**EXHIBIT99.2**

**EXECUTIONCOPY**

** PNM RESOURCES, INC.**

**and**

**U.S. BANK NATIONALASSOCIATION,as Collateral Agent, Custodial Agent and Securities Intermediary**

**and**

**U.S. BANK NATIONALASSOCIATION,as Purchase Contract Agent**

**PLEDGE AGREEMENT**

**Dated as of October 7, 2005**

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**Tableof Contents**

ARTICLE 1

Definitions
|         |        | **Page** |
|--------------|-------------|----------|
| Section 1.01 | Definitions | 1        |

ARTICLE 2

PLEDGE
| Section 2.01 | Pledge      | 5 |
|--------------|-------------|---|
| Section 2.02 | Control     | 5 |
| Section 2.03 | Termination | 6 |

ARTICLE 3

Distributions on Pledged Collateral
| Section 3.01 | Income and  Distributions                                            | 6 |
|--------------|----------------------------------------------------------------------|---|
| Section 3.02 | Principal Payments  Following Termination Event                      | 6 |
| Section 3.03 | Principal Payments  Prior to or on Purchase Contract Settlement Date | 6 |
| Section 3.04 | Payments to Purchase  Contract Agent                                 | 7 |
| Section 3.05 | Assets Not Properly  Released                                        | 7 |

ARTICLE 4

Control
| Section 4.01 | Establishment of  Collateral Account | 7 |
|--------------|--------------------------------------|---|
| Section 4.02 | Treatment as  Financial Assets       | 8 |
| Section 4.03 | Sole Control by  Collateral Agent    | 8 |
| Section 4.04 | Securities  Intermediary's Location  | 8 |
| Section 4.05 | No Other Claims                      | 8 |
| Section 4.06 | Investment and  Release              | 8 |
| Section 4.07 | Statements and  Confirmations        | 8 |
| Section 4.08 | Tax Allocations                      | 9 |
| Section 4.09 | No Other Agreements                  | 9 |
| Section 4.10 | Powers Coupled with  an Interest     | 9 |
| Section 4.11 | Waiver of Lien;  Waiver of Set-off   | 9 |

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ARTICLE 5

Initial Deposit; Creation of Treasury Units and Recreation

OF Corporate Units
| Section 5.01 | Initial Deposit of  Senior Notes                             | 9  |
|--------------|--------------------------------------------------------------|----|
| Section 5.02 | Creation of Treasury  Units                                  | 10 |
| Section 5.03 | Recreation of  Corporate Units                               | 11 |
| Section 5.04 | Termination Event                                            | 12 |
| Section 5.05 | Cash Settlement                                              | 13 |
| Section 5.06 | Early Settlement and  Cash Merger Early Settlement           | 14 |
| Section 5.07 | Application of  Proceeds in Settlement of Purchase Contracts | 15 |
| Section 5.08 | Special Event  Redemption                                    | 17 |

ARTICLE 6

Voting Rights - Pledged Senior Notes
| Section 6.01 | Voting Rights | 17 |
|--------------|---------------|----|

ARTICLE 7

Rights and Remedies
| Section 7.01 | Rights and Remedies  of the Collateral Agent | 18 |
|--------------|----------------------------------------------|----|
| Section 7.02 | Special Event  Redemption                    | 19 |
| Section 7.03 | Initial Remarketing                          | 19 |
| Section 7.04 | Final Remarketing                            | 19 |
| Section 7.05 | Successful Initial  Remarketing              | 19 |
| Section 7.06 | Substitutions                                | 20 |

ARTICLE 8

Representations and Warranties; Covenants
| Section 8.01 | Representations and  Warranties | 20 |
|--------------|---------------------------------|----|
| Section 8.02 | Covenants                       | 21 |

ARTICLE 9

The Collateral Agent, The Custodial Agent and The

Securities Intermediary
| Section 9.01 | Appointment, Powers  and Immunities                                        | 21 |
|--------------|----------------------------------------------------------------------------|----|
| Section 9.02 | Instructions of the  Company                                               | 22 |
| Section 9.03 | Reliance by  Collateral Agent, Custodial Agent and Securities Intermediary | 22 |

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| Section 9.04 | Certain Rights                                                                     | 23 |
|--------------|------------------------------------------------------------------------------------|----|
| Section 9.05 | Merger, Conversion,  Consolidation or Succession to Business                       | 23 |
| Section 9.06 | Rights in Other  Capacities                                                        | 23 |
| Section 9.07 | Non-reliance on  Collateral Agent, the Custodial Agent and Securities Intermediary | 24 |
| Section 9.08 | Compensation and  Indemnity                                                        | 24 |
| Section 9.09 | Failure to Act                                                                     | 25 |
| Section 9.10 | Resignation of  Collateral Agent, the Custodial Agent and Securities Intermediary  | 25 |
| Section 9.11 | Right to Appoint  Agent or Advisor                                                 | 27 |
| Section 9.12 | Survival                                                                           | 27 |
| Section 9.13 | Exculpation                                                                        | 27 |

