exh4-1_050609.htm


    Execution
Version

    


    Exhibit
4.1


    


    


    ___________________________________________________________________________

    ___________________________________________________________________________

    


    TEXAS-NEW
MEXICO POWER COMPANY

    


    


    to

     

    


    THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A.,

    as
Trustee

    


    _______________________________________

     

    


    THIRD
SUPPLEMENTAL INDENTURE

    dated
as of April 30, 2009

    


     

    Supplemental
to the First Mortgage Indenture

    dated
as of March 23, 2009

    (file
no.:  09-0007931211)

    


     

    Establishing
a series of Securities designated

    


    FIRST
MORTGAGE BONDS, DUE 2011, SERIES 2009C

     

    


    


    


    


    


    ___________________________________________________________________________

    ___________________________________________________________________________

    


    


    THIS
INSTRUMENT GRANTS A SECURITY INTEREST BY A UTILITY

    


    THIS
INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS

     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Address
of Debtor:

    Texas-New
Mexico Power Company

    Attention:
Vice President and Treasurer

    577 North
Garden Ridge Boulevard

    Lewisville,
Texas  75067

    


    


    


    


    Address
of Secured Party:

    The Bank
of New York Mellon Trust Company, N.A., as Trustee

    700 South
Flower Street, Suite 500

    Los
Angeles, California 90017

    Attention:
Corporate Trust Administration

    


    


     

    


     

    


     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    THIRD SUPPLEMENTAL INDENTURE,
dated as of April 30, 2009, between TEXAS-NEW MEXICO POWER
COMPANY, a corporation organized and existing under the laws of the State
of Texas (hereinafter called the “Company”), and THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., a national banking association organized and existing
under the laws of the United States, as Trustee under the Indenture hereinafter
referred to (hereinafter called the “Trustee”).

    


    RECITALS
OF THE COMPANY

    


    WHEREAS, the Company has
heretofore executed and delivered to the Trustee a First Mortgage Indenture,
dated as of March 23, 2009 (the “Original Indenture”),
providing for the issuance by the Company from time to time of its bonds, notes
or other evidence of indebtedness to be issued in one or more series of
Securities and to provide security for the payment of the principal of and
premium, if any, and interest, if any, on the Securities and the performance and
observance of the other obligations of the Company thereunder; and

    


    WHEREAS, the Company has also
heretofore executed and delivered to the Trustee a First Supplemental Indenture,
dated as of March 23, 2009, and a Second Supplemental Indenture, dated as
of March 25, 2009, each by and between the Company and the Trustee, each
providing for the establishment of the terms of a series of Securities (the
Original Indenture, as supplemented by said First Supplemental Indenture and
said Second Supplemental Indenture, the “Indenture”);
and

    


    WHEREAS, the Company has
entered into a Credit Agreement dated as of April 30, 2009 (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
“Credit
Agreement”) with the Lenders (as defined below) and JPMorgan Chase Bank,
N.A., as administrative agent for the Lenders, providing for the making of
certain financial accommodations thereunder, and pursuant to such Credit
Agreement the Company has agreed to issue to the Administrative Agent (as
defined below), as collateral security for the Borrower Obligations (as defined
below), a new series of Securities under the Indenture; and

    


    WHEREAS, for such purposes the
Company desires to issue a new series of Securities, to be designated First
Mortgage Bonds, due 2011, Series 2009C (the “Collateral Bonds”),
the Securities of which series are to be issued as registered bonds without
coupons and are to bear interest at the Interest Rate (as defined below) and are
to mature on the Maturity Date (as defined below); and

    


    WHEREAS, the Company, in the
exercise of the power and authority conferred upon and reserved to it under the
provisions of the Indenture and pursuant to appropriate resolutions of the Board
of Directors, has duly determined to make, execute and deliver to the Trustee
this Third Supplemental Indenture to the Indenture as permitted by Sections
2.01, 3.01 and 14.01 of the Original Indenture in order to establish the form
and terms of, and to provide for the creation and issuance of, the Collateral
Bonds under the Indenture in an initial aggregate principal amount of
$75,000,000; and

    


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    WHEREAS, all things necessary
to make the Collateral Bonds, when executed by the Company and authenticated and
delivered by the Trustee or any Authenticating Agent and issued upon the terms
and subject to the conditions hereinafter and in the Indenture, the valid,
binding and legal obligations of the Company and to make this Third Supplemental
Indenture a valid, binding and legal agreement of the Company, have been
done;

