consent not to be unreasonably
withheld, conditioned or delayed); provided, however, any Party may without the
consent of any other Party (and without relieving itself from liability
hereunder) but with prior notice to the other Parties:

22.1.1    transfer, sell, pledge, encumber or assign this Restructuring
Agreement as collateral in connection with any financing arrangements;

22.1.2    transfer or assign this Restructuring Agreement to an Affiliate of
such Party so long as (i) such Affiliate’s creditworthiness is equal to or
higher than that of the assigning Party; and (ii) such assignee has agreed in
writing to unconditionally assume

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and be bound by the terms and conditions hereof and all of the transferring
Party’s obligations hereunder; or

22.1.3    transfer or assign this Restructuring Agreement to any entity
succeeding to all or substantially all of the assets of the transferring Party
so long as the assignee’s creditworthiness is equal to or higher than that of
the assigning Party and such assignee has agreed in writing to unconditionally
assume and be bound by the terms and conditions hereof and all of the
transferring Party’s obligations hereunder.

Any (i) mortgagee, trustee or secured party under present or future deeds of
trust, mortgages, indentures or security agreements of any of the Parties and
any successor or assign thereof; (ii) receiver, referee, or trustee in
bankruptcy or reorganization of any of the Parties, and any successor by action
of law or otherwise; and (iii) purchaser, transferee or assignee or any thereof
may, without need for the prior consent of the other Parties and subject to the
provisions of Section 22.2, succeed to and acquire all the rights, titles and
interests of such Party in this Restructuring Agreement, and upon such
succession or acquisition, will assume all of the obligations of such Party in
this Restructuring Agreement arising from and after the date of the succession
and may take over possession of or foreclose upon said property, rights, titles
and interests of such Party.

22.2    Assignee Responsibility. Any (i) mortgagee, trustee or secured party;
(ii) receiver, referee or trustee appointed pursuant to the provisions of any
present or future mortgage, deed of trust, indenture or security agreement
creating a lien upon or encumbering the rights, titles or interests of any Party
in, to and under this Restructuring Agreement and any successor thereof by
action of law or otherwise; and (iii) purchaser, transferee or assignee of any
thereof, will not be obligated to pay any monies accruing on account of any of
the obligations or duties of such Party under this Restructuring Agreement
incurred prior to the taking of possession, the effectiveness of transfer, or
the initiation of foreclosure or other remedial proceedings by such mortgagee,
trustee or secured party.

22.3    Parties not Relieved of Obligations. No Party will be relieved of any of
its obligations and duties to the other Parties by a transfer or assignment
under this Section 22 without the express prior written consent of the remaining
Parties, which consent will not be unreasonably withheld, conditioned or
delayed.

23.    Dispute Resolution and Default

23.1    Amicable Resolution. If a dispute between or among any of the Parties
should arise under this Restructuring Agreement, or in relation to the rights or
obligations of the Parties under this Restructuring Agreement, the Parties will
first seek to resolve the dispute as set forth in this Section 23.1.

23.1.1    The dispute resolution process will be initiated by the delivery of a
written notice by a Party (“Noticing Party”) of the dispute (“Notice of
Dispute”) to the Party with which a dispute is claimed. The Notice of Dispute
will specify the existence, nature and extent of the dispute. Copies of the
Notice of Dispute will also be served on all other

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Parties. The Notice of Dispute will specifically state the sums allegedly due,
any non-monetary obligation allegedly not performed, or both if applicable.
     
23.1.2    Within fifteen (15) Business Days of receipt of the Notice of Dispute,
the Party alleged not to be performing will (i) pay any undisputed amount to the
Party entitled to such payment, and deposit any disputed amount into escrow in
accordance with an escrow agreement consistent with this Section 23; and (ii)
commence performance of any disputed non-monetary obligation, but in either case
may do so under protest (the “Protest”).

23.1.2.1     The Protest will be in writing, will accompany the disputed payment
into escrow or precede the commencement of performance of the disputed
non-monetary obligation, and will specify the basis of the Protest. Copies of
the Protest will be served by the protesting Party (“Protesting Party”) on all
other Parties.

23.1.2.2     The escrow agreement will (i) provide that amounts deposited into
escrow will be held in escrow until the Noticing Party and the Protesting Party
mutually direct otherwise or until an award of arbitrators directs otherwise;
(ii) direct the escrow agent to deposit the escrowed amounts into an
interest-bearing account with appropriate liquidity considering the nature and
likely duration of the dispute; and (iii) provide that fees for establishing the
escrow be paid by the Protesting Party and that fees for other services of the
escrow agent may be deducted periodically from the funds held in escrow or as
otherwise agreed by the Noticing Party, Protesting Party and escrow agent. The
escrow agreement may contain other appropriate terms customarily required in
such agreements by escrow agents.

23.1.3    Within fifteen (15) Business Days of the giving of a Notice of Dispute
under Section 23.1.1, or within ten (10) Business Days after the service of a
Protest under Section 23.1.2, executive representatives of the Parties involved
in the dispute with authority to resolve the dispute will meet at a mutually
acceptable time and place to attempt to negotiate a timely and amicable
resolution of the dispute. If an executive of a Party involved in the dispute
intends to be accompanied by counsel, the other Party or Parties involved in the
dispute must be given at least five (5) Business Days’ written notice of such
intent and such other Parties may also be accompanied by counsel. All
negotiations will be confidential and will be treated as compromise and
settlement negotiations under New Mexico law. If the executive representatives
of the Parties are unable to resolve the dispute within sixty (60) days of the
Notice of Dispute (or such other period as they may agree to), any Party
involved in the dispute may call for submission of the dispute to arbitration,
which call will be binding upon all other affected Parties.
  
23.2    Call for Arbitration. The Party calling for arbitration must give
written notice to all other Parties (“Arbitration Notice”), setting forth in the
Arbitration Notice in adequate detail the entity against whom relief is sought,
the nature of the dispute, the amount, if any, involved in

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such dispute, and the remedy sought by such arbitration proceedings, which may
include monetary, equitable and declaratory relief. Within twenty (20) Business
Days after receipt of the Arbitration Notice, any other Party may submit its own
statement of the matter at issue and set forth in adequate detail additional
related matters or issues to be arbitrated, with copies of such notice provided
to all other Parties. Thereafter, the Party calling for arbitration will have
ten (10) Business Days in which to submit a written rebuttal statement, copies
of which must be provided to all other Parties.

23.3    Selection of Arbitrators.
  
23.3.1    The Parties involved in the arbitration will seek to agree upon a
panel of three (3) neutral arbitrators as follows. Within ten (10) days after
service of the written rebuttal statement, the Parties representing each side of
the dispute will provide to the Parties representing the other side of the
dispute a list of up to five (5) suggested arbitrators having the qualifications
required by Section 23.3.2 and a summary of each such suggested arbitrator’s
experience and qualifications. Within five (5) Business Days thereafter, the
Parties involved in the arbitration will meet and confer by telephone or in
person to seek to agree upon a panel of three (3) neutral arbitrators from the
lists that have been exchanged. If such agreement is not reached as the result
of such meeting, the Parties representing each side of the dispute will provide
a second list of suggested arbitrators to one another, and the Parties will meet
and confer again within five (5) Business Days thereafter to attempt to reach
agreement upon a panel of three (3) neutral arbitrators. If such agreement on
arbitrators is reached, the Parties will proceed to arbitration as further set
forth in this Section 23.
 
23.3.2    If the Parties involved in the arbitration are not able to agree upon
a complete panel of three (3) neutral arbitrators, such Parties will select the
arbitrators upon which agreement has not been reached as follows. The Parties
will request from the American Arbitration Association (“AAA”) (or similar
organization as the arbitrating Parties agree upon) (“Arbitration Organization”)
a list of seven (7) arbitrators with names and biographical sketches and
specific qualifications relating to the case to be heard. The proposed
arbitrators must be retired judges or other attorneys with experience in complex
business disputes. The Parties involved in the arbitration will each advise the
Arbitration Organization of its order of preference of such arbitrators by
numbering from one (1) to seven (7) each name on the list (with one (1) being
the most preferred arbitrator) and submitting the numbered lists in writing to
the Arbitration Organization. Depending upon the number of arbitrators to be
selected, the name or names with the lowest combined numbers will be appointed
as the remaining neutral arbitrator(s). In the event more than one name on the
list has the same lowest combined score, the tie will be broken by lot. Should
the Parties agree that one list of seven (7) is insufficient to obtain a total
of three (3) neutral arbitrators with the required qualifications, an additional
list of arbitrators may be requested from the Arbitration Organization.

23.3.3    No person will be eligible for appointment as an arbitrator who is an
officer or employee of any of the Parties to the dispute or is otherwise
interested in the matter to be arbitrated.

23.4    Arbitration Procedures. Except as otherwise provided in this Section 23
or otherwise agreed by the Parties to the dispute, the Parties will utilize in
the arbitration the AAA’s Commercial Arbitration Rules and Mediation Procedures
(including Procedures for Large, Complex Commercial Disputes) or similar rules
and practices of another Arbitration Organization from time-to-time in force,
except that if such rules and practices, as modified herein, conflict with New
Mexico Rules of Civil Procedure or any other provisions of New Mexico law then
in force that are specifically applicable to arbitration proceedings, such New
Mexico laws will govern. The arbitration will be conducted at a location in
Albuquerque, New Mexico, unless otherwise agreed by the affected Parties.

23.5    Decision of Arbitrators. The arbitrators will hear evidence submitted by
the respective Parties or group or groups of Parties and may call for additional
information, which additional information must be furnished by the Party having
such information. The decision of a majority of the arbitrators (“Arbitration
Award”) must be rendered no later than twenty (20) days after the conclusion of
the arbitration hearing and will be binding upon all the Parties and must be
based on the provisions of this Restructuring Agreement and applicable New
Mexico or federal Law. The Arbitration Award must be in writing and must explain
in reasonable detail the basis of the award.

23.6    Enforcement of Arbitration Award. This agreement to arbitrate is
specifically enforceable, and the Arbitration Award will be final and binding
upon the Parties to the extent provided by the laws of the State of New Mexico.
Any Arbitration Award may be filed with a court of competent jurisdiction in New
Mexico and upon motion of a Party the court shall enter a judgment in conformity
therewith as provided by the New Mexico Uniform Arbitration Act. Said judgment
shall be enforceable in other States and Territories of the United States under
the Full Faith and Credit provisions of the United States Constitution and other
Laws.

23.7    Fees and Expenses. The non-prevailing Party will be responsible for
reimbursing the prevailing Party for the fees and expenses of the arbitrators,
unless the Arbitration Award specifies some other apportionment of such fees and
expenses. All other expenses and costs of the arbitration, including attorney
fees and expert witness fees, will be borne by the Party incurring the same.

23.8    Interest and Penalty Interest. The arbitrators will award the amount of
interest actually earned during deposit of the disputed amounts in the escrow
account (“Escrow Interest”) to the Party who prevails in the arbitration. The
arbitrators will further calculate interest on the monetary portion of the
Arbitration Award at the Wall Street Journal Prime Rate (or any successor to
that rate) plus five percent (5%). The arbitrators will subtract Escrow Interest
from the interest calculated pursuant to the immediately preceding sentence and
also award the result of that calculation (“Penalty Interest”) to the prevailing
Party. The arbitrators will have no discretion to refuse to award either Escrow
Interest or Penalty Interest.

23.9    Prompt Resolution. The Parties acknowledge the importance of prompt
dispute resolution and will cooperate toward the rendering of an Arbitration
Award no later than two hundred and seventy (270) days after the Arbitration
Notice is served.

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23.10    Default. A default under this Restructuring Agreement (“Default”) will
occur only if a Party (i) has received a Notice of Dispute and fails to follow
the procedures in Section 23.1.2, or (ii) does not comply with all of the terms
and conditions of an Arbitration Award against it (unless the effect of such
Arbitration Award is stayed).

23.11    Consequences of Default. Any Party in Default under this Restructuring
Agreement will lose its rights under this Restructuring Agreement, the
Decommissioning Agreement (if the Decommissioning Agreement is in effect), and
the Mine Reclamation Agreement so long as the Party remains in Default. This
consequence of Default is in addition to and cumulative of any other remedy to
which the Party in Default may be subject. If and when the Party in Default
remedies the Default, its rights under such agreements will be restored.

23.12    Legal Remedies. Nothing in this Section 23 will be deemed to prevent a
Party from commencing judicial action: (i) to obtain a provisional remedy to
protect the effectiveness of the arbitration proceeding; (ii) to confirm,
enforce, modify, correct, vacate or challenge an Arbitration Award on grounds
provided for in the New Mexico Uniform Arbitration Act; (iii) to obtain relief
in instances where the arbitrators are unable or unwilling to act within the
time provided for in Section 23.9; or (iv) where, as the result of the
unreasonable or dilatory conduct of another Party, a Party is not able to obtain
a timely valid and enforceable Arbitration Award.

24.    Audit Rights; Related Disputes

24.1    Right of Audit. The Operating Agent will maintain complete and accurate
records of all expenses and transactions for which a Party may have cost
responsibility under this Restructuring Agreement. Such records will be
maintained from the date an expense is billed to a Party hereunder for a period
of the longer of: (i) the expiration of the statute of limitations for actions
based on contract; or (ii) the date the records may be destroyed under the
Operating Agent’s document retention policy. Any Party (an “Initiating Party”)
may, upon reasonable advance written notice to the Operating Agent, conduct an
audit of all records, invoices, costs, expenses or Liabilities charged to the
Initiating Party or for which the Initiating Party has or may have cost
responsibility. Parties desiring to perform an audit will cooperate with one
another so as to minimize the number of audits and any undue burden upon the
Operating Agent. Each such audit will be carried out by an auditor of the
Initiating Party’s choosing and at the expense of the Initiating Party, except
as provided in Section 24.3. The Operating Agent will cooperate with the
Initiating Party and the Initiating Party’s auditor and will make available its
relevant business records at reasonable times and places, upon reasonable
advance notice. A copy of the audit report will be provided to all Parties by
the Initiating Party within fifteen (15) days of receipt of the audit report.