ARTICLE 10

Amendment
| Section 10.01 | Amendment Without  Consent of Holders | 27 |
|---------------|---------------------------------------|----|
| Section 10.02 | Amendment with  Consent of Holders    | 28 |
| Section 10.03 | Execution of  Amendments              | 29 |
| Section 10.04 | Effect of Amendments                  | 29 |
| Section 10.05 | Reference of  Amendments              | 29 |

ARTICLE 11

Miscellaneous
| Section 11.01 | No Waiver                                                                | 29 |
|---------------|--------------------------------------------------------------------------|----|
| Section 11.02 | Governing Law;  Submission to Jurisdiction                               | 29 |
| Section 11.03 | Notices                                                                  | 30 |
| Section 11.04 | Successors and  Assigns                                                  | 30 |
| Section 11.05 | Counterparts                                                             | 30 |
| Section 11.06 | Severability                                                             | 30 |
| Section 11.07 | Expenses, Etc                                                            | 30 |
| Section 11.08 | Security Interest  Absolute                                              | 31 |
| Section 11.09 | Notice of Special  Event, Special Event Redemption and Termination Event | 31 |

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EXHIBITS

Exhibit A -Instruction from Purchase Contract Agent to Collateral Agent (Creation ofTreasury Units)

Exhibit B -Instruction from Collateral Agent to Securities Intermediary (Creation ofTreasury Units)

Exhibit C -Instruction from Purchase Contract Agent to Collateral Agent (Recreation ofCorporate Units)

Exhibit D -Instruction from Collateral Agent to Securities Intermediary (Recreation ofCorporate Units)

Exhibit E- Notice of Cash Settlement from Collateral Agent to Purchase Contract Agent

Exhibit F- Instruction to Custodial Agent Regarding Remarketing

Exhibit G- Instruction to Custodial Agent Regarding Withdrawal From Remarketing

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**PLEDGE AGREEMENT** dated as of October 7, 2005 between**PNM RESOURCES, INC.**, a New Mexico corporation (the**"Company"**),and **U.S. BANK NATIONAL ASSOCIATION**, a national banking association, ascollateral agent (in such capacity, together with its successors in such capacity,the **"Collateral Agent"**), as custodial agent (in such capacity, togetherwith its successors in such capacity, the **"Custodial Agent"**), and as securitiesintermediary (as defined in Section 8-102(a)(14) of the UCC) with respect tothe Collateral Account (in such capacity, together with its successors in suchcapacity, the **"Securities Intermediary"**), and as purchase contract agentand as attorney-in-fact of the Holders from time to time of the Units (in suchcapacity, together with its successors in such capacity, the **"PurchaseContract Agent"**) under the Purchase Contract Agreement.

**RECITALS**

**WHEREAS,** the Company and the Purchase ContractAgent are parties to the Purchase Contract Agreement dated as of October 7,2005 (as modified and supplemented and in effect from time to time, the **"PurchaseContract Agreement"**), pursuant to which 4,000,000 Corporate Units will be issued.

**WHEREAS,** each Corporate Unit, at issuance, consistsof a unit comprised of (a) a stock purchase contract (a **"Purchase Contract"**)pursuant to which the Holder will purchase from the Company on the PurchaseContract Settlement Date, for an amount equal to $25 (the **"Stated Amount"**),a number of shares of the Company's common stock, no par value (**"CommonStock"**), equal to the Settlement Rate and (b) a 1/40, or 2.5%, beneficialownership interest in a Senior Note.

**WHEREAS,** pursuant to the terms of the PurchaseContract Agreement and the Purchase Contracts, the Holders of the Units haveirrevocably authorized the Purchase Contract Agent, as attorney-in-fact of suchHolders, among other things, to execute and deliver this Agreement on behalf ofsuch Holders and to grant the pledge provided herein of the Collateral tosecure the Obligations.