    


    NOW, THEREFORE, THIS THIRD
SUPPLEMENTAL INDENTURE WITNESSETH that, in order to establish the terms
of the Collateral Bonds and for and in consideration of the premises and of the
covenants contained in the Indenture and in this Third Supplemental Indenture
and for other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, intending to be legally bound, it is mutually
covenanted and agreed as follows:

    


    ARTICLE
ONE

    


    DEFINITIONS

     

    Section
1.01       Certain Definitions.
Each capitalized term that is used herein and is defined in the Original
Indenture shall have the meaning specified in the Original Indenture unless such
term is otherwise defined herein.  Unless the context otherwise
requires, any references to a “Section” refers to a Section of this Third
Supplemental Indenture.

     

     

    The
following terms have the meanings given to them in this Article One and, for
purposes of this Third Supplemental Indenture, such meanings shall supersede and
replace the meanings given them, if any, in the Indenture:

     

     

    “Administrative Agent”
has the meaning given it in the Credit Agreement.

     

    “Borrower Obligations”
has the meaning given it in the Credit Agreement.

     

    “Business Day” has the
meaning given it in the Credit Agreement.

     

    “Collateral Bonds” has
the meaning given it in the fourth recital.

     

    “Commitment” has the
meaning given it in the Credit Agreement.

     

    “Company” has the
meaning given it in the preamble.

     

    “Credit Acceleration
Event” means the acceleration of the Loans and any and all other Borrower
Obligations pursuant to Section 9.2(b) of the Credit Agreement.

     

    “Credit Agreement” has
the meaning given it in the third recital.

     

    “Credit Notice” means
a written notice from the Administrative Agent to the Company (with a copy to a
Responsible Officer of the Trustee at the Corporate Trust Office of the Trustee)
that states (i) that there has occurred a Credit Repurchase Event and (ii) the
Credit Repurchase Amount as of the related Credit Repurchase Date.

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Credit Repurchase
Amount” has the meaning given it in Section 2.03(c).

    


    “Credit Repurchase
Date” means (i) the date of the occurrence of a Credit Repurchase Event,
or (ii) with respect to a Credit Acceleration Event (other than a Credit
Repurchase Event), the date fixed in a Credit Written Demand for the Company’s
satisfaction of a Credit Repurchase Requirement.

    


    “Credit Repurchase
Event” means the occurrence of an “Event of Default”, as such term is
defined in the Credit Agreement, under Section 9.1(e) of the Credit
Agreement.

    


    “Credit Repurchase
Requirement” has the meaning given it in Section 2.03(c).

    


    “Credit Written
Demand” means a written demand from the Administrative Agent to the
Company (with a copy to a Responsible Officer of the Trustee at the Corporate
Trust Office of the Trustee) that (i) states that there has occurred a Credit
Acceleration Event (other than a Credit Repurchase Event), (ii) demands
repurchase by the Company of Collateral Bonds pursuant to Section 2.03(c), (iii)
fixes a Credit Repurchase Date (which date must be at least three and no more
than ten Business Days following the date on which the Company receives the
related Credit Written Demand) and (iv) states the Credit Repurchase Amount as
of such Credit Repurchase Date.

    


    “Indenture” has the
meaning given it in the second recital.

     

    “Interest Payment
Date” means each date on which Borrower Obligations constituting interest
and/or fees are due and payable from time to time pursuant to the Credit
Agreement.

     

    “Interest Rate” means
a rate of interest per annum, adjusted as necessary, to result in an interest
payment equal to the aggregate amount of Borrower Obligations constituting
interest and/or fees due under the Credit Agreement on the applicable Interest
Payment Date.

     

    “Lenders” has the
meaning given it in the Credit Agreement.

     

    “Loans” has the
meaning given it in the Credit Agreement.

     

    “Maturity” means the
date on which all of the principal of the Collateral Bonds becomes due and
payable, whether at stated maturity, upon redemption or acceleration or
otherwise.

     

    “Maturity Date” has
the meaning given it in the Credit Agreement.

     

    “Original Indenture”
has the meaning given it in the first recital.

     

    “Revolving Committed
Amount” has the meaning given it in the Credit Agreement.

     

    “Trustee” has the
meaning given it in the preamble.