24.2    Dispute Resolution. If any Party disagrees with an audit finding from an
audit conducted under Section 24.1, the Party may within fifteen (15) Business
Days of the receipt of the audit report request in writing that the audit be
reviewed by providing such request to all of the Parties. After any such
request, the affected Parties will review the expenditure and will endeavor to
agree upon whether an over- or under-billing occurred. If, after the review, the
affected Parties determine that the expenditure was over- or under-billed, an
adjustment to the

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billing that is the subject of the audit finding will be made to eliminate the
over- or under-billing and an adjusted bill will be sent as provided for in
Section 24.3. Each Party that receives a payment as a result of under- or
over-billing will reimburse the Initiating Party as provided for in Section
24.3. If within thirty (30) Business Days of the date of the mailing of the
written request for review the affected Parties are unable to agree in writing
on a modification of the expenditure to eliminate the over- or under-billing,
the matter will be submitted to dispute resolution pursuant to Section 23.

24.3    Adjusted Billing Procedures. If as the result of an audit and any
related dispute resolution procedures under Section 23.1 or Section 23.2 it is
determined that there was an under- or over-billing, the Operating Agent will
issue invoices to correct the under- or over-billing with interest at the Wall
Street Journal Prime Rate (or any successor to that rate). Interest will be
calculated from the due date for payments on the prior invoices that included
the under-or over-billed amounts to the date of the revised billings. The owing
Party will pay any amounts owed on the corrected invoices within twenty (20)
Business Days of receipt of the revised billing reflecting the result of the
audit report. Each Party (other than an Initiating Party) that receives a
payment or credit as a result of an audit report will reimburse the Initiating
Party for the cost of the audit based on the amount received by such Party as a
percentage of the total amount of payments and credits received by Parties;
provided, that if the amount received by a Party is less than the lower of (i)
$5,000 or (ii) ten percent (10%) of the amount of the disputed billing, no
reimbursement for the audit costs will be required.

24.4    Effectiveness. The provisions of this Section 24 will become effective
as of the Exit Date. Matters requiring audit arising before the Exit Date will
be addressed in a manner consistent with the audit provisions of the SJPPA.

25.    Miscellaneous Provisions

25.1    Governing Law. This Restructuring Agreement is made under and will be
governed by New Mexico law, without regard to conflicts of law or choice of law
principles that would require the application of the laws of a different
jurisdiction.

25.2    Venue. Venue with respect to any judicial proceeding arising out of or
relating to this Restructuring Agreement will lie exclusively in the state or
federal courts in Albuquerque, New Mexico, and the Parties irrevocably consent
and submit to the exclusive jurisdiction of such courts for such purpose and
irrevocably waive the defense of an inconvenient forum to the maintenance of any
such action or proceeding. Service of process may be made in any manner
recognized by such courts. A final judgment of the state or federal court will
be enforceable in other states under applicable Law.

25.3    Manner of Giving of Notice. Any notice, demand, protest or request
provided for in this Restructuring Agreement, or served, given or made in
connection with it, will be deemed properly served, given or made: (i) when
delivered personally or by prepaid overnight courier, with a record of receipt;
(ii) on the fourth day if mailed by certified mail, return receipt requested; or
(iii) on the day of transmission, if sent by facsimile or electronic mail during
regular business hours or the day after transmission, if sent after regular
business hours (provided, however, that such

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facsimile or electronic mail will be followed on the same day or next Business
Day with the sending of a duplicate notice, demand or request by a nationally
recognized prepaid overnight courier with record of receipt), to the persons
specified below:

25.3.1
Public Service Company of New Mexico

Attn: Vice President, PNM Generation
2401 Aztec N.E., Bldg. A
Albuquerque, NM 87107

with a copy to:

Public Service Company of New Mexico
c/o Secretary
414 Silver Ave. S.W.
Albuquerque, NM 87102

25.3.2
Tucson Electric Power Company

88 E. Broadway Blvd.
MS HQE901
Tucson, AZ 85701
Attn: Corporate Secretary

25.3.3
City of Farmington

c/o City Clerk
800 Municipal Drive
Farmington, NM 87401

with a copy to:

Farmington Electric Utility System
Electric Utility Director
101 North Browning Parkway
Farmington, NM 87401

25.3.4
M-S-R Public Power Agency

c/o General Manager
1231 11th Street
Modesto, CA 95354

25.3.5
Southern California Public Power Authority

c/o Executive Director
1160 Nicole Court
Glendora, CA 91740

25.3.6
City of Anaheim

c/o City Clerk

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200 South Anaheim Boulevard
Anaheim, CA 92805

with a copy to:

Public Utilities General Manager
201 South Anaheim Boulevard
Suite 1101
Anaheim, CA 92805

25.3.7    Incorporated County of
Los Alamos, New Mexico
c/o County Clerk
1000 Central Ave.
Suite 240
Los Alamos, NM 87544

with a copy to:

Incorporated County of
Los Alamos, New Mexico
c/o Utilities Manager
1000 Central Ave.
Suite 130
Los Alamos, NM 87544

25.3.8
Utah Associated Municipal Power Systems

c/o General Manager
155 North 400 West
Suite 480
Salt Lake City, UT 84103

25.3.9
Tri-State Generation and Transmission

Association, Inc.
c/o Chief Executive Officer
1100 West 116th Avenue
Westminster, CO 80234
Or P. O. Box 33695
Denver, CO 80233

For purposes of overnight courier service, Tri-State’s address will be:

Tri-State Generation and Transmission Association, Inc.
c/o Chief Executive Officer
3761 Eureka Way
Frederick, CO 80516

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25.3.10
PNMR Development and Management Corporation

c/o Corporate Secretary
PNM Resources
Corporate Headquarters
414 Silver Ave. SW
Albuquerque, NM 87158-1245                    

A Party may, at any time or from time-to-time, by written notice to the other
Parties, change the designation or address of the person so specified as the one
to receive notices pursuant to this Restructuring Agreement.

25.4    Other Documents. Each Party agrees, upon request of another Party, to
make, execute and deliver any and all documents and instruments reasonably
required to carry into effect the terms of this Restructuring Agreement;
provided, that such documents and instruments will not increase or expand the
obligations of a Party hereunder.

25.5    Incorporation of Exhibits. All exhibits attached to, or referred to in,
this Restructuring Agreement are incorporated in this Restructuring Agreement by
this reference.

25.6    Captions and Headings. The captions and headings appearing in this
Restructuring Agreement are inserted merely to facilitate reference and will
have no bearing upon the interpretation of the provisions hereof.

25.7    Prior Obligations Unaffected. Except as otherwise provided herein,
nothing in this Restructuring Agreement will be deemed to relieve the Parties of
their obligations in effect prior to the Effective Date and such obligations
will continue in full force and effect until satisfied or as otherwise mutually
agreed.

25.8    Amendment and Modification. Except as otherwise provided herein, this
Restructuring Agreement may be amended, modified or supplemented only by written
instrument executed by all of the Parties with the same formality as this
Restructuring Agreement.

25.9    Waivers of Compliance. Except as otherwise provided herein, any failure
by a Party to comply with any obligation, covenant, agreement or condition of
this Restructuring Agreement may be waived by the Party entitled to the benefits
thereof only by written instrument signed by the Party granting such waiver, but
such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition will not operate as a waiver of, or estoppel
with respect to, any earlier or subsequent or other failure.

25.10    Uncontrollable Forces. No Party will be considered to be in default in
the performance of any of its obligations hereunder (other than obligations of a
Party to pay costs and expenses) if failure of performance is due to
Uncontrollable Forces. The term “Uncontrollable Forces” means any cause beyond
the control of the Party affected, including failure of facilities, flood,
earthquake, storm, fire, lightning, epidemic or pandemic, war, riot,

50    Restructuring Agreement 7/31/2015

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EXECUTION VERSION

civil disturbance, labor dispute, sabotage or terrorism, restraint by court
order or public authority, or failure to obtain approval from a necessary
Governmental Authority which by exercise of due diligence and foresight such
Party could not reasonably have been expected to avoid and which by exercise of
due diligence it is unable to overcome. Nothing contained herein requires a
Party to settle any strike or labor dispute in which it may be involved. Any
Party rendered unable to fulfill any obligation by reason of Uncontrollable
Forces will promptly provide notice to the other Parties and will exercise due
diligence to remove such inability with all reasonable dispatch.

25.11    No Interpretation against Drafter. This Restructuring Agreement has
been drafted with full participation by all of the Parties and their counsel of
choice and no provision hereof will be construed against any Party on the ground
that such Party or its counsel was the author of such provision. All of the
provisions of this Restructuring Agreement will be construed in a reasonable
manner to give effect to the intentions of the Parties in executing this
Restructuring Agreement.

25.12    No Third Party Beneficiaries. The terms and provisions of this
Restructuring Agreement are intended solely for the benefit of the Parties and
their respective successors and permitted assigns, and it is not the intention
of the Parties to confer third-party beneficiary rights upon any other person.

25.13    Compliance with Law. The Parties will comply with all applicable Laws
in the performance of their respective obligations under this Restructuring
Agreement.

25.14    Independent Covenants. The covenants and obligations contained in this
Restructuring Agreement are independent covenants, not dependent covenants, and
the obligation of a Party to perform all of the obligations and covenants to be
by it kept and performed is not conditioned on the performance by another Party
of all of the covenants and obligations to be kept and performed by it. Nothing
in this Section 25.14 affects the rights of the Parties under the dispute
resolution and default provisions of Section 23.

25.15    Invalid Provisions. If any provision of this Restructuring Agreement is
held to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any Party under this Restructuring Agreement
will not be materially and adversely affected thereby, such provision will be
fully severable, this Restructuring Agreement will be construed and enforced as
if such illegal, invalid or unenforceable provision had never comprised a part
hereof, the remaining provisions of this Restructuring Agreement will remain in
full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom, and the Parties will
negotiate in good faith to attempt to agree upon a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.

25.16    Parties’ Cost Responsibilities. Each Party will be solely responsible
for its own costs and expenses, including fees and costs of counsel, incurred in
connection with the negotiation of this Restructuring Agreement and with any
actions associated with the implementation of this Restructuring Agreement,
including obtaining Regulatory Approvals.

51    Restructuring Agreement 7/31/2015

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EXECUTION VERSION

25.17    Entire Agreement. This Restructuring Agreement, together with the
schedules and exhibits hereto, supersedes all prior negotiations, agreements and
understandings between the Parties with respect to the covenants and obligations
agreed upon in this Restructuring Agreement.
25.18    Survival of Certain Provisions. Termination of this Restructuring
Agreement will not relieve a Party of any obligation or liability incurred by
such Party before and existing as of the Termination Date, or any obligations
resulting from such Party’s Default hereunder.

25.19    No Admission of Liability. The terms of this Restructuring Agreement
are the product of compromise between and among the Parties. Neither any conduct
nor statements made in its negotiation, nor entry by the Parties into it, will
constitute evidence of, or an admission of, liability; provided, however,
nothing in this Section 25.19 will be construed or interpreted to excuse any
Party from, or be used by any Party to argue against, that Party’s performance
of any of its obligations under this Restructuring Agreement.

25.20    Other Rights. Subject to Sections 20.14, 23.1.3 and 23.12, the rights
and remedies provided in this Restructuring Agreement will be in addition to any
other rights and remedies the non-defaulting Parties have in law or equity.

25.21    Execution in Counterparts. This Restructuring Agreement may be executed
in any number of counterparts, and each executed counterpart will have the same
force and effect as an original instrument as if all the Parties to the
aggregated counterparts had signed the same instrument. Any signature page of
this Restructuring Agreement may be detached from any counterpart thereof
without impairing the legal effect of any signatures thereon and may be attached
to any other counterpart of this Restructuring Agreement identical in form
thereto but having attached to it one or more additional pages. Electronic or
pdf signatures will have the same effect as an original signature.

IN WITNESS WHEREOF, the Parties have caused this Restructuring Agreement to be
executed on their behalf and the signatories hereto represent that they have
been duly authorized to enter into this Restructuring Agreement on behalf of the
Party for whom they sign.