**NOW, THEREFORE,** the Company, the Collateral Agent,the Custodial Agent, the Securities Intermediary and the Purchase ContractAgent agree as follows:

# **ARTICLE1****Definitions**

Section 1.01         Definitions.  For all purposes of this Agreement, except asotherwise expressly provided or unless the context otherwise requires:

(a)       theterms defined in this Article have the meanings assigned to them in thisArticle and include the plural as well as the singular, and nouns and pronounsof the masculine gender include the feminine and neuter genders;

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(b)       thewords **"herein,"****"hereof"** and **"hereunder"** and other wordsof similar import refer to this Agreement as a whole and not to any particularArticle, Section, Exhibit or other subdivision;

(c)       thefollowing terms which are defined in the UCC shall have the meanings set forththerein: **"certificated security," "control," "financial asset," "entitlementorder," "securities account"** and **"security entitlement"**;

(d)       capitalizedterms used herein and not defined herein have the meanings assigned to them inthe Purchase Contract Agreement; and

(e)       thefollowing terms have the meanings given to them in this **Section 1.01(e)**:

**"Agreement"** means this Pledge Agreement, as thesame may be amended, modified or supplemented from time to time.

**"Cash"** means any coin or currency of the UnitedStates as at the time shall be legal tender for payment of public and privatedebts.

**"Collateral"** means the collective reference to:

                                                                 (i)              the Collateral Account and all investment property and otherfinancial assets from time to time credited to the Collateral Account and allsecurity entitlements with respect thereto, including, without limitation, (A)the Senior Notes and security entitlements relating thereto that are acomponent of the Corporate Units from time to time, (B) the ApplicableOwnership Interests (as specified in clause (i) of the definition of such term)in the Treasury Portfolio that are a component of the Corporate Units from timeto time, (C) any Treasury Securities and security entitlements relating theretodelivered from time to time upon creation of Treasury Units in accordance with **Section5.02** hereof and (D) payments made by Holders pursuant to **Section 5.05**hereof;

                                                               (ii)              all Proceeds of any of the foregoing (whether such Proceeds arisebefore or after the commencement of any proceeding under any applicablebankruptcy, insolvency or other similar law, by or against the pledgor or withrespect to the pledgor); and

                                                              (iii)              all powers and rights now owned or hereafter acquired under orwith respect to the Collateral.

**"Collateral Account"** means the securities accountof U.S. Bank National Association, as Collateral Agent, maintained by theSecurities Intermediary and designated "U.S. Bank National Association, as CollateralAgent of PNM Resources, Inc., as pledgee of U.S. Bank National Association, asthe Purchase Contract Agent on behalf of and as attorney-in-fact for theHolders".

**"Collateral Agent"** has the meaning specified in theparagraph preceding the recitals of this Agreement.

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**"Common Stock"** has the meaning specified in thesecond paragraph of the recitals of this Agreement.

**"Company"** means the Person named as the **"Company"**in the first paragraph of this Agreement until a successor shall have becomesuch pursuant to the applicable provisions of the Purchase Contract Agreement, andthereafter **"Company"** shall mean such successor.

**"Custodial Agent"** has the meaning specified in theparagraph preceding the recitals of this Agreement.

**"Indemnitees"** has the meaning given such term inSection 9.08(b).

**"Loss" or "Losses"** has the meaning given such termin Section 9.08(b).

**"Obligations"** means, with respect to each Holder,all obligations and liabilities of such Holder under such Holder's PurchaseContract, the Purchase Contract Agreement and this Agreement or any otherdocument made, delivered or given in connection herewith or therewith, in eachcase whether on account of principal, interest (including, without limitation, interestaccruing before and after the filing of any petition in bankruptcy, or thecommencement of any insolvency, reorganization or like proceeding, relating tosuch Holder, whether or not a claim for post-filing or post-petition interestis allowed in such proceeding), fees, indemnities, costs, expenses or otherwise(including, without limitation, all fees and disbursements of counsel to theCompany or the Collateral Agent or the Securities Intermediary that arerequired to be paid by the Holder pursuant to the terms of any of the foregoingagreements).

**"Permitted Investments"** means any one of thefollowing, in each case maturing on the Business Day following the date ofacquisition:

(1)  any evidence of indebtedness with an originalmaturity of 365 days or less issued, or directly and fully guaranteed or insured,by the United States of America or any agency or instrumentality thereof (*provided*that the full faith and credit of the United States of America is pledged insupport of the timely payment thereof or such indebtedness constitutes ageneral obligation of it);

(2)  deposits, certificates of deposit oracceptances with an original maturity of 365 days or less of any institution whichis a member of the Federal Reserve System having combined capital and surplusand undivided profits of not less than $500 million at the time of deposit (andwhich may include the Collateral Agent);

(3)  investments with an original maturity of 365days or less of any Person that are fully and unconditionally guaranteed by a bankreferred to in clause (2);

(4)  repurchase agreements and reverse repurchaseagreements relating to marketable direct obligations issued or unconditionally guaranteedby the United States of America or issued by any agency thereof and backed asto timely payment by the full faith and credit of the United States of America;

(5)  investments in commercial paper, other thancommercial paper issued by the Company or its Affiliates, of any corporation incorporatedunder the laws of the United States of America or any State thereof, whichcommercial paper has a rating at the time 

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of purchase at least equal to **"A-1"**by Standard & Poor's Ratings Services (**"S&P"**) or at least equalto **"P-1"** by Moody's Investors Service, Inc. (**"Moody's"**); and

(6)  investments in money market funds (including,but not limited to, money market funds managed by the Collateral Agent or an affiliateof the Collateral Agent) registered under the Investment Company Act of 1940,as amended, rated in the highest applicable rating category by S&P or Moody's.