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    ARTICLE
TWO

    


    TITLE,
FORM AND TERMS OF THE COLLATERAL BONDS

     

    Section
2.01       Title of the Collateral
Bonds.  This Third Supplemental Indenture hereby creates a
series of Securities designated as the “First Mortgage Bonds, due 2011, Series
2009C” (which are referred to herein as the “Collateral Bonds”)
and the form thereof shall be substantially as set forth in Exhibit A
hereto.  Such Collateral Bonds shall be executed, authenticated and
delivered in accordance with the provisions of, and, except as hereinafter
provided, shall in all respects be subject to all of the terms, conditions and
covenants of the Indenture as supplemented by this Third Supplemental Indenture.
For purposes of the Indenture, the Collateral Bonds shall constitute a single
series of Securities and may be issued in an unlimited aggregate principal
amount (subject to the limitations set forth in Article IV of the Indenture),
although the initial issuance, authentication and delivery of the Collateral
Bonds shall be in the aggregate principal amount of $75,000,000.

     

     

    Section
2.02       Form and Terms of the
Collateral Bonds.

     

     

    (a) The form
and terms of the Collateral Bonds pursuant to the authority granted by this
Third Supplemental Indenture in accordance with Sections 2.01 and 3.01 of the
Original Indenture are set forth herein.  The Collateral Bonds shall
be issued in registered form without coupons in the denominations of $1,000 and
integral multiples of $1,000, appropriately numbered and substantially in the
form set forth as Exhibit A
hereto.  The Collateral Bonds are to be issued to and registered in
the name of the Administrative Agent under the Credit Agreement, and are issued
as collateral security for any and all Borrower Obligations.

     

     

    (b) The
Collateral Bonds shall mature on the Maturity Date and shall bear interest at
the Interest Rate, payable on each Interest Payment Date.  The
Collateral Bonds shall be payable as to principal and interest in any coin or
currency of the United States of America which at the time of payment is legal
tender for public and private debts and as otherwise provided for in the
Indenture.

     

     

    (c) The
obligation of the Company to pay the principal of and accrued interest on the
Collateral Bonds at or after the Maturity (x) shall be deemed to have been
satisfied and discharged in full in the event that all amounts then due in
respect of the Borrower Obligations shall have been paid in full in immediately
available funds or (y) shall be deemed to remain unsatisfied in an amount equal
to the aggregate amount then due in respect of the Borrower Obligations and
remaining unpaid (not in excess, however, of the amount otherwise then due in
respect of principal of and accrued interest on the Collateral
Bonds).  The aggregate principal amount of the Collateral Bonds shall
be reduced in amount pursuant to Section 2.03 herein.

     

     

    (d) The
obligation of the Company to pay the accrued interest on the Collateral Bonds on
any Interest Payment Date prior to the Maturity (a) shall be deemed to have been
satisfied and discharged in full in the event that all amounts then due in
respect of the 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    Borrower
Obligations shall have been paid in full in immediately available funds or (b)
shall be deemed to remain unsatisfied in an amount equal to the aggregate amount
then due in respect of the Borrower Obligations and remaining unpaid (not in
excess, however, of the amount otherwise then due in respect of interest on the
Collateral Bonds).

     

     

    (e) The
Trustee may at any time and all times conclusively presume that the obligation
of the Company to pay the principal of and interest on the Collateral Bonds as
the same shall have become due and payable shall have been fully satisfied and
discharged unless and until a Responsible Officer of the Trustee shall have
received at the Corporate Trust Office a written notice from the Administrative
Agent stating (A) that timely payment of principal and interest on the
Collateral Bonds has not been made, (B) that the Company is in arrears as
to the payments required to be made by it to the Administrative Agent pursuant
to the Credit Agreement and (C) the amount of the
arrearage.  This paragraph is solely for the benefit of the
Trustee.

     

     

    Section
2.03       Redemption;
Repurchase.  (a) The Collateral Bonds are not redeemable at the
option of the Company.

     

    (b)           A
reduction in the Revolving Committed Amount in accordance with Section 2.1(d) of
the Credit Agreement shall automatically reduce the aggregate principal amount
of the Collateral Bonds by the aggregate amount of such reduction in the
Revolving Committed Amount, upon surrender by the Administrative Agent to the
Trustee at the Corporate Trust Office of the Trustee of Collateral Bonds in an
aggregate principal amount equal to the reduction, which surrender shall be a
condition precedent to the reduction in the Revolving Committed Amount and a
condition precedent to the reduction of the aggregate principal amount of the
Collateral Bonds.