[Signatures on succeeding pages]

52    Restructuring Agreement 7/31/2015

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EXECUTION VERSION

PUBLIC SERVICE COMPANY OF NEW MEXICO

By: _/s/ Chris M. Olson______________
Its: ____Vice President - Generation_____
Date: __June 30, 2015_______________

TUCSON ELECTRIC POWER COMPANY

By: _______________________________
Its: _______________________________
Date: _____________________________

THE CITY OF FARMINGTON, NEW MEXICO

By: _______________________________
Its: _______________________________
Date: _____________________________

M-S-R PUBLIC POWER AGENCY

By: _______________________________
Its: _______________________________
Date: _____________________________

THE INCORPORATED COUNTY OF LOS ALAMOS, NEW MEXICO

By: ________________________________
Its: ________________________________
Date: ______________________________

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY

By: _______________________________
Its: _______________________________
Date: _____________________________

CITY OF ANAHEIM

By: _______________________________
Its: _______________________________
Date: _____________________________

54    Restructuring Agreement 7/31/2015

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EXECUTION VERSION

PUBLIC SERVICE COMPANY OF NEW MEXICO

By: _______________________________
Its: _______________________________
Date: _____________________________

TUCSON ELECTRIC POWER COMPANY

By: _/s/_Mark Mansfield_ _____________
Its: ___Vice President, Energy Resources__
Date: _______7/1/15_____________

THE CITY OF FARMINGTON, NEW MEXICO

By: _______________________________
Its: _______________________________
Date: _____________________________

M-S-R PUBLIC POWER AGENCY

By: _______________________________
Its: _______________________________
Date: _____________________________

THE INCORPORATED COUNTY OF LOS ALAMOS, NEW MEXICO

By: ________________________________
Its: ________________________________
Date: ______________________________

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY

By: _______________________________
Its: _______________________________
Date: _____________________________

CITY OF ANAHEIM

By: _______________________________
Its: _______________________________
Date: _____________________________

54    Restructuring Agreement 7/31/2015

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EXECUTION VERSION

PUBLIC SERVICE COMPANY OF NEW MEXICO

By: _______________________________
Its: _______________________________
Date: _____________________________

TUCSON ELECTRIC POWER COMPANY

By: _______________________________
Its: _______________________________
Date: _____________________________

THE CITY OF FARMINGTON, NEW MEXICO

By: _/s/_Robert Mayes________________
Its: __City Manager__________________
Date: _______7/1/15_________________

M-S-R PUBLIC POWER AGENCY

By: _______________________________
Its: _______________________________
Date: _____________________________

THE INCORPORATED COUNTY OF LOS ALAMOS, NEW MEXICO

By: ________________________________
Its: ________________________________
Date: ______________________________

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY

By: _______________________________
Its: _______________________________
Date: _____________________________

CITY OF ANAHEIM

By: _______________________________
Its: _______________________________
Date: _____________________________

54    Restructuring Agreement 7/31/2015

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EXECUTION VERSION

PUBLIC SERVICE COMPANY OF NEW MEXICO

By: _______________________________
Its: _______________________________
Date: _____________________________

TUCSON ELECTRIC POWER COMPANY

By: _______________________________
Its: _______________________________
Date: _____________________________

THE CITY OF FARMINGTON, NEW MEXICO

By: _______________________________
Its: _______________________________
Date: _____________________________

M-S-R PUBLIC POWER AGENCY

By: _ /s/_Martin Hopper_____________
Its: __    General Manager______________
Date: _7-27-15_________________

THE INCORPORATED COUNTY OF LOS ALAMOS, NEW MEXICO

By: ________________________________
Its: ________________________________
Date: ______________________________

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY

By: _______________________________
Its: _______________________________
Date: _____________________________

CITY OF ANAHEIM

By: _______________________________
Its: _______________________________
Date: _____________________________

54    Restructuring Agreement 7/31/2015

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EXECUTION VERSION

PUBLIC SERVICE COMPANY OF NEW MEXICO

By: _______________________________
Its: _______________________________
Date: _____________________________

TUCSON ELECTRIC POWER COMPANY

By: _______________________________
Its: _______________________________
Date: _____________________________

THE CITY OF FARMINGTON, NEW MEXICO

By: _______________________________
Its: _______________________________
Date: _____________________________

M-S-R PUBLIC POWER AGENCY

By: _______________________________
Its: _______________________________
Date: _____________________________

THE INCORPORATED COUNTY OF LOS ALAMOS, NEW MEXICO

By: _    /s/ Kristin Henderson____________
Its: _    Council Chair_________________
Date: _July 28, 2015__________________

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY

By: _______________________________
Its: _______________________________
Date: _____________________________

CITY OF ANAHEIM

By: _______________________________
Its: _______________________________
Date: _____________________________

54    Restructuring Agreement 7/31/2015

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EXECUTION VERSION

PUBLIC SERVICE COMPANY OF NEW MEXICO

By: _______________________________
Its: _______________________________
Date: _____________________________

TUCSON ELECTRIC POWER COMPANY

By: _______________________________
Its: _______________________________
Date: _____________________________

THE CITY OF FARMINGTON, NEW MEXICO

By: _______________________________
Its: _______________________________
Date: _____________________________

M-S-R PUBLIC POWER AGENCY

By: _______________________________
Its: _______________________________
Date: _____________________________

THE INCORPORATED COUNTY OF LOS ALAMOS, NEW MEXICO

By: ________________________________
Its: ________________________________
Date: ______________________________

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY

By: _/s/ Fred Mason__________________
Its: ___ President____________________
Date: _ 7- 16-2015___________________

CITY OF ANAHEIM

By: _______________________________
Its: _______________________________
Date: _____________________________

54    Restructuring Agreement 7/31/2015

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CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT                
CIVIL CODE § 1189

State of California                )

County of ____Los Angeles___________________)

On __July 16, 2015_________before me, _________Salpi Ortiz, a notary
public________________ ,            Date                    Here Insert Name and
Title of the Officer    

personally appeared _______Fred Mason___________________________________
Name(s) of Signer(s)
____________________________________________________________________________________
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature_/s/Salpi Ortiz_________    
Signature of Notary Public
Place Notary Seal Above
-----------------------------------------------------------------OPTIONAL----------------------------------------------------------
Though this section is optional, completing this information can deter
alteration of the document or fraudulent reattachment of this form to an
unintended document.

Description of Attached Document
Title or Type of Document:_________________________ Document Date:
_______________
Number of Pages: _______ Signer(s) Other Than Named Above:
______________________________

Capacity(ies) Claimed by Signer(s)
□Signer's Name:_____________________

□Signer's Name:_____________________

□Corporate Officer ___ Title(s):_________

□Corporate Officer ___ Title(s):_________

□Partner -     □Limited    □General

□Partner -     □Limited    □General

□Individual    □Attorney in Fact

□Individual    □Attorney in Fact

□Trustee     □Guardian or Conservator

□Trustee     □Guardian or Conservator

□Other: ____________________________

□Other: ____________________________

Signer Is Representing: _______________

Signer Is Representing: _______________

__________________________________

__________________________________

©2013 National Notary Association ·www.NatlonalNotary.org • 1-800-US NOTARY
(1-800-876-6827) Item #5907

`

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

EXECUTION VERSION

PUBLIC SERVICE COMPANY OF NEW MEXICO

By: _______________________________
Its: _______________________________
Date: _____________________________

TUCSON ELECTRIC POWER COMPANY

By: _______________________________
Its: _______________________________
Date: _____________________________

THE CITY OF FARMINGTON, NEW MEXICO

By: _______________________________
Its: _______________________________
Date: _____________________________

M-S-R PUBLIC POWER AGENCY

By: _______________________________
Its: _______________________________
Date: _____________________________

THE INCORPORATED COUNTY OF LOS ALAMOS, NEW MEXICO

By: ________________________________
Its: ________________________________
Date: ______________________________

SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY

By: _______________________________
Its: _______________________________
Date: _____________________________

CITY OF ANAHEIM
APPROVED AS TO FORM:
MICHAEL R.W. HOUSTON, CITY ATTORNEY
By: __/s/_Dukku Lee_______________    BY _________/s/ Alison M. Kott 7-27-15___
Dukku Lee                     Alison M. Kott, Assistant City Attorney
Public Utilities General Manager
Date: July 27, 2015

     54    Restructuring Agreement 7/31/2015

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EXECUTION VERSION

UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS

By: __/s/ Douglas Hunter_______________
Its: ___ General Manager______________
Date: _ July 31, 2015_________________

TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, INC.

By: _______________________________
Its: _______________________________
Date: _____________________________

PNMR DEVELOPMENT AND MANAGEMENT CORPORATION

By: __________________________________
Its: __________________________________
Date: ________________________________

    55    Restructuring Agreement 7/31/2015

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EXECUTION VERSION

UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS

By: _______________________________
Its: _______________________________
Date: _____________________________

TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, INC.

By: __/s/_Micheal McInnes_____________
Its: ____ CEO________
Date: ___7-22-15_________________

PNMR DEVELOPMENT AND MANAGEMENT CORPORATION

By: __________________________________
Its: __________________________________
Date: ________________________________

    55    Restructuring Agreement 7/31/2015

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EXECUTION VERSION

UTAH ASSOCIATED MUNICIPAL POWER SYSTEMS

By: _______________________________
Its: _______________________________
Date: _____________________________
    
TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, INC.

By: _______________________________
Its: _______________________________
Date: _____________________________

PNMR DEVELOPMENT AND MANAGEMENT CORPORATION

By: _/s/ Elisabeth Eden_________________
Its: _President, Chief Executive Officer and Treasurer
Date: _June 30, 2015___________________

    55    Restructuring Agreement 7/31/2015

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EXECUTION VERSION

EXHIBIT A

Regulatory Approvals

The Parties have identified the following Regulatory Approvals required in
connection with this Restructuring Agreement:

A.
Public Service Company of New Mexico

a.
New Mexico Public Regulation Commission

i.
Approval for abandonment of interests in Unit 2 and Unit 3 pursuant to NMSA
1978, § 62-9-5;

ii.
A certificate of public convenience and necessity pursuant to NMSA 1978, §
62-9-1 to own and operate Unit 4 with a greater ownership interest.

b.
Federal Energy Regulatory Commission

i.
Approvals for the transfer of ownership interests in jurisdictional assets
pursuant to Section 203 of the Federal Power Act.

ii.
Approvals pursuant to Section 205 of the Federal Power Act.

B.
Tucson Electric Power Company

None

C.
City of Farmington, New Mexico

None

D.
M-S-R Public Power Agency

None

E.
County of Los Alamos

None

F.
Southern California Public Power Agency

None

G.
City of Anaheim

None

A-1

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EXECUTION VERSION

H.
Utah Associated Municipal Power Systems

None

I.
Tri-State Generation and Transmission Association, Inc.

None

J.
PNMR Development and Management Corporation

Federal Energy Regulatory Commission
i.
Approvals for the transfer of ownership interests in jurisdictional assets
pursuant to Section 203 of the Federal Power Act.

A-2

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EXECUTION VERSION

EXHIBIT B

Other Project Agreements

The Parties have identified the following Other Project Agreements:

Contract Title
Contract Date
Contract Parties
Amended and Restated San Juan Project Participation Agreement
3/23/2006
San Juan Participants
San Juan Project Designated Representative Agreement and amendment No. 1 thereto
4/29/1994; 10/31/2000
San Juan Participants
San Juan Project Operating Procedure No. 1, Energy Accounting under SJ Project
Participation Agreement
10/11/2000
San Juan Participants
Mine Reclamation and Trust Funds Agreement
6/1/2012
San Juan Participants
San Juan Unit 3 Purchase Agreement
3/25/1993
Century Power and SCPPA
San Juan Unit 3 Purchase Agreement
6/1/1994
Century Power and Tri-State
1st Amendment to the San Juan Unit 3 Purchase Contract
5/20/1993
Century Power Corporation and Southern California Public Power Authority
Amended and Restated Interconnection Agreement
10/7/1992
Tucson Electric Power and Century
Assignment and Amendment to Amended and Restated Interconnection Agreement
3/1/1993
Tucson Electric Power and Century Power Corporation
San Juan Unit 4 Purchase and Participation Agreement and Amendment No. 1
4/26/1991 and 10/27/1999
PNM and Anaheim
Instrument of Sale and Conveyance
8/12/1993
PNM and Anaheim
Insurance Policy endorsements adding Anaheim as named insured on SJ Project
insurance policies
8/12/1993
PNM and Anaheim
Assumption Agreement (Pollution Control Bond Operation, Maintenance and
Insurance Covenants)
8/12/1993
PNM and Anaheim
Interconnection Agreement
4/26/1991
PNM and Anaheim

B-1

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EXECUTION VERSION

Contract Title
Contract Date
Contract Parties
Letters to Anaheim from PNM re: exchange of economy energy under Service
Schedule C of the Interconnection Agreement dated 4/26/1991
5/22/1992; 5/19/2003
PNM and Anaheim
Interconnection Agreement, Service Schedule E, Interruptible Transmission
Service
4/26/1991
PNM and Anaheim
Interconnection Agreement, Service, Schedule F, San Juan Unit 4 Transmission
Service
4/26/1991
PNM and Anaheim
Operating Procedure No. 1 under the Purchase and Participation Agreement
12/27/1995
PNM and Anaheim
Letter to PNM from Anaheim (notice of intent to become CAISO member)
6/20/2002
PNM and Anaheim
Recovery System Water Agreement
8/31/2012
PNM and BHP Navajo Coal Co
Water Use Agreement
Amendment 1
Amendment 2
12/1/2009
10/26/2011
6/1/2013
PNM and BHP Navajo Coal Co
Amended Instrument of Sale and Conveyance (Installment Sale Agreement; pollution
control systems) (PNM grantee, Farmington, grantor)
5/16/1979
PNM and Farmington
Amended Instrument of Sale and Conveyance (Installment Sale Agreement; pollution
control systems) (PNM grantor, Farmington grantee)
5/16/1979
PNM and Farmington
Purchase Agreement and Participation Agreement and amendments 1 and 2 thereto
11/17/1981; 10/31/1984 & 10/27/1999
PNM and Farmington
Instrument of Sale and Conveyance
11/17/1981
PNM and Farmington
Insurance (adding Farmington to Project insurance policies)
11/1981
PNM and Farmington
First Amended and Restated Interconnection Agreement
6/19/2007
PNM and Farmington
First Amended and Restated Construction and Interconnection Agreement
6/19/2007
PNM and Farmington
Operating Procedure No. 1 for Hazard Sharing Obligation, Rev. 2, in conjunction
with Service Schedule E of Interconnection Agreement
5/31/2007
PNM and Farmington
Operating Procedure No. 2 for Blackstart Restoration Plan, Rev. 2, in
conjunction with Interconnection Agreement dated 11/17/1981
5/31/2007
PNM and Farmington