**"Person"** means anyindividual, corporation, partnership, joint venture, trust, unincorporatedorganization or government or any agency, instrumentality or politicalsubdivision thereof.

**"Pledge"** means the lien and security interestcreated by this Agreement.

**"Pledged Applicable Ownership Interests"** means theHolder's Applicable Ownership Interests (as specified in clause (i) of the definitionthereof) in the Treasury Portfolio and security entitlements with respectthereto from time to time credited to the Collateral Account and not thenreleased from the Pledge.

**"Pledged Senior Notes"** means Senior Notes andsecurity entitlements with respect thereto from time to time credited to theCollateral Account and not then released from the Pledge.

**"Pledged Securities"** means the Pledged SeniorNotes, the Pledged Applicable Ownership Interests and the Pledged TreasurySecurities, collectively.

**"Pledged Treasury Securities"** means TreasurySecurities and security entitlements with respect thereto from time to timecredited to the Collateral Account and not then released from the Pledge.

**"Proceeds"** has the meaning ascribed thereto in theUCC and includes, without limitation, all interest, dividends, cash,instruments, securities, financial assets and other property received,receivable or otherwise distributed upon the sale (including, withoutlimitation, the Remarketing), exchange, collection or disposition of anyfinancial assets from time to time held in the Collateral Account.

**"Purchase Contract"** has the meaning specified inthe second paragraph of the recitals of this Agreement.

**"Purchase Contract Agent"** has the meaning specifiedin the paragraph preceding the recitals of this Agreement.

**"Purchase Contract Agreement"** has the meaningspecified in the first paragraph of the recitals of this Agreement.

**"Purchase Contract Settlement Date"** means November16, 2008.

**"Securities Intermediary"** has the meaning specifiedin the paragraph preceding the recitals of this Agreement.

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**"Stated Amount"** has the meaning specified in thesecond paragraph of the recitals of this Agreement.

**"TRADES"** means the Treasury/Reserve Automated DebtEntry System maintained by the Federal Reserve Bank of New York pursuant to theTRADES Regulations.

**"TRADES Regulations"** means the regulations of theUnited States Department of the Treasury, published at 31 C.F.R. Part 357, asamended from time to time.  Unless otherwise defined herein, all terms definedin the TRADES Regulations are used herein as therein defined.

**"Transfer"** means (i) in the case of certificatedsecurities in registered form, delivery as provided in § 8-301(a) of the UCC, endorsedto the transferee or in blank by an effective endorsement, (ii) in the case ofTreasury Securities, registration of the transferee as the owner of suchTreasury Securities on TRADES and (iii) in the case of security entitlements,including, without limitation, security entitlements with respect to TreasurySecurities, a securities intermediary indicating by book entry that suchsecurity entitlement has been credited to the transferee's securities account.

**"Treasury Securities"** means zero-coupon U.S.treasury securities that mature on November 15, 2008 (CUSIP No. 912828EC0).

**"UCC"** means the Uniform Commercial Code as ineffect in the State of New York from time to time.

**"Value"** means, with respect to any item ofCollateral on any date, as to (1) Cash, the face amount thereof, (2) TreasurySecurities or Senior Notes, the aggregate principal amount thereof at maturityand (3) Applicable Ownership Interests (as specified in clause (i) of the definitionof such term), the appropriate percentage of the aggregate principal amount atmaturity of the Treasury Portfolio.

# **ARTICLE 2****PLEDGE**

Section 2.01         Pledge.  Each Holder,acting through the Purchase Contract Agent as such Holder's attorney-in-fact,and the Purchase Contract Agent, acting solely as such attorney-in-fact, herebypledges and grants to the Collateral Agent, as agent of and for the benefit ofthe Company, a continuing first priority security interest in and to, and alien upon and right of set-off against, all of such Person's right, title andinterest in and to the Collateral to secure the prompt and complete payment andperformance when due (whether at stated maturity, by acceleration or otherwise)of the Obligations.  The Collateral Agent shall have all of the rights,remedies and recourses with respect to the Collateral afforded a secured partyby the UCC, in addition to, and not in limitation of, the other rights,remedies and recourses afforded to the Collateral Agent by this Agreement.

Section 2.02         Control.  The CollateralAgent shall have control of the Collateral Account pursuant to the provisionsof **Article 4** of this Agreement.