     

    (c)           On
a Credit Repurchase Date, the Company shall repurchase (the “Credit Repurchase
Requirement”) the Collateral Bonds (including all accrued and unpaid
interest on the Collateral Bonds) for a purchase price equal to the Borrower
Obligations (the “Credit Repurchase
Amount”).  On the Credit Repurchase Date, the Company will
deposit with the Trustee immediately available funds in an amount equal to the
Credit Repurchase Amount and the Trustee shall pay such amount as soon as
practicable after receipt thereof to the Administrative
Agent.  Payment of a Credit Repurchase Amount equal to the Borrower
Obligations as of the applicable Credit Repurchase Date shall be deemed to
satisfy and discharge in full the principal of, and accrued and unpaid interest
on, the Collateral Bonds.

     

    (d)           The
Company’s obligation to satisfy a Credit Repurchase Requirement shall be
mandatory upon the occurrence of a Credit Repurchase Event.  Upon a
Credit Acceleration Event, the Administrative Agent may, at its option, deliver
a Credit Written Demand upon the Company’s receipt of which the Company’s
compliance with the Credit Repurchase Requirement shall be
mandatory.

     

    (e)           Following
a Credit Repurchase Event, the Administrative Agent shall promptly deliver to
the Company a Credit Notice.

     

    (f)           Any
Collateral Bonds surrendered to the Trustee in connection with a Credit
Repurchase Requirement or in connection with a reduction in the Revolving
Committed Amount shall promptly be cancelled in accordance with Section 3.09 of
the Indenture.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (g)           Any
Collateral Bond which is to be repurchased only in part (or is reduced in part,
pursuant to a reduction in the Revolving Committed Amount) shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Collateral Bond, without
service charge, a new Collateral Bond of any authorized denomination as
requested by such Holder and of like tenor and in aggregate principal amount
equal to and in exchange for the portion of the principal of the Collateral Bond
so surrendered that is not being repurchased or reduced.

     

    Section
2.04       [Reserved].

    


    Section
2.05       Restrictions on
Transfer.  The Collateral Bonds shall be issued to and
registered in the name of the Administrative Agent and shall not be transferable
by the Administrative Agent, except to (i) a successor Administrative Agent
appointed pursuant to the terms of Section 10.06 of the Credit Agreement or (ii)
the Company.  The Company hereby instructs the Trustee to so limit
transfers requested by any Holder (other than the Company) of any Collateral
Bond.

    


    Section
2.06       Sinking
Fund.  The Collateral Bonds are not subject to any sinking
fund.

     

                   
Section 2.07       Surrender.  The
Administrative Agent shall surrender the Collateral Bonds to the Trustee when
all of the Borrower Obligations shall have been duly paid in full in immediately
available funds, and the Credit Agreement (including, without limitation, all
Commitments thereunder) shall have been terminated, and the Trustee shall cancel
such Collateral Bonds upon receipt thereof.

    


    


    ARTICLE
THREE

    


    ISSUANCE
OF THE COLLATERAL BONDS

     

                   
Section 3.01      Additional Collateral
Bonds.  The principal amount of the Collateral Bonds which may
be authenticated and delivered hereunder is not limited, except as otherwise
provided in Article IV of the Indenture.

     

                  
Section 3.02      Authentication.  The
Collateral Bonds for the aggregate principal amount of $75,000,000 may forthwith
be executed by the Company and delivered to the Trustee and shall be
authenticated by the Trustee and delivered (either before or after the filing or
recording hereof) pursuant to or in accordance with a Company Order, upon
compliance by the Company with the appropriate provisions and requirements of
Articles III and IV of the Indenture.

     

    


    ARTICLE
FOUR

    


    MISCELLANEOUS
PROVISIONS

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

                   
Section 4.01       Utility and Transmitting
Utility.  The Company is a utility as defined in Section 35.01
of the Texas Business and Commerce Code (the “TBCC”). The Company
intends to subject this Third Supplemental Indenture to the requirements and
benefits of Subchapter A of Chapter 35 of the TBCC. The perfection and notice
provided by this Third Supplemental Indenture under Section 35.02 of the TBCC
shall be effective from the date of deposit for filing until the interest
granted as security is released by the filing of a termination statement, and no
renewal, refilling or continuation statement shall be required to continue such
effectiveness.  The Company is also a transmitting utility as defined in
Section 9.102 of the Texas Uniform Commercial Code.  This Third
Supplemental Indenture shall remain effective as a financing statement until a
termination statement is filed, as provided in Section 9.515(f) of the Texas
Uniform Commercial Code.