B-2

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EXECUTION VERSION

Contract Title
Contract Date
Contract Parties
Operating Procedure No. 3 for Normal and Emergency Operation of the Hogback
Substation
6/7/2007
PNM and Farmington
Operating Procedure No. 4 for Notification of Maintenance or Testing
6/7/2007
PNM and Farmington
Operating Procedure No. 5 for Clearance and Switching Coordination Agreement
(First Amended and Restated Interconnection Agreement)
6/7/2007
PNM and Farmington
San Juan to Shiprock Transmission System Participation Agreement
5/24/1982
PNM and Farmington
Managed Business Relationship Agreement
7/1/2004
PNM and GE
Water Supply Agreement
7/17/2000
PNM and Jicarilla Apache Tribe
Amended and Restated San Juan Unit 4 Purchase and Participation Agreement and
Amendment No. 1 thereto
12/28/1984 and 10/27/1999
PNM and Los Alamos County
Instrument of Sale and Conveyance
7/1/1985
PNM and Los Alamos County
Los Alamos County added as additional insured on Project insurance policies
7/1/1985
PNM and Los Alamos County
Interconnection Agreement
11/26/1984
PNM and Los Alamos County
Interconnection Agreement, Service Schedule A, Emergency Generation Service
11/26/1984
PNM and Los Alamos County
Interconnection Agreement, Service Schedule B, Economy Energy Interchange
11/26/1984
PNM and Los Alamos County
Interconnection Agreement, Service Schedule C, Hazard Sharing
11/26/1984
PNM and Los Alamos County
Interconnection Agreement, Service Schedule G, Transmission Service through the
Norton 115 KV Switching Station
11/26/1984
PNM and Los Alamos County
Third Revised Service Agreement for Network Integration Transmission Service
7/3/2012
PNM and Los Alamos County
Third Revised Network Operating Agreement
7/3/2012
PNM and Los Alamos County
Agreement of the Operating Committee (cost sharing of telemetry and data
acquisition at SJ Units 3 and 4, SJ Switching Station) (supersedes 2 operating
committee agreements dated 7/11/1985)
7/22/1986
PNM and Los Alamos County
PNM-LAC Operating Procedure Number II, Substitute Energy
5/1/1991
PNM and Los Alamos County

B-3

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

EXECUTION VERSION

Contract Title
Contract Date
Contract Parties
Operating Procedure Number III, Hazard Sharing obligation, Service Schedule C of
Interconnection Agreement (SJ Units 3 and 4)
9/29/1992
PNM and Los Alamos County
PNM-LAC Operating Procedure Number IV, Area Control Accounting (Service Schedule
H) (entitlement to SJ generation)
5/1/1991
PNM and Los Alamos County
Operating Procedure Number V, Determination of Credit for Self Supply of
Reactive Supply & Voltage Control Service from Generation Sources (attachment
refers to SJ Ratio)
9/20/1999
PNM and Los Alamos County
Replacement for the Revised & Restated Operating Procedure No. VI, Energy
Imbalance Accounts & Derivation of Monthly Invoices (SJ Station)
7/26/2002
PNM and Los Alamos County
Letter Agreement between PNM and Incorporated Los Alamos County of Los Alamos
re: defining and agreeing on interruptible schedules (San Juan)
4/16/1998
PNM and Los Alamos County
Interconnection Agreement
9/26/1983
PNM and M-S-R
San Juan Unit 4 Early Purchase and Participation Agreement, as amended
9/26/1983; 12/16/1987; 10/31/1989; 10/27/1999
PNM and M-S-R
Instrument of Sale and Conveyance
12/31/1983
PNM and M-S-R
Certificate of Insurance
12/28/1983
PNM and M-S-R
Interconnection Agreement, Service Schedule A, Economy Energy Interchange (SJ
Units 3 and 4)
9/26/1983
PNM and M-S-R
Amendment No. 1 to Service Schedule A, to the Interconnection Agreement (to
permit seller to offer economy energy at current market price or actual costs to
generate energy)
1/22/1986
PNM and M-S-R
SSB - Economy Energy Brokerage
9/26/1983
PNM and M-S-R
SSC - Power Exchange
9/26/1983
PNM and M-S-R
San Juan Unit 4 Operating Procedure No. 1
4/25/1995
PNM and M-S-R
Coal Feedstock Purchase Agreement
6/21/2013
PNM and San Juan Fuels, LLC
Pre-Closing Coal Inventory Purchase Agreement
6/21/2013
PNM and San Juan Fuels, LLC
Refined Coal Supply Agreement
6/21/2013
PNM and San Juan Fuels, LLC
Surface Use Lease Agreement
1/1/2003
PNM and SJCC
Water Use Agreement - SJCC Pit Dewatering
4/24/1989
PNM and SJCC
Purchase Agreement
5/16/1979
PNM and TEP

B-4

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

EXECUTION VERSION

Contract Title
Contract Date
Contract Parties
Instrument of Sale and Conveyance
5/16/1979
PNM and TEP
Tucson Assignment
5/16/1979
PNM and TEP
Amended Interconnection Agreement
12/19/1997
PNM and TEP
Amendment No. 1 to the Amended Interconnection Agreement
7/13/1998
PNM and TEP
Amendment No. 2 to the Amended Interconnection Agreement
1/1/2003
PNM and TEP
Amendment No. 3 to the 1997 Amended Interconnection Agreement
3/14/2007
PNM and TEP
Amended Interconnection Agreement, Service Schedule A - Reserve Sharing, Exhibit
1 - Revised 2009 (Springerville Unit)
1/1/2009
PNM and TEP
Letter to Tucson Electric from PNM re: agreement for SJGS Curtailment Energy
Sales (1/25/1979 Interconnection Agreement)
4/26/1982
PNM and TEP
Power Exchange and Transmission Agreement (SJGS, SJ 345kV Switchyard), as
amended
4/26/1982; 10/12/2006
PNM and TEP
Network Interface Control Document (power control systems data exchange)
9/23/1985
PNM and TEP
Assignment of Water Contract (delivery of 20,200 acre feet of water per annum)
12/1/2009
PNM and TEP
Fourth Revised Service Agreement for Network Integration Transmission Service
7/31/2006
PNM and Tri-State
Fourth Revised Operating Agreement
7/31/2006
PNM and Tri-State
Schedule of Tri-State Generation and Transmission Assoc Network Resources (SJ
Unit 3)
8/26/2010
PNM and Tri-State
Operating Procedures Agreement, Contract No. TS-00-0020, with Operating
Agreement Nos. 1 through 6 (signed 2/2001) re: adoption of operating procedures
between PNM/Plains subsequent to merger of Plains and Tri-State to provide SCADA
for PNM assets purchased from Plains.
7/1/2000
PNM and Tri-State
Revision 2 to Operating Procedure 06, Real Time Metering Data and Equipment
Status to be Exchanged (SJ Units 3 & 4)
1/31/2007
PNM and Tri-State
Operating Procedure 03, Restoration and Operating Guidelines (San Juan-Ojo 345kV
line)
8/7/2008; 1/30/2010
PNM and Tri-State
Operating Procedure 8 rev 5 - Tri-State Load Within PNM Balancing Authority
1/1/2013
PNM and Tri-State
Operating Procedure 10 - Energy Imbalance accounts & Derivations of Monthly
Invoices, under Specification 4 of the Service Agreement for Network Integration
Transmission Service (SJGS)
2/28/2001
PNM and Tri-State

B-5

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

EXECUTION VERSION

Contract Title
Contract Date
Contract Parties
Op Proc No 11 Defining the Methodology for Determination of a Credit for
Tri-State’s Reactive Supply (attachment re: San Juan)
2/28/2001
PNM and Tri-State
First Revised Op Proc No 12 Rev 1 Reserve Methodology Activation and Scheduling,
under First Revised Reserve Obligation Agreement effective 10/1/04

9/27/2004
PNM and Tri-State
Op Proc No 13 Pyramid Generating Station Deliveries (ALIS), under Second Revised
Service Agreement for Network Integration Transmission Service dated 4/1/2003
(San Juan 345kV)
1/1/2013
PNM and Tri-State
Op Proc No 14 Hourly Check-Out (of key energy schedules and meter data), under
Network Service Agreement (PNM Control Area)
5/1/2004
PNM and Tri-State
Op Proc No 15 After the Fact Check-Out (of key energy schedules and meter data),
under network integration transmission service agreement (NITSA) in PNM Control
Area)
5/1/2004
PNM and Tri-State
Restoration and Operating Guidelines 03-02 Western New Mexico Area 115kV Line
Overloads (San Juan-BA 345kV Line listed as a probable contingency)
5/27/2010
PNM and Tri-State
Instrument of Sale and Conveyance
1/2/1996
Century and Tri-State
Assignment and Assumption Agreement
1/2/1996
Century and Tri-State
Assignment and Assumption of Easement and License
1/2/1996
Century and Tri-State
Assignment and Amendment No. 2 to Amended and Restated Interconnection Agreement
1/2/1996
TEP, Century, SCPPA and Tri-State
Assignment and Amendment No. 2 to Assumption Agreement
1/2/1995
TEP, Century, SCPPA and Tri-State
Delegation Agreement and Acknowledgment
6/18/2007
All San Juan Participants
Various Letter Agreements
1/13/98, 1/29/1999, 1/1/2000, 1/24/2001, 1/1/2002, 2/12/2003, 1/31/2004,
1/7/2005, and 2/13/2006
PNM, TEP, Los Alamos, Farmington, MSR, SCPPA, Anaheim, UAMPS and Tri-State

B-6

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

EXECUTION VERSION

Contract Title
Contract Date
Contract Parties
Contract No. TS-99-0035 for Purchase of Firm Power (SJ 345kV Bus)
7/1/2000
PNM and Tri-State
Restated and Amended San Juan Unit 4 Purchase and Participation Agreement and
Amendment No. 1 thereto
5/27/1993 and 10/27/1999
PNM and UAMPS
Instrument of Sale and Conveyance
6/2/1994
PNM and UAMPS
PNM Certificate adding UAMPS as named insured on all San Juan Project Insurance
Policies
6/2/1994
PNM and UAMPS
Assumption Agreement (assumes PNM's obligations for PCB Operation, Maintenance
and Insurance Covenants under ISAs)
6/2/1994
PNM and UAMPS
Interconnection Agreement
5/27/1993
PNM and UAMPS
Service Schedule A to Interconnection Agreement, Emergency Assistance
5/27/1993
PNM and UAMPS
Service Schedule B, to Interconnection Agreement Banked Energy
5/27/1993
PNM and UAMPS
Service Schedule C to Interconnection Agreement, Short Term Firm Capacity
5/27/1993
PNM and UAMPS
Amendment Number One to Service Schedule C to Interconnection Agreement
11/12/1993
PNM and UAMPS
Service Schedule D to Interconnection Agreement, Interruptible Transmission
Service
5/27/1993
PNM and UAMPS
Amendment Number One to Service Schedule D to Interconnection Agreement
11/12/1993
PNM and UAMPS
Service Schedule E to Interconnection Agreement, San Juan Unit 4 Transmission
Service
5/27/1993
PNM and UAMPS
Amended Number One to Service Schedule E to Interconnection Agreement
7/20/1994
PNM and UAMPS
Operating Procedure Number 1 re: scheduling of UAMPS SJ Unit 4 entitlement
pursuant to Section 12 of the Purchase and Participation Agreement
5/31/1994
PNM and UAMPS
The Further Assurance Agreement (with regard to certain costs and liabilities
arising in future re: contamination of soil or groundwater allocable to PNM
ownership prior to purchase)
5/20/1994
PNM and UAMPS
Non-Exclusive Technology License Agreement
6/21/2013
PNM and VRC Technology, LLC
Easement and License
8/12/1993
PNM, TEP, and Anaheim

B-7

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

EXECUTION VERSION

Contract Title
Contract Date
Contract Parties
Easement and License
11/17/1981
PNM, TEP, and Farmington
Easement and License
7/1/1985
PNM, TEP, and Los Alamos County
Easement and License
12/31/1983
PNM, TEP, and M-S-R
Low Water Weir Lease
7/9/1971
PNM, TEP, and Navajo Tribe of Indians
Environmental Indemnity Agreement
6/21/2013
PNM, TEP, and San Juan Fuels, LLC
License and Access Agreement
6/21/2013
PNM, TEP, and San Juan Fuels, LLC
Underground Coal Sales Agreement;
Amendments 1, 2, 3, 4, 5
8/31/2001; 12/15/2003; 9/15/2004; 5/11/2005; 3/7/2007; 12/21/2007
PNM, TEP, and SJCC
Closing Agreement (Amendment One to Underground Coal Sales Agreement)
12/15/2003
PNM, TEP, and SJCC
Letter Agreement (Reimbursement of taxes and royalties under the Underground
Coal Sales Agreement)
12/15/2003
PNM, TEP, and SJCC
UG-CSA Joint Committee Resolution Number 1 - Post Retirement Medical Benefits
(FAS-106) Settlement Agreement
4/29/2005
PNM, TEP, and SJCC
UG-CSA Joint Committee Resolution Number 8 - Operating Cost Treatment for SJCC
Asset Disposal
1/1/2006
PNM, TEP, and SJCC
UG-CSA Joint Committee Resolution Number 2 - Operating Cost Clarification
11/28/2006
PNM, TEP, and SJCC
UG-CSA Joint Committee Resolution Number 4 - Settlement of 2007 Issues
12/21/2007
PNM, TEP, and SJCC
UG-CSA Joint Committee Resolution Number 5 - Revision of Base Year for Implicit
Price Deflator, Gross Domestic Product
8/10/2009
PNM, TEP, and SJCC
UG-CSA Joint Committee Resolution Number 6 - Accounting Guidance Regarding Labor
and Services to Install Fixed Assets Underground
12/1/2009
PNM, TEP, and SJCC
UG-CSA Joint Committee Resolution Number 7 - Settlement and Future Treatment of
Gatebelt Drive Installation Costs
12/1/2009
PNM, TEP, and SJCC