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Section 2.03         Termination.  As to each Holder,this Agreement and the Pledge created hereby shall terminate upon thesatisfaction of such Holder's Obligations.  Upon such termination, the Collateral Agent shall, except asotherwise provided herein, instruct the Securities Intermediary to Transfersuch Holder's portion of the Collateral to the Purchase Contract Agent fordistribution to such Holder, free and clear of the Pledge created hereby.

# **ARTICLE3****Distributionson Pledged Collateral**

Section 3.01         Income and Distributions. The Collateral Agent shall transfer all income and distributions received bythe Collateral Agent on account of the Pledged Senior Notes, the PledgedApplicable Ownership Interests or Permitted Investments from time to time heldin the Collateral Account (ABA No. 789017000, Re: PNM Resources, Inc.) to thePurchase Contract Agent for distribution to the applicable Holders as providedin the Purchase Contracts or Purchase Contract Agreement.

Section 3.02         Principal Payments Following Termination Event.  Following a Termination Event, the CollateralAgent shall transfer all principal payments it receives, if any, in respect of(1) the Pledged Senior Notes, (2) the Pledged Applicable Ownership Interestsand (3) the Pledged Treasury Securities, to the Purchase Contract Agent for thebenefit of the applicable Holders for distribution to such Holders inaccordance with their respective interests, free and clear of the Pledgecreated hereby.

Section 3.03         Principal Payments Prior to or on Purchase Contract SettlementDate.

(a)  Subjectto the provisions of **Sections 5.06**and**5.08**, and except as providedin **Section 3.03(b)** below, if no Termination Event shall have occurred, allprincipal payments received by the Securities Intermediary in respect of (1) thePledged Senior Notes, (2) the Pledged Applicable Ownership Interests and (3) thePledged Treasury Securities, shall be held and invested in Permitted Investmentsuntil the Purchase Contract Settlement Date, and transferred to the Company onthe Purchase Contract Settlement Date as provided in **Section 5.07** hereof. Any balance remaining in the Collateral Account shall be released from thePledge and transferred to the Purchase Contract Agent for the benefit of the applicableHolders for distribution to such Holders in accordance with their respectiveinterests, free and clear of the Pledge created thereby.  The Company shallinstruct the Collateral Agent in writing as to the type of Permitted Investmentsin which any payments made under this **Section 3.03(a)** shall be invested;*provided*, *however*, that if the Company fails to deliver such instructionsby 10:30 a.m. (New York City time) on the day such payments are received by theCollateral Agent, the Collateral Agent shall invest such payments in thePermitted Investments as described in clause (6) of the definition of PermittedInvestments.  The Collateral Agent shall have no liability in respect of lossesincurred as a result of the failure of the Company to provide timely writteninvestment direction.

(b)       Allprincipal payments received by the Securities Intermediary in respect of (1)the Senior Notes, (2) the Applicable Ownership Interests (as specified inclause (i) of the definition thereof) in the Treasury Portfolio and (3) theTreasury Securities or security entitlements thereto, that, in each case, havebeen released from the Pledge pursuant hereto shall 

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be transferred to thePurchase Contract Agent for the benefit of the applicable Holders fordistribution to such Holders in accordance with their respective interests.

Section 3.04         Payments to Purchase Contract Agent.  The Securities Intermediary shall use commercially reasonable effortsto deliver payments to the Purchase Contract Agent hereunder to the accountdesignated by the Purchase Contract Agent for such purpose not later than 12:00p.m. (New York City time) on the Business Day such payment is received by theSecurities Intermediary; *provided*, *however*, that if such paymentis received on a day that is not a Business Day or after 11:00 a.m. (New YorkCity time) on a Business Day, then the Securities Intermediary shall usecommercially reasonable efforts to deliver such payment to the PurchaseContract Agent no later than 10:30 a.m. (New York City time) on the nextsucceeding Business Day.

Section 3.05         Assets Not Properly Released.  If the Purchase Contract Agent or any Holder shall receive any principalpayments on account of financial assets credited to the Collateral Account andnot released therefrom in accordance with this Agreement, the Purchase ContractAgent or such Holder shall hold the same as trustee of an express trust for thebenefit of the Company and, upon receipt of an Officers' Certificate of theCompany so directing, promptly deliver the same to the Securities Intermediaryfor credit to the Collateral Account or to the Company for application to theObligations of the Holders, and the Purchase Contract Agent and Holders shallacquire no right, title or interest in any such payments of principal amountsso received.  The Purchase Contract Agent shall have no liability under this **Section3.05** unless and until it has been notified in writing that such payment wasdelivered to it erroneously and shall have no liability for any action taken,suffered or omitted to be taken prior to its receipt of such notice.