     

                
Section 4.02      Ratification.  The
Indenture, as supplemented by this Third Supplemental Indenture, is in all
respects ratified and confirmed, and this Third Supplemental Indenture shall be
deemed part of the Indenture in the manner and the extent herein and therein
provided.

     

                  
Section 4.03      Trustee.  The
Trustee hereby accepts the trust hereby declared and provided, and agrees to
perform the same upon the terms and conditions set forth in the Indenture, as
previously supplemented and amended, and as further supplemented by this Third
Supplemental Indenture, and upon the following terms and
conditions:

    


    The
Trustee shall not be responsible in any manner whatsoever for or in respect of
the validity or sufficiency of this Third Supplemental Indenture or the due
execution hereof by the Company or for or in respect of the recitals contained
herein, all of which recitals are made by the Company solely.

     

                  
Section 4.04      Governing
Law.  This Third Supplemental Indenture and the Collateral
Bonds shall be governed by and construed in accordance with the law of the State
of New York (including without limitation Section 5-1401 of the New York General
Obligations Law or any successor to such statute), except to the extent that the
Trust Indenture Act would be applicable were this Third Supplemental Indenture
qualified under the Trust Indenture Act and except to the extent that the law of
any other jurisdiction shall mandatorily govern the creation, perfection,
priority or enforcement of the Lien of the Indenture or the exercise of remedies
with respect to the Mortgaged Property.

     

                  
Section 4.05     Counterparts.  This
Third Supplemental Indenture is an indenture supplemental to the Indenture. This
Third Supplemental Indenture may be simultaneously executed in any number of
counterparts, each of which when so executed shall be deemed to be an original;
but such counterparts shall together constitute but one and the same
instrument.

     

    [signature
page follows]

     

    


     


    
      
         


      

      
        7

        
          

        

      

      
         


      

    


    IN WITNESS WHEREOF, said
TEXAS-NEW MEXICO POWER COMPANY has caused this Third Supplemental Indenture to
be executed on its behalf, and said THE BANK OF NEW YORK MELLON TRUST COMPANY,
N.A., as Trustee as aforesaid, in evidence of its acceptance of the trust hereby
created, has caused this Third Supplemental Indenture to be executed on its
behalf, all on the 29th day of April, 2009, to be effective as of the 30th day
of April, 2009.

    


    
      	 
      	
              TEXAS-NEW
      MEXICO POWER COMPANY

               

               

            
	 
      	
              By:

            	
              /s/
      Terry R.
      Horn                                               
      

            
	 
      	
              Name:

            	
              Terry
      R. Horn

            
	 
      	
              Title:

            	
              Vice
      President and Treasurer

            


    

    


    


    ACKNOWLEDGMENT:

    


    STATE OF
NEW
MEXICO                                         §

    
 

    §

    


    COUNTY OF
BERNALILLO                                       §

    


    


    This
instrument was acknowledged before me on this 29th day of April, 2009, by Terry
R. Horn, Vice President and Treasurer of TEXAS-NEW MEXICO POWER COMPANY, a Texas
corporation, on behalf of said corporation.

    


    


    


    /s/ Corrine
Brazfield

    Notary
Public in and for the State of

    New
Mexico

    


         Commission
Expires: 12/1/11

     

     

     

    
      
        
          
            S-1

            


            [Signature Page to Third
Supplemental Indenture, dated as of April 30, 2009, to

            First
Mortgage Indenture of Texas-New Mexico Power Company]

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    
 

    
      	 
      	
              THE
      BANK OF NEW YORK MELLON

                    TRUST
      COMPANY, N.A., as Trustee

               

               

            
	 
      	
              By:

            	
              /s/
      Raymond Torres

            
	 
      	 
      	
              Name:
      Raymond Torres

            
	 
      	 
      	
              Title:
      Assistant Vice President

            


    

    


    


    CALIFORNIA ALL-PURPOSE
ACKNOWLEDGMENT:

    


    


    STATE OF
CALIFORNIA                                           §

    


    §

    


    COUNTY OF
LOS
ANGELES                                      §

    


    On April
29, 2009, before me, Karen Yu, Notary Public, personally appeared Raymond Torres
who proved to me on the basis of satisfactory evidence to
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.