B-8

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

EXECUTION VERSION

Contract Title
Contract Date
Contract Parties
UG-CSA Joint Committee Resolution Number 9 - Extension of Operating Cost
Definition for Third Party Audit to years 2006-2009
7/30/2010
PNM, TEP, and SJCC
UG-CSA Joint Committee Resolution Number 10 - Costs Arising from Sierra Club's
December 2009 RCRA and SMCRA Notice of Intent Letters and Sierra Club's April 8,
2010 Complaint
7/30/2010
PNM, TEP, and SJCC
Coal Combustion Byproduct Disposal Agreement Closing Agreement
1/1/2008
PNM, TEP, and SJCC
Coal Combustion Byproduct Disposal Agreement
1/1/2008
PNM, TEP, and SJCC
Easement (grant of easement to SJCC) (undated but in file with 3/10/89 Water Use
Agreement)
3/10/1989
PNM, TEP, and SJCC
Refined Coal Facility Agreement
1/1/2012
PNM, TEP, and TCG Global, LLC
Easement and License
6/2/1994
PNM, TEP, and UAMPS
Grant of Authority
8/18/1980
PNM, TEP, and Utah International Inc.
Payment Allocation and Process Agreement Jicarilla Agreement
9/14/2007
PNM; APS; BHP Navajo Coal Company
Letter Agreement
3/28/1996
PNM; BHP Navajo Coal Co; BHP Minerals International, Inc.
Recommendations for San Juan River Operations and Administration for 2013
through 2016
7/2/2012
PNM; BHP; APS; Navajo Nation
Water Supply Agreement
3/2/2007
PNM; Jicarilla Apache Nation; APS; BHP Navajo Coal Company
Installment Sale Agreement (air and water pollution control facilities at San
Juan Generation Station)
11/1/1977
TEP and Farmington
Installment Sale Agreement (air and water pollution control facilities at San
Juan Generation Station)
1/1/1978
TEP and Farmington
Amendment No. 1 to Installment Sale Agreement
5/16/1979
TEP and Farmington
Amendment No. 2 to Installment Sale Agreement
5/16/1979
TEP and Farmington

B-9

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

EXECUTION VERSION

Contract Title
Contract Date
Contract Parties
Agreement (Installment Sale Agreement; pollution control systems facilities to
be acquired, constructed and installed at San Juan Generating Station)
5/16/1979
TEP and Farmington
San Juan Unit No. 4 Sale of Option Agreement
11/29/1982
TEP and M-S-R
Assignment of Option by TEP
11/29/1982
TEP and M-S-R
Instrument of Sale and Conveyance by TEP
11/29/1982
TEP and M-S-R
Title Commitment re: Interest created by Easement and License
5/27/1994
(land)
6/2/1994 (easement)
UAMPS (In favor of)
Fuel and Capital Funding Agreement
09/2014
All Participants
Capacity Option and Funding Agreement
05/2015
PNM, PNMR, PNMR-D, Anaheim and M-S-R

B-10

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

EXECUTION VERSION

EXHIBIT C

Form of Instrument of Sale and Conveyance

[Exiting Participant], a ___________ (“____________”), in consideration of the
mutual covenants and agreements contained in that certain San Juan Project
Restructuring Agreement dated as of ________, 2015 (the “Restructuring
Agreement”), which Restructuring Agreement is incorporated herein by this
reference, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, hereby grants, transfers,
bargains, sells and conveys to [Acquiring Participant], a ____________
(“________”), all of its rights, titles and interests consisting of an undivided
_________% of the Ownership Interest (as defined in the Restructuring Agreement)
previously conveyed to [Exiting Participant] in that certain Instrument of Sale
and Conveyance (the “Original Instrument”) granted by [Grantor] to [Exiting
Participant] dated [___________] and recorded in the Records of the County Clerk
of San Juan County, New Mexico on [__________] in Book ____, Page _____
(“Conveyed Assets”), including all subsequent changes, additions, improvements,
substitutions and accessions to the Conveyed Assets. Capitalized terms used in
this document have the meaning as defined in the Restructuring Agreement unless
specifically defined herein.

1.    This Instrument of Sale and Conveyance is intended to, and does include
all of [Exiting Participant’s] rights, titles and interests in and to all
fixtures which are part of or related to the Conveyed Assets situate upon the
real property described in the Original Instrument, but is not intended to and
does not convey title to the underlying real property described in the Original
Instrument.

2.    [Exiting Participant] represents and warrants to [Acquiring Participant]
and [Acquiring Participant’s] authorized successors, trustees and
representatives that the Conveyed Assets are free from all encumbrances made by
[Exiting Participant] and that [Exiting Participant] shall warrant and defend
the same to [Acquiring Participant] and its authorized successors and assigns
forever against the lawful claims and demands of all persons claiming by,
through or under [Exiting Participant], but against none other. Such
representation and warranty by [Exiting Participant] are subject to the
following disclaimer:

EXCEPT AS OTHERWISE PROVIDED HEREIN: (1) THE CONVEYED ASSETS ARE CONVEYED BY
[EXITING PARTICIPANT] TO [ACQUIRING PARTICIPANT] ON AN “AS IS,” “WHERE IS” AND
“WITH ALL FAULTS” BASIS; (2) [EXITING PARTICIPANT] MAKES NO REPRESENTATION OR
WARRANTY WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT
LIMITATION, ANY REPRESENTATION OR WARRANTY AS TO THE VALUE, QUANTITY, CONDITION,
SALABILITY, OBSOLESCENCE, MERCHANTABILITY, FITNESS OR SUITABILITY FOR USE OR
WORKING ORDER OF, ALL OR ANY PART OF THE CONVEYED ASSETS; AND (3) [EXITING
PARTICIPANT] DOES NOT REPRESENT OR WARRANT THAT THE USE OR OPERATION OF THE
CONVEYED ASSETS WILL NOT VIOLATE OR CONFLICT WITH PATENT, TRADEMARK OR SERVICE
MARK RIGHTS OF ANY THIRD PARTY. [ACQUIRING PARTICIPANT] ACCEPTS THE CONVEYANCE
OF CONVEYED ASSETS IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE
RESTRUCTURING AGREEMENT.

C-1

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

EXECUTION VERSION

3.    NOTWITHSTANDING THE FOREGOING, [Acquiring Participant] shall have the
benefit, in proportion to its interest in the Conveyed Assets, of all
manufacturers’ and vendors’ warranties (to the extent [Exiting Participant] may
have a right or benefit thereof) in connection with the Conveyed Assets.

4.    NOTWITHSTANDING THE FOREGOING, (i) [Exiting Participant] covenants and
warrants that title to the Conveyed Assets is free from all former grants,
sales, taxes, assessments, liens, trusts, mortgages and encumbrances created by
or through [Exiting Participant] through the Exit Date; and (ii) nothing
contained herein shall be construed to relieve [Exiting Participant] from its
duties under the Restructuring Agreement, the Decommissioning Agreement and the
Mine Reclamation Agreement.

5.    [Exiting Participant], by execution and delivery of this Instrument of
Sale and Conveyance, and [Acquiring Participant], by its acceptance hereof,
hereby waive and renounce for themselves, their successors, transferees and
assigns, any and all rights, titles and interests of any kind or nature
whatsoever, legal or equitable, as a tenant in common in the Conveyed Assets, to
partition or equitable accounting.

6.    This Instrument of Sale and Conveyance and the terms and conditions
contained herein shall bind and inure to the benefit of the respective
successors, assigns, trustees and representatives of [Exiting Participant] and
[Acquiring Participant].
    
This Instrument of Sale and Conveyance shall be governed and construed in
accordance with New Mexico law.

IN WITNESS WHEREOF, [Exiting Participant] has caused this Instrument of Sale and
Conveyance to be executed as of the ___ day of ___, 2017.

[Exiting Participant]
By: ________________
Its: ________________

ACKNOWLEDGEMENT

STATE OF ____________    )
) ss.
COUNTY OF __________    )

This instrument was acknowledged before me on ________, 2017 by
___________________, as ___________ of ____________________, a _______________.

________________________________
Notary Public
                            
My Commission Expires: ___________    

C-2

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

EXECUTION VERSION

EXHIBIT D

Form of Opinion of Counsel

The legal opinions of counsel for each of the Parties required by Section 17.3
of the Restructuring Agreement will be to the following effect:
[Addressed to Parties]
Ladies and Gentlemen: [Expand as appropriate to encompass customary
qualifications and limitations and other relevant language]

We have acted as counsel to ________________ [Insert name of the Party on whose
behalf this opinion is provided] in connection with the San Juan Project
Restructuring Agreement among Public Service Company of New Mexico; Tucson
Electric Power Company; The City of Farmington, New Mexico; M-S-R Public Power
Agency; The Incorporated County of Los Alamos, New Mexico; Southern California
Public Power Authority; City of Anaheim; Utah Associated Municipal Power
Systems; Tri-State Generation and Transmission Association, Inc.; and PNMR
Development and Management Corporation, dated as of July 31, 2015
(“Restructuring Agreement”) (each a “Party” and collectively the “Parties”).
Section 17 of the Restructuring Agreement contains certain representations and
warranties of the Parties to one another; and Section 17.3 provides that counsel
for each Party will provide its opinion to each of the other Parties that the
Party is in compliance with the representations and warranties given in Section
17. This opinion of counsel is given in accordance with Section 17.3 of the
Restructuring Agreement.
We are of the opinion that the representations and warranties made by
_________________ [Insert name of the Party on whose behalf this opinion is
provided] pursuant to Section 17 of the Restructuring Agreement are true and
correct in all material respects as of the Execution Date of the Restructuring
Agreement (as that date is defined in the Restructuring Agreement). No facts
have come to our attention, after reasonable inquiry, which would lead us to
believe that the Section 17 representations and warranties of ____________
[Insert name of the Party on whose behalf this opinion is provided] contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make such statements, in the light of the circumstances under which
they are being made, not misleading.

The opinions expressed herein are based only on the laws of the State of
__________ [Insert State] in effect as of the date of this opinion and in all
respects are subject to and may be limited by future legislation, as well as
developing case law. We undertake no duty to advise you of the same.

D-1

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

EXECUTION VERSION

This letter is furnished by us as __________ [Insert Title, e.g., – General
Counsel] to _____________ [Insert name of the Party on whose behalf this opinion
is provided]. No attorney-client relationship has existed or exists between us
and you in connection with the transactions provided for in the Restructuring
Agreement or by virtue of this letter. This letter is delivered to you and is
solely for your benefit and is not to be used, circulated, quoted or otherwise
referred to or relied upon for any other purpose or by any other person.
 

D-2

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

EXECUTION VERSION

EXHIBIT E

Parties’ Pre-Exit Date Ownership Interests in Project Facilities

The Parties’ pre-Exit Date Ownership Interests in the Project are the following:

A.    For Units 1 and 2 and for all equipment and facilities directly related to
Units 1 and 2 only, in accordance with the following percentages:
  
•
PNM: 50 percent

•
TEP: 50 percent

•
M-S-R: 0 percent

•
Farmington: 0 percent

•
Tri-State: 0 percent

•
LAC: 0 percent

•
SCPPA: 0 percent

•
Anaheim: 0 percent

•
UAMPS: 0 percent

•
PNMR-D: 0 percent

B.    For Unit 3 and for all equipment and facilities directly related to Unit 3
only, in accordance with the following percentages:
 
•
PNM: 50 percent

•
TEP: 0 percent

•
M-S-R: 0 percent

•
Farmington: 0 percent

•
Tri-State: 8.2 percent

•
LAC: 0 percent

•
SCPPA: 41.8 percent

•
Anaheim: 0 percent

•
UAMPS: 0 percent

•
PNMR-D: 0 percent

C.    For Unit 4 and for all equipment and facilities directly related to Unit 4
only, in accordance with the following percentages:
  
•
PNM: 38.457 percent

•
TEP: 0 percent

•
M-S-R: 28.8 percent

•
Farmington: 8.475 percent

•
Tri-State: 0 percent

•
LAC: 7.20 percent

•
SCPPA: 0 percent

•
Anaheim: 10.04 percent

E-1

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

EXECUTION VERSION

•
UAMPS: 7.028 percent

•
PNMR-D: 0 percent

D.    For equipment and facilities common to Units 1 and 2 only, in accordance
with the following percentages:
  
•
PNM: 50 percent

•
TEP: 50 percent

•
M-S-R: 0 percent

•
Farmington: 0 percent

•
Tri-State: 0 percent

•
LAC: 0 percent

•
SCPPA: 0 percent

•
Anaheim: 0 percent

•
UAMPS: 0 percent

•
PNMR-D: 0 percent

E.    For equipment and facilities common to Units 3 and 4 only, in accordance
with the following percentages:
 
•
PNM: 44.119 percent

•
TEP: 0 percent

•
M-S-R: 14.4 percent

•
Farmington: 4.249 percent

•
Tri-State: 4.1 percent

•
LAC: 3.612 percent

•
SCPPA: 20.9 percent

•
Anaheim: 5.07 percent

•
UAMPS: 3.55 percent

•
PNMR-D: 0 percent

F.    For equipment and facilities common to all of the Units in accordance with
the following percentages:
 
•
PNM: 46.297 percent

•
TEP: 19.8 percent

•
M-S-R: 8.7 percent

•
Farmington: 2.559 percent

•
Tri-State: 2.49 percent

•
LAC: 2.175 percent

•
SCPPA: 12.71 percent

•
Anaheim: 3.10 percent

•
UAMPS: 2.169 percent

•
PNMR-D: 0 percent

E-2

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

EXECUTION VERSION

EXHIBIT F

SJGS Plant Site

The SJGS Plant Site consists of Parcels A, B, D, E and F in the property
descriptions below.