# **ARTICLE4****Control**

Section 4.01         Establishment of Collateral Account.  The Securities Intermediary hereby confirms that:

(a)       theSecurities Intermediary has established the Collateral Account;

(b)       theCollateral Account is a securities account;

(c)       subjectto the terms of this Agreement, the Securities Intermediary shall identify inits records the Collateral Agent as the entitlement holder entitled to exercisethe rights that comprise any financial asset credited to the CollateralAccount;

(d)       allproperty delivered to the Securities Intermediary pursuant to this Agreement orthe Purchase Contract Agreement, including any Applicable Ownership Interests(as specified in clause (i) of such definition) in the Treasury Portfolio andany Permitted Investments, will be credited promptly to the Collateral Account;and

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(e)       allsecurities or other property underlying any financial assets credited to theCollateral Account shall be (i) registered in the name of the Purchase ContractAgent and endorsed to the Securities Intermediary or in blank, (ii) registeredin the name of the Securities Intermediary or (iii) credited to anothersecurities account maintained in the name of the Securities Intermediary.  Inno case will any financial asset credited to the Collateral Account beregistered in the name of the Purchase Contract Agent or any Holder orspecially endorsed to the Purchase Contract Agent or any Holder unless suchfinancial asset has been further endorsed to the Securities Intermediary or inblank.

Section 4.02         Treatment as Financial Assets.  Each item of property (whether investment property, financial asset,security, instrument or cash) credited to the Collateral Account shall betreated as a financial asset.

Section 4.03         Sole Control by Collateral Agent.  Except as provided in **Section 6.01**, at all times prior to thetermination of the Pledge, the Collateral Agent shall have sole control of theCollateral Account, and the Securities Intermediary shall take instructions anddirections with respect to the Collateral Account solely from the CollateralAgent.  If at any time the Securities Intermediary shall receive an entitlementorder issued by the Collateral Agent and relating to the Collateral Account,the Securities Intermediary shall comply with such entitlement order withoutfurther consent by the Purchase Contract Agent or any Holder or any otherPerson.  Except as otherwise permitted under this Agreement, until terminationof the Pledge, the Securities Intermediary will not comply with any entitlementorders issued by the Purchase Contract Agent or any Holder.

Section 4.04         Securities Intermediary's Location.  The Collateral Account, and the rights and obligations of theSecurities Intermediary, the Collateral Agent, the Purchase Contract Agent andthe Holders with respect thereto, shall be governed by the laws of the State ofNew York.  Regardless of any provision in any other agreement, for purposes ofthe UCC, New York shall be deemed to be the Securities Intermediary'sjurisdiction.

Section 4.05         No Other Claims.  Exceptfor the claims and interest of the Collateral Agent and of the PurchaseContract Agent and the Holders in the Collateral Account, the SecuritiesIntermediary (without having conducted any investigation) does not know of anyclaim to, or interest in, the Collateral Account or in any financial assetcredited thereto.  If any Person asserts any lien, encumbrance or adverse claim(including any writ, garnishment, judgment, warrant of attachment, execution orsimilar process) against the Collateral Account or in any financial assetcarried therein, the Securities Intermediary will promptly notify theCollateral Agent and the Purchase Contract Agent.

Section 4.06         Investment and Release.  Allproceeds of financial assets from time to time deposited in the CollateralAccount shall be invested and reinvested as provided in this Agreement.  At notime prior to termination of the Pledge with respect to any particular propertyshall such property be released from the Collateral Account except inaccordance with this Agreement or upon written instructions of the CollateralAgent.

Section 4.07         Statements and Confirmations.  The Securities Intermediary will promptly send copies of allstatements, confirmations and other correspondence concerning the Collateral

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Account and any financial assets credited theretosimultaneously to each of the Purchase Contract Agent and the Collateral Agentat their addresses for notices under this Agreement.

Section 4.08         Tax Allocations.  ThePurchase Contract Agent shall report all items of income, gain, expense andloss recognized in the Collateral Account, to the extent such reporting isrequired by law, to the Internal Revenue Service authorities in the mannerrequired by law.  Neither the Securities Intermediary nor the Collateral Agentshall have any tax reporting duties hereunder.

Section 4.09         No Other Agreements.  TheSecurities Intermediary has not entered into, and prior to the termination ofthe Pledge will not enter into, any agreement with any other Person relating tothe Collateral Account or any financial assets credited thereto, including,without limitation, any agreement to comply with entitlement orders of anyPerson other than the Collateral Agent.

Section 4.10         Powers Coupled with an Interest.  The rights and powers granted in this Article 4 to theCollateral Agent have been granted in order to perfect its security interestsin the Collateral Account, are powers coupled with an interest and will beaffected neither by the bankruptcy of the Purchase Contract Agent or any Holdernor by the lapse of time.  The obligations of the Securities Intermediary underthis Article 4 shall continue in effect until the termination of thePledge with respect to any and all Collateral.