    


    


      /s/ Karen
Yu

      Signature of Notary
Public


    
      
        
          S-2

          


          [Signature Page to Third
Supplemental Indenture, dated as of April 30, 2009, to

          First
Mortgage Indenture of Texas-New Mexico Power Company]

        

         


      

      
         


        
          

        

      

      
         


      

    


    Exhibit
A

     

    [FORM
OF FIRST MORTGAGE BOND, DUE 2011, SERIES 2009C]

    


    THIS
SECURITY IS NOT TRANSFERABLE EXCEPT AS PERMITTED IN SECTION 2.05 OF THE
THIRD SUPPLEMENTAL INDENTURE.

    


     

    TEXAS-NEW
MEXICO POWER COMPANY

     

    


    (Incorporated
under the laws of the State of Texas)

    


    
 

    First
Mortgage Bond, due 2011, Series 2009C

    


    


    No.                                                                                                                                              $          

    


    


    TEXAS-NEW
MEXICO POWER COMPANY, a corporation organized and existing under the laws of the
State of Texas (the “Company”, which term
shall include any Successor Corporation under the Indenture (as defined on the
reverse hereof)), for value received, hereby promises to pay to
                               ,
as administrative agent (in such capacity, the “Administrative
Agent”) for the Lenders under and as defined in the Credit Agreement,
dated as of April 30, 2009, among the Company, the Lenders named therein
and from time to time a party thereto and the Administrative Agent (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
“Credit
Agreement”), or registered assigns, the principal sum of $75,000,000 or
such lesser principal amount as may result from permanent reductions in the
aggregate principal amount hereof pursuant to Section 2.03(b) or Section 2.03(c)
of the Third Supplemental Indenture (as defined on the reverse hereof), but not
in excess, however, of said $75,000,000 principal sum, on the Maturity Date, in
any coin or currency of the United States of America which at the time of
payment is legal tender for public and private debts, and to pay interest
thereon at the Interest Rate in like coin or currency from April 30, 2009,
or from the most recent Interest Payment Date to which interest is paid or
provided for, payable on each Interest Payment Date until the principal hereof
is paid or duly made available for payment on the Maturity Date, or, in the
event of default in the payment of the principal hereof, until the Company’s
obligations with respect to the payment of such principal shall be discharged as
provided in the Indenture.

    


    Principal
of, premium (if any) and interest on this Collateral Bond are payable at the
corporate trust office or agency of the Trustee, in New York, New York, as
Paying Agent for the Company.

    


    The
provisions of this Collateral Bond are continued on the reverse hereof, and such
continued provisions shall for all purposes have the same effect as though fully
set forth at this place.

     

    
      
        
          
            A-1

            


          

           


        

        
           


          
            

          

        

        
           


        

      

    

    
 

    This
Collateral Bond shall not be entitled to any benefit under the Indenture or any
indenture supplemental thereto, or become valid or obligatory for any purpose,
until The Bank of New York Mellon Trust Company, N.A., the Trustee under the
Indenture, or a successor trustee thereto under the Indenture, shall have signed
the form of certificate endorsed hereon.

    


    [signature
page follows]


    
      
        
          A-2

          


        

         


      

      
         


        
          

        

      

      
         


      

    


    


    IN
WITNESS WHEREOF, TEXAS-NEW MEXICO POWER COMPANY has caused the signature of its
duly authorized officer to be hereto affixed.

    


    Dated:
____________

    
      	 
      	
               

               

                                                          
      By:

            	
              TEXAS-NEW
      MEXICO POWER COMPANY

               

              __________________________________

            
	 
      	 
      	
              Name:

            
	 
      	 
      	
              Title:

            


    

    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    CERTIFICATE
OF AUTHENTICATION

     

    This is
one of the First Mortgage Bonds of the series designated therein referred to in
the within-mentioned Indenture, as supplemented by the Third Supplemental
Indenture.