PARCEL A
The following portions of Township 30 North, Range 15 West, N.M.P.M., San Juan
County, New Mexico:
Section 16:    SW 1/4
Section 20: NE 1/4, N 1/2 SE 1/4, SW 1/4SE 1/4
Section 21: NW 1/4 NW 1/4
Section 29: NE 1/4

PARCEL B
The following portions of Township 30 North, Range 15 West, N.M.P.M., San Juan
County, New Mexico:

Section 19: SE 1/4 SW 1/4, SW 1/4 SE 1/4
Section 20: E 1/2 NW 1/4, NE 1/4 SW 1/4
Section 29: NW 1/4, N 1/2 SW 1/4
Section 30: NE 1/4, E 1/2 NW 1/4, N 1/2 SE 1/4
PARCEL D
The following portions of Township 30 North, Range 15 West, N.M.P.M., San Juan
County, New Mexico:
Section 17:    SE 1/4 SW 1/4, S1/2 SE 1/4
PARCEL E
The following portions of Township 30 North, Range 15 West, N.M.P.M., San Juan
County, New Mexico:
Section 19:    SE 1/4 SE 1/4
NE 1/4 SE 1/4
E 1/2 NW 1/4 SE 1/4
S 1/2 S 1/2 SE 1/4 NE 1/4

F-1

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

EXECUTION VERSION

Section 20:     SE 1/4 SW 1/4
SW 1/4 SW 1/4
NW 1/4 SW 1/4
S 1/2 SW 1/4 SW 1/4 NW 1/4
Containing 235 acres, more or less.
PARCEL F
The following portions of Township 30 North, Range 15 West, N.M.P.M., San Juan
County, New Mexico:
Section 20:    SE 1/4 SE 1/4

F-2

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

EXECUTION VERSION

EXHIBIT G

Form of Instrument Relinquishing Easement and License

TERMINATION AND RELINQUISHMENT

_____________________, a _________________organized under the laws of the State
of __________, hereby terminates and relinquishes all interests acquired as
Grantee in that certain Easement and License dated ______________ and recorded
at Book _______, record number ____________, page __________of Records of San
Juan County, New Mexico.

Dated effective this ____ day of _______________, 2017.

_____________________________________________
[__________]

_____________________________________________
Name and title

STATE OF         )
) ss
COUNTY OF         )

The foregoing document was acknowledged before me this _____ day of
_________________, 2017 by ____________________________, as
__________________________ of ______________.

___________________________________
Notary Public

___________________________________
My Commission Expires

G-1

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

EXECUTION VERSION

EXHIBIT H

Form of Easement and Right of Entry
PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, and TUCSON
ELECTRIC POWER COMPANY, an Arizona corporation (together, the “Grantors”), for
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, hereby grant and convey to _____________________________, a
_________________ organized under the laws of the State of ____________
(“Grantee”), and to Grantee’s employees, contractors, subcontractors,
representatives, agents and licensees, a non-exclusive easement and right of
entry to, including rights of ingress and egress upon, over and across, the SJGS
Plant Site, described in Exhibit ‘A’, attached hereto and made a part hereof
(the “Premises”) and to all buildings and personal property located thereon
(collectively, the “Facilities”), for the purposes set forth below.
The rights and privileges granted herein give Grantee the right to access the
Premises and Facilities for the purposes of Grantee exercising its rights,
protecting its interests and fulfilling its obligations under the San Juan
Project Restructuring Agreement dated July 31, 2015, (“Restructuring
Agreement”), the Amended and Restated Mine Reclamation and Trust Funds Agreement
dated July 31, 2015 (“Mine Reclamation Agreement”), and the San Juan
Decommissioning and Trust Funds Agreement dated July 31, 2015 (“Decommissioning
Agreement”), to which Grantors and Grantee are parties (collectively, the
“Purposes”).
Grantors will make and keep available to Grantee all reasonable accommodations
appropriate for Grantee’s full use and enjoyment of this Easement and Right of
Entry for carrying out the Purposes, including, without limitation, parking and
security clearances appropriate for passage to and from the Premises and the
Facilities, all upon reasonable advance notice and consistent with the San Juan
Project Operating Agent’s safety and security rules and other requirements
applicable to persons who come upon the Premises and the Facilities.
This Easement and Right of Entry shall automatically expire, without any further
or additional document or act, upon the last to occur of the following: (i) the
termination or expiration of the Restructuring Agreement; (ii) the termination
or expiration of the Mine Reclamation Agreement; and (iii) the termination or
expiration of the Decommissioning Agreement. Further, this instrument is not
assignable or transferable in whole or in part by Grantee without the prior
written approval of such assignment by Grantors which approval will not be
unreasonably conditioned, delayed or denied. Upon the last to occur of items
(i), (ii) or (iii), above, Grantors may, upon thirty (30) days’ written notice
to Grantee, execute and record in the real estate records of San Juan County,
New Mexico, a written instrument certifying that this Easement and Right of
Entry has terminated.

Dated effective this ____ day of _______________, 2017.

H-1

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

EXECUTION VERSION

Public Service Company of New Mexico

By:_____________________________________________
Name:___________________________________________
Title:____________________________________________

Tucson Electric Power Company

By:_____________________________________________
Name:___________________________________________
Title:____________________________________________

STATE OF NEW MEXICO    )
) ss
COUNTY OF         )

The foregoing document was acknowledged before me this _____ day of
_________________, 2017 by ____________________________, as
__________________________ of Public Service Company of New Mexico.

___________________________________
Notary Public

__________________________________
My Commission Expires:

STATE OF ARIZONA    )
) ss
COUNTY OF PIMA         )

The foregoing document was acknowledged before me this _____ day of
_________________, 2017 by ____________________________, as
__________________________ of Tucson Electric Power Company.

___________________________________
Notary Public

____________________________________
My Commission Expires:

H-2

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

EXECUTION VERSION

EXHIBIT A
TO EASEMENT AND RIGHT OF ENTRY

DESCRIPTION OF SJGS PLANT SITE

PARCEL A
The following portions of Township 30 North, Range 15 West, N.M.P.M., San Juan
County, New Mexico:
Section 16:    SW 1/4
Section 20:     NE 1/4, N 1/2 SE 1/4, SW 1/4SE 1/4
Section 21:     NW 1/4 NW 1/4
Section 29:     NE 1/4
PARCEL B
The following portions of Township 30 North, Range 15 West, N.M.P.M., San Juan
County, New Mexico:
Section 19: SE 1/4 SW 1/4, SW 1/4 SE 1/4
Section 20: E 1/2 NW 1/4, NE 1/4 SW 1/4
Section 29: NW 1/4, N 1/2 SW 1/4
Section 30: NE 1/4, E 1/2 NW 1/4, N 1/2 SE 1/4
PARCEL D
The following portions of Township 30 North, Range 15 West, N.M.P.M., San Juan
County, New Mexico:
Section 17:    SE 1/4 SW 1/4, S1/2 SE 1/4
PARCEL E
The following portions of Township 30 North, Range 15 West, N.M.P.M., San Juan
County, New Mexico:
Section 19:    SE 1/4 SE 1/4
NE 1/4 SE 1/4
E 1/2 NW 1/4 SE 1/4
S 1/2 S 1/2 SE 1/4 NE 1/4

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EXECUTION VERSION

Section 20:     SE 1/4 SW 1/4
SW 1/4 SW 1/4
NW 1/4 SW 1/4
S 1/2 SW 1/4 SW 1/4 NW 1/4
Containing 235 acres, more or less.
PARCEL F
The following portions of Township 30 North, Range 15 West, N.M.P.M., San Juan
County, New Mexico:
Section 20:    SE 1/4 SE 1/4

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EXECUTION VERSION

EXHIBIT I
 
Form of Parental Guaranty

PARENTAL GUARANTY AGREEMENT

Reference is hereby made to the following agreements: (1) SAN JUAN PROJECT
RESTRUCTURING AGREEMENT (“Restructuring Agreement”), executed as of ___________,
2015 by and among PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation
(“PNM”); TUCSON ELECTRIC POWER COMPANY, an Arizona corporation (“TEP”); THE CITY
OF FARMINGTON, NEW MEXICO, an incorporated municipality and a body politic and
corporate, existing as a political subdivision under the constitution and laws
of the State of New Mexico (“Farmington”); M-S-R PUBLIC POWER AGENCY, a joint
exercise of powers agency organized under the laws of the State of California
(“M-S-R”); THE INCORPORATED COUNTY OF LOS ALAMOS, NEW MEXICO, a body politic and
corporate, existing as a political subdivision under the constitution and laws
of the State of New Mexico (“Los Alamos”); SOUTHERN CALIFORNIA PUBLIC POWER
AUTHORITY, a joint exercise of powers agency organized under the laws of the
State of California (“SCPPA”); CITY OF ANAHEIM, a municipal corporation
organized under the laws of the State of California (“Anaheim”); UTAH ASSOCIATED
MUNICIPAL POWER SYSTEMS, a political subdivision of the State of Utah (“UAMPS”);
TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, INC., a Colorado cooperative
corporation (“Tri-State”); and PNMR DEVELOPMENT AND MANAGEMENT CORPORATION, a
New Mexico corporation (“PNMR-D”); (2) SAN JUAN DECOMMISSIONING AND TRUST FUNDS
AGREEMENT (“Decommissioning Agreement”), dated as of ________, 2015, by and
among PNM; TEP; Farmington; M-S-R; LAC; SCPPA; Anaheim; UAMPS; Tri-State; and
PNMR-D; (3) AMENDED AND RESTATED MINE RECLAMATION AND TRUST FUNDS AGREEMENT
(“Mine Reclamation Agreement”), executed as of ____________, 2015, by and among
PNM; TEP; Farmington; M-S-R; LAC; SCPPA; Anaheim; UAMPS; Tri-State; and PNMR-D;
and (4) AMENDED AND RESTATED SAN JUAN PROJECT PARTICIPATION AGREEMENT (“SJPPA”)
dated as of March 23, 2006, as amended, by and among PNM; TEP; Farmington;
M-S-R; LAC; SCPPA; Anaheim; UAMPS; Tri-State; and PNMR-D. The Restructuring
Agreement, Decommissioning Agreement, Mine Reclamation Agreement and SJPPA are
hereinafter collectively referred to as “Guaranteed Agreements,” and TEP, M-S-R,
LAC, PNM, Farmington, Anaheim, UAMPS, SCPPA and Tri-State are hereinafter
collectively referred to as “Guaranteed Parties.”
FOR VALUE RECEIVED, and in consideration of any loans, advances, payments,
extensions of credit and/or other financial accommodations heretofore, now or
hereafter made, granted or extended by the Guaranteed Parties, and their
respective successors and assigns, or which the Guaranteed Parties and/or their
respective successors and assigns have or will become obligated to make, grant
or extend, to or for the account of PNMR-D, and in consideration of any
obligations heretofore, now or hereafter incurred by PNMR-D to the Guaranteed
Parties and/or their respective successors and assigns, Guarantor hereby
absolutely and unconditionally guarantees to each of the Guaranteed Parties and
their respective successors and assigns the prompt and complete payment and
performance when due in accordance with their terms (whether by reason of
demand, maturity, acceleration or otherwise) of any and all present and

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EXECUTION VERSION

future obligations of PNMR-D to any one or more of the Guaranteed Parties,
including, without limitation, all obligations of PNMR-D to the Guaranteed
Parties under the Guaranteed Agreements (herein referred to as the “Guaranteed
Obligations”). In addition, Guarantor shall and agrees to be liable to the
Guaranteed Parties for all costs and expenses incurred by the Guaranteed Parties
in attempting or effecting collection under this Parental Guaranty Agreement
(whether or not litigation shall be commenced in aid thereof) and in connection
with representation of the Guaranteed Parties in connection with bankruptcy or
insolvency proceedings relating to or affecting this Parental Guaranty
Agreement, including, without limitation, reasonable Attorneys’ Fees for outside
counsel for Guaranteed Parties, and interest payable on the Guaranteed
Obligations as provided for in the Guaranteed Agreements or under applicable
law. Guarantor agrees, represents and warrants that its obligations under this
Parental Guaranty Agreement are, and will remain until all of its obligations
hereunder have been fully and unconditionally performed and satisfied, ranked on
parity with other unsecured and unsubordinated obligations of Guarantor to any
other person or entity. Except as may be otherwise provided herein, in no event
will Guarantor be liable under any provision of this Parental Guaranty Agreement
for any indirect, special, punitive or incidental damages or costs of the
Guaranteed Parties (including loss of revenue, cost of capital and loss of
business reputation or opportunity), whether based in contract, tort (including,
without limitation, negligence or strict liability), or otherwise, and the
Guaranteed Parties hereby waive, release and discharge Guarantor from all such
indirect, special, punitive and incidental damages and costs.
Notice of the acceptance of this Parental Guaranty Agreement, and of the
incurrence of any of the Guaranteed Obligations, and presentment, demand for
payment, notice of dishonor, protest, notice of protest and of default by PNMR-D
are hereby waived by Guarantor. Guarantor hereby agrees that (a) this Parental
Guaranty Agreement is a guaranty of payment and not of collection, and the
obligations of such Guarantor under this Parental Guaranty Agreement may be
enforced directly against such Guarantor independently of and without proceeding
against PNMR-D with respect to any or all of the Guaranteed Obligations or
foreclosing any collateral pledged to the Guaranteed Parties, and (b) the
Guaranteed Parties may from time to time, in their sole and absolute discretion
and without notice to or consent of such Guarantor and without releasing such
Guarantor from any of its obligations under this Parental Guaranty Agreement,
(i) extend the time of payment, change the interest rates and renew or change
the manner, place, time and/or terms of payment of and make any other changes
with respect to any or all of the Guaranteed Obligations, (ii) sell, exchange,
release, surrender and otherwise deal with any collateral pledged to the
Guaranteed Parties by PNMR-D or any other person to secure any or all of the
Guaranteed Obligations, (iii) release and otherwise deal with any other
guarantor(s) of any or all of the Guaranteed Obligations, (iv) exercise or
refrain from exercising any rights against PNMR-D of any or all of the
Guaranteed Obligations and otherwise act or refrain from acting with respect to
PNMR-D of any or all of the Guaranteed Obligations and/or (v) settle or
compromise any or all of the Guaranteed Obligations with PNMR-D.
Guarantor will not have any right of subrogation, reimbursement, contribution or
indemnity whatsoever with respect to PNMR-D of any or all of the Guaranteed
Obligations or any right of recourse to or with respect to any assets or
property of PNMR-D of any or all of the Guaranteed Obligations or to any
collateral or other security for the payment of any or all of the Guaranteed
Obligations unless and until (a) all of the Guaranteed Obligations have been
fully, finally and indefeasibly paid in cash (except with respect to contingent
indemnification