Section 4.11         Waiver of Lien; Waiver of Set-off.  The Securities Intermediary waivesany security interest, lien or right to make deductions or set- offs that it maynow have or hereafter acquire in or with respect to the Collateral Account, anyfinancial asset credited thereto or any security entitlement in respect thereof. Neither the financial assets credited to the Collateral Account nor the securityentitlements in respect thereof will be subject to deduction, set-off, banker'slien or any other right in favor of any Person other than the Company.

# **ARTICLE5****InitialDeposit; Creation of Treasury Units and Recreation of Corporate Units**

Section 5.01         Initial Deposit of Senior Notes.  

(a)    Prior to orconcurrently with the execution and delivery of this Agreement, the PurchaseContract Agent, on behalf of the initial Holders of the Corporate Units, shallTransfer to the Securities Intermediary, for credit to the Collateral Account,the Senior Notes or security entitlements relating thereto, and, in the case ofsecurity entitlements, the Securities Intermediary shall indicate by book-entrythat a securities entitlement to such Senior Notes has been credited to theCollateral Account.

(b)       TheCollateral Agent may, at any time or from time to time, in its sole discretion,cause any or all securities or other property underlying any financial assetscredited to the Collateral Account to be registered in the name of theSecurities Intermediary, the Collateral Agent or their respective nominees; *provided*,*however*, that unless any Event of Default (as 

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defined in the Indenture)shall have occurred and be continuing, the Collateral Agent agrees not to causeany Senior Notes to be so re-registered.

Section 5.02         Creation of Treasury Units. 

(a)       Unlessthe Treasury Portfolio has replaced the Senior Notes as a component of theCorporate Units, a Holder of Corporate Units shall have the right, at any timeon or prior to 5:00 p.m. (New York City time) on the fifth Business Dayimmediately preceding the Purchase Contract Settlement Date, to create TreasuryUnits by substitution of Treasury Securities or security entitlements withrespect thereto for the Pledged Senior Notes comprising a part of all or aportion of such Holder's Corporate Units, in integral multiples of 40 CorporateUnits by:

                                                                 (i)              transferring to the Purchase Contract Agent, for credit to the CollateralAccount, Treasury Securities or security entitlements with respect theretohaving a Value equal to the aggregate principal amount of the Pledged SeniorNotes to be released, accompanied by a notice, substantially in the form of **ExhibitC** to the Purchase Contract Agreement, whereupon the Purchase Contract Agentshall deliver to the Collateral Agent a notice, substantially in the form of **ExhibitA** hereto, (A) stating that such Holder has notified the Purchase ContractAgent that such Holder has Transferred Treasury Securities or securityentitlements with respect thereto to the Collateral Agent for credit to theCollateral Account, (B) stating the Value of the Treasury Securities orsecurity entitlements with respect thereto Transferred by such Holder and (C)requesting that the Collateral Agent release from the Pledge the Pledged SeniorNotes that are a component of such Corporate Units; and

                                                               (ii)              delivering the related Corporate Units to the Purchase Contract Agent.

Upon receipt of such notice and confirmation that TreasurySecurities or security entitlements with respect thereto have been credited tothe Collateral Account as described in such notice, the Collateral Agent shallinstruct the Securities Intermediary by a notice, substantially in the form of **ExhibitB** hereto, to release such Pledged Senior Notes from the Pledge by Transferto the Purchase Contract Agent for distribution to such Holder, free and clearof the Pledge created hereby.

If the Treasury Portfolio has replaced the Senior Notes asa component of the Corporate Units and subject to the conditions of thePurchase Contract Agreement, a Holder of Corporate Units may, at any time on orprior to the second Business Day immediately preceding the Purchase ContractSettlement Date, substitute Treasury Securities for the Applicable OwnershipInterests in the Treasury Portfolio with respect to such Corporate Units, butonly in multiples of 4,000 Corporate Units.  In such an event, the Holder shalltransfer the required amount of Treasury Securities to the SecuritiesIntermediary, for credit to the Collateral Account, and the Purchase ContractAgent shall request the Collateral Agent to instruct the SecuritiesIntermediary to release the Pledge of and transfer to the Holder theappropriate Applicable Ownership Interests in the Treasury Portfolio in themanner set forth above.

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(b)       Uponcredit to the Collateral Account of Treasury Securities or securityentitlements with respect thereto delivered by a Holder of Corporate Units andreceipt of the related instruction from the Collateral Agent, the SecuritiesIntermediary shall release such Pledged Senior Notes or Applicable OwnershipInterest in the Treasury Portfolio, as the case may be, from the Pledge andshall promptly Transfer the same to the Purchase Contract Agent fordistribution to such Holder, free and clear of the Pledge created hereby.