    


    
      	 
      	
               

               

                     
      By:

            	
              THE
      BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee

               

               

              ____________________________________________

            
	 
      	 
      	
              Authorized
      Officer

            


    

    


    


    


    


    


    


    


    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    [FORM OF REVERSE OF FIRST
MORTGAGE BOND, DUE 2011, SERIES 2009C]

     

    This
Security is one of a duly authorized issue of First Mortgage Bonds of the
Company (herein called the “First Mortgage
Bonds”), unlimited in aggregate principal amount, of the series
hereinafter specified, all issued and to be issued under and equally secured by
an indenture, dated as of March 23, 2009, executed by the Company and
delivered to The Bank of New York Mellon Trust Company, N.A. (herein called the
“Trustee”)
(said indenture being herein called the “Indenture”), to which
Indenture and all indentures supplemental thereto (including the Third
Supplemental Indenture hereinafter referred to) reference is hereby made for a
description of the properties mortgaged and pledged, the nature and extent of
the security, the rights of the registered owners of the First Mortgage Bonds
and of the Trustee in respect thereto, and the terms and conditions upon which
the First Mortgage Bonds are, and are to be, secured, and for a statement of the
respective rights, duties and immunities thereunder of the Company, the Trustee
and the Holders of the First Mortgage Bonds and of the terms upon which the
First Mortgage Bonds are, and are to be, authenticated and
delivered.  To the extent permitted by, and as provided in, the
Indenture, modifications or alterations of the Indenture, or of any indenture
supplemental thereto, and of the rights and obligations of the Company and of
the Holders of the First Mortgage Bonds may be made, in certain cases without
the consent of the Holders, as set forth in Section 14.01 of the Indenture, and
otherwise with the consent of the Company by an affirmative vote of not less
than a majority in amount of the First Mortgage Bonds entitled to vote then
outstanding, at a meeting of Holders called and held as provided in the
Indenture, and by an affirmative vote of not less than a majority in amount of
the First Mortgage Bonds of any series entitled to vote then outstanding and
affected by such modifications or alterations, in case one or more but less than
all of the series of First Mortgage Bonds then outstanding under the Indenture
are so affected; provided,
however, that no such modifications or alterations shall be made which
will affect the terms of payment of the principal of, or interest on, this First
Mortgage Bond, which are unconditional. The First Mortgage Bonds may be issued
in series, for various principal sums, may mature at different times, may bear
interest at different rates and may otherwise vary as provided in the Indenture.
This First Mortgage Bond is one of a series designated as “First Mortgage Bonds,
due 2011, Series 2009C” (herein called the “Collateral Bonds”) of
the Company, issued under and secured by the Indenture and described in an
indenture supplemental thereto (herein called the “Third Supplemental
Indenture”), dated as of April 30, 2009, executed by the Company and
delivered to the Trustee.

     

    The
Collateral Bonds are to be issued and delivered to the Administrative Agent as
collateral security for the Borrower Obligations.

     

    The
obligation of the Company to pay the principal of and accrued interest on the
Collateral Bonds at or after the Maturity (x) shall be deemed to have been
satisfied and discharged in full in the event that all amounts then due in
respect of the Borrower Obligations shall have been paid in full in immediately
available funds or (y) shall be deemed to remain unsatisfied in an amount equal
to the aggregate amount then due in respect of the Borrower Obligations and
remaining unpaid (not in excess, however, of the amount otherwise then due in
respect of principal of and accrued interest on the Collateral
Bonds).  The aggregate principal amount of the Collateral Bonds shall
be reduced in amount pursuant to Section 2.03 herein.

     

    
      
        
        

      

      
        
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    The
obligation of the Company to pay the accrued interest on the Collateral Bonds on
any Interest Payment Date prior to the Maturity (a) shall be deemed to have been
satisfied and discharged in full in the event that all amounts then due in
respect of the Borrower Obligations shall have been paid in full in immediately
available funds or (b) shall be deemed to remain unsatisfied in an amount equal
to the aggregate amount then due in respect of the Borrower Obligations and
remaining unpaid (not in excess, however, of the amount otherwise then due in
respect of interest on the Collateral Bonds).

     

     

    The
Trustee may at any time and all times conclusively presume that the obligation
of the Company to pay the principal of and interest on the Collateral Bonds as
the same shall have become due and payable, shall have been fully satisfied and
discharged unless and until a Responsible Officer of the Trustee shall have
received at the Corporate Trust Office a written notice from the Administrative
Agent stating (A) that timely payment of principal and interest on the
Collateral Bonds has not been made, (B) that the Company is in arrears as
to the payments required to be made by it to the Administrative Agent pursuant
to the Credit Agreement and (C) the amount of the
arrearage.  This paragraph is solely for the benefit of the
Trustee.

     

    


    This
Collateral Bond is not redeemable at the option of the Company.