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EXECUTION VERSION

obligations), (b) none of the Guaranteed Parties has any further commitment or
obligation to advance funds, make loans, extend credit to or for the account of
PNMR-D under the Guaranteed Agreements and/or enter into any Guaranteed
Obligations and (c) this Parental Guaranty Agreement has been terminated.
Nothing will discharge or satisfy the liability of Guarantor under this Parental
Guaranty Agreement except the full performance and payment of all of the
Guaranteed Obligations and all obligations of such Guarantor under this Parental
Guaranty Agreement.
The books and records of the Guaranteed Parties showing the account between the
Guaranteed Parties and PNMR-D shall be admissible in evidence in any action or
proceeding and shall constitute prima facie proof of the items therein set
forth.
No invalidity, irregularity or unenforceability of any or all of the Guaranteed
Obligations or of any collateral or any other guarantees therefor shall affect,
impair or be a defense to this Parental Guaranty Agreement. The liability of the
Guarantor under this Parental Guaranty Agreement will in no way be affected or
impaired by any acceptance by the Guaranteed Parties of any collateral for or
other guarantees of any of the Guaranteed Obligations, or by any failure,
neglect or omission on the part of the Guaranteed Parties to realize upon or
protect any of the Guaranteed Obligations or any collateral therefor or
guarantees thereof. No act of commission or omission of any kind by the
Guaranteed Parties (including, without limitation, any act or omission which
impairs, reduces the value of, releases or fails to perfect a security interest
in and/or a lien on, any collateral for or guarantee of any of the Guaranteed
Obligations) shall affect or impair the obligations of Guarantor under this
Parental Guaranty Agreement in any manner.
Guarantor hereby waives any right to require the Guaranteed Parties to (a)
proceed against PNMR-D, (b) marshal assets or proceed against or exhaust any
security held from PNMR-D, (c) give notice of the terms, time and place of any
public or private sale or other disposition of personal property security held
from PNMR-D, (d) take any action or pursue any other remedy in the Guaranteed
Parties’ power and/or (e) make any presentment or demand for performance, or
give any notice of nonperformance, protest, notice of protest or notice of
dishonor under this Parental Guaranty Agreement or in connection with any
obligations or evidences of obligations held by the Guaranteed Parties as
security for or which constitute in whole or in part the Guaranteed Obligations,
or in connection with the creation of new or additional Guaranteed Obligations.
Guarantor hereby waives any defense to its obligations under this Parental
Guaranty Agreement based upon or arising by reason of (a) any disability or
other defense of PNMR-D or any other person or entity, (b) the cessation or
limitation from any cause whatsoever, other than indefeasible payment in full,
of the Guaranteed Obligations, (c) any lack of authority of any officer,
director, partner, agent or any other person or entity acting or purporting to
act on behalf of PNMR-D, or any defect in the formation of PNMR-D, (d) the
application by PNMR-D of the proceeds of any of the Guaranteed Obligations for
purposes other than the purposes represented by PNMR-D to, or intended or
understood by, the Guaranteed Parties and/or the Guarantor, (e) any act or
omission by the Guaranteed Parties which directly or indirectly results in or
aids the discharge of PNMR-D or all or any portion of the Guaranteed Obligations
by operation of law or otherwise, or which in any way impairs or suspends any
rights or remedies of the Guaranteed Parties against PNMR-D, (f) any impairment
of the value of any interest in any security for the

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EXECUTION VERSION

Guaranteed Obligations or any portion thereof, including without limitation, the
failure to obtain or maintain perfection or recordation of any interest in any
such security, the release of any such security without substitution and/or the
failure to preserve the value of, or to comply with applicable law in disposing
of, any such security, (g) any modification of any or all of the Guaranteed
Obligations, in any form whatsoever, including, without limitation, the renewal,
extension, acceleration or other change in time for payment of, or other change
in the terms of, the Guaranteed Obligations or any portion thereof, including
increasing or decreasing the rate of interest thereon and/or (h) any requirement
that the Guaranteed Parties give any notice of acceptance of this Guaranty.
Guarantor hereby further waives all rights and defenses which such Guarantor may
have arising out of (a) any election of remedies by the Guaranteed Parties, even
though that election of remedies, such as a non-judicial foreclosure with
respect to any security for any portion of the Guaranteed Obligations, impairs,
diminishes, negates or destroys such Guarantor’s rights of subrogation or such
Guarantor’s rights to proceed against PNMR-D for reimbursement or (b) any loss
of rights such Guarantor may suffer by reason of any rights, powers or remedies
of PNMR-D in connection with any anti-deficiency laws or any other laws
limiting, qualifying or discharging the Guaranteed Obligations, whether by
operation of law or otherwise, including any rights which such Guarantor may
have to a fair market value hearing to determine the size of a deficiency
following any foreclosure sale or other disposition of any real property
security for any portion of the Guaranteed Obligations. Guarantor acknowledges
and agrees that the waivers in the immediately preceding sentence constitute
unconditional and irrevocable waivers of any rights and defenses Guarantor may
have, and that such rights and defenses include, without limitation, any rights
and defenses based upon any and all applicable state statutes.
GUARANTOR HEREBY FURTHER WAIVES ANY AND ALL OTHER SURETYSHIP DEFENSES.
Guarantor hereby represents and warrants to the Guaranteed Parties that (a) such
Guarantor is a New Mexico company duly formed, validly existing and in good
standing under the laws of the State of New Mexico, (b) the execution, delivery
and performance by such Guarantor of this Parental Guaranty Agreement (i) are
within company powers of such Guarantor, (ii) have been duly authorized by all
necessary company action on the part of such Guarantor, (iii) require no action
by or in respect of, consent or approval of or filing or recording with, any
governmental or regulatory body, instrumentality, authority, agency or official
or any other person or entity and (iv) do not conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a default under
or result in any violation of, the terms of the Articles of Incorporation,
Bylaws and any other governing document of Guarantor, any applicable law, rule,
regulation, order, writ, judgment or decree of any court or governmental or
regulatory body, instrumentality, authority, agency or official or any
agreement, document or instrument to which such Guarantor is a party or by which
such Guarantor or any of its property or assets is bound or to which Guarantor
or any of its property or assets is subject and (c) this Parental Guaranty
Agreement constitutes the legal, valid and binding obligation of Guarantor and
is enforceable against Guarantor in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

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EXECUTION VERSION

No delay by the Guaranteed Parties in exercising any of their options, powers or
rights under this Parental Guaranty Agreement and/or any partial or single
exercise thereof shall constitute a waiver thereof. No waiver of any of the
rights and/or remedies of the Guaranteed Parties under this Parental Guaranty
Agreement and no modification or amendment of this Parental Guaranty Agreement
shall be deemed to be made by the Guaranteed Parties unless the same shall be in
writing, duly signed on behalf of the Guaranteed Parties and each such waiver
(if any) shall apply only with respect to the specific instance involved and
shall in no way impair the rights of the Guaranteed Parties or the obligations
of the Guarantor to the Guaranteed Parties in any other respect at any other
time. In the event any one or more of the provisions contained in this Parental
Guaranty Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions of this
Parental Guaranty Agreement shall not be affected or impaired thereby.
All payments made under or pursuant to this Parental Guaranty Agreement shall be
paid for the benefit of the Guaranteed Parties and shall be allocated among the
principal, interest and other portions of the Guaranteed Obligations and the
other obligations of the Guarantor under this Parental Guaranty Agreement in the
order and manner set forth in the Guaranteed Agreements.
Guarantor hereby covenants and agrees to deliver to the Guaranteed Parties (a)
such publicly-available financial statements and other publicly-available
financial information regarding the Guarantor as reasonably requested by the
Guaranteed Parties., and (b) notice and a true and correct executed copy of any
other guaranty executed by Guarantor to guarantee any obligations of PNMR-D
entered into at any time after the date this Parental Guaranty Agreement is
executed and before the date of termination hereof.
This Parental Guaranty Agreement is a continuing guaranty which will remain in
full force and effect and will not be terminable unless and until (a) all of the
Guaranteed Obligations have been fully and finally paid in cash (except with
respect to contingent indemnification obligations), (b) none of the Guaranteed
Parties has any further commitment or obligation to advance funds, make loans,
extend credit to or for the account of PNMR-D under the Guaranteed Agreements,
and/or enter into any Guaranteed Obligations and (c) the Guaranteed Agreements
have expired or been terminated in accordance with their terms. The dissolution
of the Guarantor shall not effect a termination of this Parental Guaranty
Agreement. If claim is ever made on the Guaranteed Parties for repayment or
recovery of any amount or amounts received by the Guaranteed Parties in payment
or on account of any of the Guaranteed Obligations (including payment under a
guaranty or from application of collateral) and the Guaranteed Parties repay or
disgorge all or part of said amount by reason of (a) any judgment, decree or
order of any court or administrative body having jurisdiction over the
Guaranteed Parties or any of the property or assets of the Guaranteed Parties or
(b) any settlement or compromise of any such claim effected by the Guaranteed
Parties with any such claimant (including, without limitation, PNMR-D and/or
Guarantor), then and in such event Guarantor agrees that any such judgment,
decree, order, settlement or compromise shall be binding on such Guarantor,
notwithstanding any cancellation of any note or other instrument or agreement
evidencing such Guaranteed Obligations or of this Parental Guaranty Agreement,
and Guarantor will be and remain liable to the Guaranteed Parties under this
Parental Guaranty Agreement for the amount so repaid, recovered or disgorged to
the same extent as if such amount had never originally been received

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EXECUTION VERSION

by the Guaranteed Parties. This Parental Guaranty Agreement will continue to be
effective or be reinstated, as the case may be, if (a) at any time any payment
of any of the Guaranteed Obligations is rescinded, cancelled, voided or must
otherwise be returned by or is disgorged from the Guaranteed Parties for any
reason including, without limitation, the insolvency, bankruptcy or
reorganization of PNMR-D, Guarantor or otherwise, all as though such payment had
not been made or (b) this Parental Guaranty Agreement is released or the
liability of Guarantor under this Parental Guaranty Agreement is reduced in
consideration of a payment of money or transfer of property or grant of a
security interest by PNMR-D, Guarantor or any other person and such payment,
transfer or grant is rescinded, cancelled, voided or must otherwise be returned
by or disgorged from the Guaranteed Parties for any reason including, without
limitation, the insolvency, bankruptcy or reorganization of such person or
otherwise, all as though such payment, transfer or grant had not been made.
Any notice, demand or other communication to Guarantor under this Parental
Guaranty Agreement will be in writing and delivered in person or sent by
facsimile, recognized overnight courier or registered or certified mail (return
receipt requested) to Guarantor at the address or facsimile number for the
Guarantor set forth on the signature page(s) of this Parental Guaranty
Agreement, or at such other address or facsimile number as the Guarantor may
designate as its address or facsimile number for communications under this
Parental Guaranty Agreement. Such notices will be deemed effective on the day on
which delivered or sent if delivered in person or sent by facsimile, on the
first (1st) business day after the day on which sent, if sent by recognized
overnight courier or on the third (3rd) business day after the day on which
sent, if sent by registered or certified mail.
This Parental Guaranty Agreement will be understood to be for the benefit of the
Guaranteed Parties, individually and collectively, and for such other person or
persons as may from time to time become or be the holder or owner of any of the
Guaranteed Obligations or any interest therein and this Parental Guaranty
Agreement will be transferable to the same extent and with the same force and
effect as any of the Guaranteed Obligations may be transferable, and any one or
more of the Guaranteed Parties may, but is not required to, demand payment or
performance hereunder by the Guarantor. This Parental Guaranty Agreement cannot
be changed or terminated orally, will be governed by and construed in accordance
with the substantive laws of the State of New Mexico (without reference to
conflict of law principles), will be binding on the successors and permitted
assigns of Guarantor and will inure to the benefit of the respective successors
and assigns of the Guaranteed Parties. Guarantor may not assign or delegate any
of its rights, obligations or duties under this Parental Guaranty Agreement
without the prior written consent of the Guaranteed Parties.
GUARANTOR HEREBY IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
ANY NEW MEXICO STATE COURT OR FEDERAL COURT IN ALBUQUERQUE, NEW MEXICO, AS THE
GUARANTEED PARTIES MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS PARENTAL GUARANTY AGREEMENT, (B) AGREES THAT ALL CLAIMS IN
RESPECT TO ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE HELD AND DETERMINED IN ANY
OF SUCH COURTS, (C) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH GUARANTOR MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY SUCH SUIT, ACTION OR