     

    A
reduction in the Revolving Committed Amount in accordance with Section 2.1(d) of
the Credit Agreement shall automatically reduce the aggregate principal amount
of the Collateral Bonds by the aggregate amount of such reduction in the
Revolving Committed Amount, upon surrender by the Administrative Agent to the
Trustee at the Corporate Trust Office of the Trustee of Collateral Bonds in an
aggregate principal amount equal to the reduction, which surrender shall be a
condition precedent to the reduction in the Revolving Committed Amount and a
condition precedent to the reduction of the aggregate principal amount of the
Collateral Bonds.

     

    On a
Credit Repurchase Date, the Company shall repurchase (the “Credit Repurchase
Requirement”) the Collateral Bonds (including all accrued and unpaid
interest on the Collateral Bonds) for a purchase price equal to the Borrower
Obligations (the “Credit Repurchase
Amount”).  On the Credit Repurchase Date, the Company will
deposit with the Trustee immediately available funds in an amount equal to the
Credit Repurchase Amount and the Trustee shall pay such amount as soon as
practicable after receipt thereof to the Administrative Agent.

     

    Payment
of a Credit Repurchase Amount equal to the Borrower Obligations as of the
applicable Credit Repurchase Date shall be deemed to satisfy and discharge in
full the principal of, and accrued and unpaid interest on, the Collateral
Bonds.

     

    The
Company’s obligation to satisfy a Credit Repurchase Requirement shall be
mandatory upon the occurrence of a Credit Repurchase Event.  Upon a
Credit Acceleration Event, the Administrative Agent may, at its option, deliver
a Credit Written Demand, upon the Company’s receipt of which the Company’s
compliance with the Credit Repurchase Requirement shall be
mandatory.

     

    Any
Collateral Bond which is to be repurchased only in part (or reduced in part,
pursuant to a reduction in the Revolving Committed Amount) shall be surrendered
at a Place of Payment 

     

    
      
        
        

      

      
        
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    therefor
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Collateral Bond, without service charge, a new
Collateral Bond of any authorized denomination as requested by such Holder and
of like tenor and in aggregate principal amount equal to and in exchange for the
portion of the principal of the Collateral Bond so surrendered that is not being
repurchased or reduced.

     

    In case
an Event of Default shall occur, the principal of all the Collateral Bonds at
any such time outstanding under the Indenture may be declared or may become due
and payable, upon the conditions and in the manner and with the effect provided
in the Indenture. The Indenture provides that such declaration may in certain
events be waived by the Holders of a majority in principal amount of the
Collateral Bonds outstanding.

    


    Except as
set forth in Section 2.05 of the Third Supplemental Indenture, this Collateral
Bond is not transferable by the Holder thereof.

    


    No
recourse shall be had for the payment of the principal of, or the interest on,
this Collateral Bond, or for any claim based hereon or on the Indenture or any
indenture supplemental thereto, against any incorporator, or against any
stockholder, director or officer, past, present or future, of the Company, as
such, or of any predecessor or successor corporation, either directly or through
the Company or any such predecessor or successor corporation, whether for
amounts unpaid on stock subscriptions or by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or otherwise,
all such liability, whether at common law, in equity, by any constitution,
statute or otherwise, of incorporators, stockholders, directors or officers
being released by every owner hereof by the acceptance of this Collateral Bond
and as part of the consideration for the issue hereof, and being likewise
released by the terms of the Indenture.

    


    This
Collateral Bond shall be governed by, and construed in accordance with, the laws
of the State of New York (including without limitation Section 5-1401 of the New
York General Obligations Law or any successor to such statute), except to the
extent that the Trust Indenture Act would be applicable were the Third
Supplemental Indenture qualified under the Trust Indenture Act and except to the
extent that the law of any other jurisdiction shall mandatorily govern the
creation, perfection, priority or enforcement of the Lien of the Indenture or
the exercise of remedies with respect to the Mortgaged Property.

    


    The
Administrative Agent shall surrender this Collateral Bond to the Trustee when
all of the Borrower Obligations shall have been duly paid in full in immediately
available funds, and the Credit Agreement (including, without limitation, all
Commitments thereunder) shall have been terminated, and the Trustee shall cancel
such Collateral Bonds upon receipt thereof.

    


    All
capitalized terms used but not defined in this Collateral Bond shall have the
meanings assigned to them in the Indenture or the Third Supplemental Indenture,
as applicable.

    



    
      
        
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