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EXECUTION VERSION

PROCEEDING BROUGHT IN ANY SUCH COURT, (D) WAIVES ANY CLAIM THAT SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM AND (E) WAIVES ALL RIGHTS OF ANY OTHER JURISDICTION WHICH
GUARANTOR MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR SUBSEQUENT
DOMICILES. GUARANTOR (AND BY THEIR ACCEPTANCE HEREOF) THE GUARANTEED PARTIES
HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION
IN WHICH GUARANTOR, ON THE ONE HAND, AND THE GUARANTEED PARTIES, ON THE OTHER
HAND, ARE PARTIES RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS
PARENTAL GUARANTY AGREEMENT.
Executed as of the ____ day of_______.
PNM RESOURCES, INC., a New Mexico corporation         
Guarantor
By__________________________________________
Title: _______________________________________
    
                        
Contact information of Guarantor, Guaranteed Parties and PNMR-D for purpose of
Notices:
PNM Resources, Inc.
414 Silver Avenue SW
Albuquerque, NM 87102
Attention: Secretary
FAX No. (505) 241-2368

PNMR Development and Management Corporation
414 Silver Avenue SW
Albuquerque, NM 87102
Attention: Secretary
FAX No. (505) 241-2368
    
Public Service Company of New Mexico
Attn: Vice President, PNM Generation
2401 Aztec N.E., Bldg. A
Albuquerque, NM 87107

With a copy to:

Public Service Company of New Mexico
c/o Secretary
414 Silver Ave. S.W.
Albuquerque, NM 87102

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EXECUTION VERSION

Tucson Electric Power Company
88 E. Broadway Blvd.
MS HQE901
Tucson, AZ 85701
Attn: Corporate Secretary

City of Farmington
c/o City Clerk
800 Municipal Drive
Farmington, NM 87401

With a copy to:

Farmington Electric Utility System
Electric Utility Director
101 North Browning Parkway
Farmington, NM 87401

Incorporated County of Los Alamos, New Mexico
c/o County Clerk
P.O. Drawer 1030
170 Central Park Square
Suite 240
Los Alamos, NM 87544

with a copy to:

Incorporated County of Los Alamos, New Mexico
c/o Utilities Manager
P.O. Drawer 1030
170 Central Park Square
Suite 240
Los Alamos, NM 87544

Utah Associated Municipal Power Systems
c/o General Manager
155 North 400 West
Suite 480
Salt Lake City, UT 84103

City of Anaheim
Attention: City Clerk
200 South Anaheim Boulevard
Anaheim, CA 92805

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EXECUTION VERSION

with a copy to:

City of Anaheim
Attention: Public Utilities General Manager
201 South Anaheim Blvd., Suite 1101
Anaheim, CA 92805
FAX No. (714) 765-4138

M-S-R Public Power Agency
Attention: General Manager
1231 11th Street
Modesto, CA 95354
FAX No. (209) 526-7574

Southern California Public Power Authority
c/o Executive Director
1160 Nicole Court
Glendora, CA 91740

Tri-State Generation and Transmission Association, Inc.
c/o Chief Executive Officer
1100 West 116th Avenue
Westminster, CO 80234
Or P. O. Box 33695
Denver, CO 80233

For purposes of overnight courier service, Tri-State’s address will be:

Tri-State Generation and Transmission Association, Inc.
c/o Chief Executive Officer
3761 Eureka Way
Frederick, CO 80516

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EXECUTION VERSION

EXHIBIT J
 
FORM OF LETTER OF CREDIT

L/C NUMBER                 AMOUNT                EXPIRATION DATE

BENEFICIARY NAME                    APPLICANT NAME
BENEFICIARY ADDRESS                APPLICANT ADDRESS
BENEFICIARY ADDRESS                APPLICANT ADDRESS

WE HEREBY OPEN OUR IRREVOCABLE NON-TRANSFERABLE STANDBY LETTER OF CREDIT IN YOUR
FAVOR IN CONNECTION WITH _________________ AGREEMENT DATED AS
OF__________________ FOR THE ACCOUNT OF THE ABOVE REFERENCED APPLICANT IN THE
AGGREGATE AMOUNT OF (Ten Million Dollars) WHICH IS AVAILABLE BY PAYMENT WHEN
ACCOMPANIED BY THE FOLLOWING DOCUMENTS:

1. A DRAFT AT SIGHT DRAWN ON ____________________________________, DULY ENDORSED
ON ITS REVERSE SIDE THEREOF BY THE BENEFICIARY, SPECIFICALLY REFERENCING THIS
LETTER OF CREDIT NUMBER.

2. THE ORIGINAL LETTER OF CREDIT AND ANY AMENDMENTS ATTACHED THERETO.

3. COPY OF INVOICE MARKED UNPAID IN THE CASE OF ITEM 4.A, AND

4. A STATEMENT ISSUED ON THE LETTERHEAD OF AND PURPORTEDLY SIGNED BY AN
AUTHORIZED REPRESENTATIVE OF THE BENEFICIARY STATING THE FOLLOWING:

A.
THE APPLICANT HAS NOT MADE PAYMENT ON INVOICE NUMBER (INSERT INVOICE NUMBER) PER
OUR AGREED TERMS. WE THEREFORE DEMAND PAYMENT IN THE AMOUNT OF (INSERT AMOUNT)
AS SAME IS DUE AND OWING; or

B.
AT THE TIME OF ISSUANCE OF LETTER OF CREDIT NO. [INSERT NUMBER], [NAME OF
ISSUING BANK] HAD A LONG TERM OBLIGATION RATING FROM ONE OR MORE OF THE
FOLLOWING CREDIT RATING AGENCIES OF AT LEAST: MOODY’S, A3 OR BETTER; STANDARD &
POOR’S, A- OR BETTER; AND/OR FITCH, A- OR BETTER. SAID RATING(S) HAS/HAVE FALLEN
BELOW THAT EXISTING AT THE TIME OF ISSUANCE OF THE LETTER OF CREDIT.

INVOICE(S) IN EXCESS OF AMOUNT AVAILABLE UNDER THIS LETTER OF CREDIT ARE
ACCEPTABLE, HOWEVER, DRAWINGS UNDER THIS LETTER OF CREDIT MAY NOT EXCEED AMOUNT
AVAILABLE.

PARTIAL DRAWINGS UNDER THIS LETTER OF CREDIT ARE PERMITTED.

MULTIPLE DRAWINGS UNDER THIS LETTER OF CREDIT ARE PERMITTED.

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EXECUTION VERSION

ALL BANKING CHARGES OF THE ISSUER ASSOCIATED WITH THIS LETTER OF CREDIT ARE FOR
THE ACCOUNT OF THE APPLICANT.

THIS LETTER OF CREDIT WILL BE AUTOMATICALLY EXTENDED EACH YEAR WITHOUT AMENDMENT
FOR A PERIOD OF AT LEAST ONE YEAR FROM THE EXPIRATION DATE HEREOF, AS EXTENDED,
UNLESS AT LEAST FORTY-FIVE (45) DAYS PRIOR TO THE EXPIRATION DATE, WE NOTIFY THE
BENEFICIARY AND APPLICANT BY A NATIONALLY RECOGNIZED OVERNIGHT COURIER OR
CERTIFIED MAIL THAT WE ELECT NOT TO EXTEND THIS LETTER OF CREDIT FOR SUCH
ADDITIONAL PERIOD (THE PRESENT OR ANY FUTURE EXPIRATION DATE AS AFORESAID IS
REFERRED TO HEREIN AS THE “EXPIRATION DATE”).  WE WILL GIVE NOTICE OF
NON-EXTENSION TO THE BENEFICIARY AT THE BENEFICIARY'S ADDRESS SET FORTH HEREIN
OR AT SUCH OTHER ADDRESS AS THE BENEFICIARY MAY DESIGNATE TO US IN WRITING AT
OUR LETTERHEAD ADDRESS. FOLLOWING RECEIPT BY THE BENEFICIARY OF SUCH NOTICE, AND
NO EARLIER THAN TWENTY (20) DAYS BEFORE THE EXPIRATION DATE, THE BENEFICIARY MAY
DRAW THE FULL AMOUNT HEREUNDER.

IF OUR CREDIT RATING(S) FALL BELOW OUR LONG TERM OBLIGATION RATING EXISTING AT
THE TIME OF ISSUANCE OF THE LETTER OF CREDIT, WE WILL GIVE NOTICE OF SUCH EVENT
TO THE BENEFICIARY AND APPLICANT BY A NATIONALLY RECOGNIZED OVERNIGHT COURIER OR
CERTIFIED MAIL. WE WILL GIVE SUCH NOTICE TO THE BENEFICIARY AT THE BENEFICIARY'S
ADDRESS SET FORTH HEREIN OR AT SUCH OTHER ADDRESS AS THE BENEFICIARY MAY
DESIGNATE TO US IN WRITING AT OUR LETTERHEAD ADDRESS. FOLLOWING RECEIPT BY THE
BENEFICIARY OF SUCH NOTICE, AND NO EARLIER THAN TWENTY-FIVE (25) DAYS AFTER
RECEIPT OF SUCH NOTICE, THE BENEFICIARY MAY DRAW THE FULL AMOUNT HEREUNDER.

THIS IRREVOCABLE LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR
UNDERTAKING. THIS UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED, AMENDED,
AMPLIFIED OR INCORPORATED BY REFERENCE TO ANY DOCUMENT, CONTRACT, AGREEMENT
REFERENCED TO HEREIN.

WE HEREBY AGREE WITH YOU THAT DRAFT(S) DRAWN UNDER AND IN COMPLIANCE WITH THE
TERMS AND CONDITIONS OF THIS LETTER OF CREDIT SHALL BE DULY HONORED IF PRESENTED
TOGETHERWITH DOCUMENT(S) AS SPECIFIED AT OUR OFFICE LOCATED AT
____________________________ ATTENTION: STANDBY LETTERS OF CREDIT ON OR BEFORE
_________________________________

THE ABOVE STATED EXPIRY DATE, OR ANY EXTENDED EXPIRY DATE IF APPLICABLE.
DRAFT(S) DRAWN UNDER THIS LETTER OF CREDIT MUST SPECIFICALLY REFERENCE OUR
LETTER OF CREDIT NUMBER.

EXCEPT AS OTHERWISE EXPRESSLY STATED HEREIN, THIS LETTER OF CREDIT IS SUBJECT TO
THE INTERNATIONAL STANDBY PRACTICES 1998, INTERNATIONAL CHAMBER OF COMMERCE
PUBLICATION NO. 590 ("ISP98").

SINCERELY,

AUTHORIZED SIGNATURE
XXX

J-2

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EXECUTION VERSION

PLEASE DIRECT ANY CORRESPONDENCE INCLUDING DRAWING OR INQUIRY QUOTING OUR LETTER
OF CREDIT NUMBER TO:

J-3

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EXECUTION VERSION

EXHIBIT K

Form of Bring-Down Opinion of Counsel

The legal opinions of counsel for each of the Exiting Participants and Acquiring
Participants required by Sections 7.3.4 and 7.4.3 of the Restructuring Agreement
will be to the following effect:

[Addressed to Exiting and Acquiring Participants]

Ladies and Gentlemen: [Expand as appropriate to encompass customary
qualifications and limitations and other relevant language]

We have acted as counsel to ______________ [Insert name of Party on whose behalf
this opinion is provided] in connection with the San Juan Project Restructuring
Agreement among Public Service Company of New Mexico; Tucson Electric Power
Company; The City of Farmington, New Mexico; M-S-R Public Power Agency; The
Incorporated County of Los Alamos, New Mexico; Southern California Public Power
Authority; City of Anaheim; Utah Associated Municipal Power Systems; Tri-State
Generation and Transmission Association, Inc.; and PNMR Development and
Management Corporation, dated as of July 31, 2015 (“Restructuring Agreement”)
(each a “Party” and collectively the “Parties”). We have been advised that in
accordance with Section 7 of the Restructuring Agreement all of the transactions
contemplated to take place at the Closing are ready to close and all of the
conditions precedent to the Closing have been satisfied or waived. Section
[7.3.4 or 7.4.2] of the Restructuring Agreement provides for the giving of this
bring-down opinion.

Pursuant to Section 17.3 of the Restructuring Agreement, we rendered to the
other Parties a legal opinion, dated __________, 2015 [Date of Prior Opinion]
(“Prior Opinion”), with respect to __________________ [Insert name of the Party
on whose behalf this opinion is provided]. In connection with the Closing, as
defined in Section 7 of the Restructuring Agreement, we hereby reaffirm the
Prior Opinion, as though it was dated the date hereof, in the form it was so
rendered on __________, 2015 [Date of Prior Opinion].

In addition to the foregoing, we are of the opinion that the representations and
warranties made by ________________ [Insert name of the Party on whose behalf
this opinion is provided] pursuant to Section 17.3 of the Restructuring
Agreement were true and correct in all material respects as of the date of the
Prior Opinion and are true and correct in all material respects as of the date
hereof, and no facts have come to our attention, after reasonable inquiry, which
would lead us to believe that such representations and warranties contained or
contain any untrue statement of a material fact or omitted to state or omit to
state any material fact necessary in order to make such statements, in the light
of the circumstances under which they were made, not misleading.

The opinions expressed herein are based only on the laws of the State of
_____________ [Insert State] in effect as of the date of this opinion and in all
respects are subject to and may be

K-1

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EXECUTION VERSION

limited by future legislation, as well as developing case law. We undertake no
duty to advise you of the same.

This letter is furnished by us as ____________

K-2