Section 5.03         Recreation of Corporate Units. 

(a)       Unlessthe Treasury Portfolio has replaced the Senior Notes as a component of theCorporate Units, at any time on or prior to 5:00 p.m. (New York City time) onthe fifth Business Day immediately preceding the Purchase Contract SettlementDate, a Holder of Treasury Units shall have the right to recreate CorporateUnits by substitution of Senior Notes or security entitlements with respectthereto for Pledged Treasury Securities in integral multiples of 40 TreasuryUnits by:

                                                                 (i)              transferring to the Securities Intermediary, for credit to the CollateralAccount, Senior Notes or security entitlements with respect thereto having aprincipal amount equal to the Value of the Pledged Treasury Securities to bereleased, accompanied by a notice, substantially in the form of **Exhibit C**to the Purchase Contract Agreement, whereupon the Purchase Contract Agent shalldeliver to the Collateral Agent a notice, substantially in the form of **ExhibitC** hereto, stating that such Holder has Transferred the Senior Notes orsecurity entitlements with respect thereto to the Collateral Account for creditto the Collateral Account and requesting that the Collateral Agent release fromthe Pledge the Pledged Treasury Securities related to such Treasury Units; and

                                                               (ii)              delivering the related Treasury Units to the Purchase Contract Agent.

Upon receipt of such notice and confirmation that SeniorNotes or security entitlements with respect thereto have been credited to theCollateral Account as described in such notice, the Collateral Agent shallinstruct the Securities Intermediary by a notice substantially in the form of **ExhibitD** hereto to release such Pledged Treasury Securities from the Pledge byTransfer to the Purchase Contract Agent for distribution to such Holder, freeand clear of the Pledge created hereby.

If the Treasury Portfolio has replaced the Senior Notes asa component of the Corporate Units, a Holder of Treasury Units may, at any timeon or prior to the second Business Day immediately preceding the PurchaseContract Settlement Date, substitute the Applicable Ownership Interests in theTreasury Portfolio for the Pledged Treasury Securities with respect to suchTreasury Units, but only in multiples of 4,000 Treasury Units.  In such anevent, the Holder shall Transfer the required Applicable Ownership Interests inthe Treasury Portfolio to the Securities Intermediary, for credit to theCollateral Account, and the Purchase Contract Agent shall request theCollateral Agent to instruct the Securities Intermediary to release andTransfer to the Holder the Pledged Treasury Securities in the manner set forthabove.

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(b)       Uponcredit to the Collateral Account of Senior Notes or security entitlements withrespect thereto or Applicable Ownership Interests in the Treasury Portfoliodelivered by a Holder of Treasury Units and receipt of the related instructionfrom the Collateral Agent, the Securities Intermediary shall release suchPledged Treasury Securities from the Pledge and shall promptly Transfer thesame to the Purchase Contract Agent for distribution to such Holder, free andclear of the Pledge created hereby.

Section 5.04         Termination Event. 

(a)       Uponreceipt by the Collateral Agent of written notice from the Company or thePurchase Contract Agent that a Termination Event has occurred, the CollateralAgent shall release all Collateral from the Pledge and shall promptly instructthe Securities Intermediary to Transfer:

                                                               (i)              any Pledged Senior Notes or security entitlements with respect theretoor Pledged Applicable Ownership Interests;

                                                               (ii)              any Pledged Treasury Securities; and

                                                              (iii)              any payments by Holders (or the Permitted Investments of such payments)pursuant to **Section 5.05** hereof,

to the Purchase Contract Agent for the benefit of theHolders for distribution to such Holders, in accordance with their respectiveinterests, free and clear of the Pledge created hereby; *provided*, *however*,if any Holder shall be entitled to receive less than $1,000 with respect to itsinterest in the Applicable Ownership Interests (as specified in clause (i) ofthe definition of such term) in the Treasury Portfolio, the Purchase ContractAgent shall dispose of such interest for cash and deliver to such Holder cashin lieu of delivering the Applicable Ownership Interests (as specified inclause (i) of the definition of such term) in the Treasury Portfolio.

(b)       Ifsuch Termination Event shall result from the Company's becoming a debtor underthe Bankruptcy Code, and if the Collateral Agent shall for any reason failpromptly to effectuate the release and Transfer of all Pledged Senior Notes,Pledged Applicable Ownership Interests, Pledged Treasury Securities andpayments by Holders (or the Permitted Investments of such payments) pursuant to**Section 5.05** and Proceeds of any of the foregoing, as the case may be,as provided by this **Section 5.04**, the Purchase Contract Agent shall:

                                                                 (i)              use its best efforts to obtain an opinion of a nationally recognizedlaw firm to the effect that, notwithstanding the Company being the debtor insuch a bankruptcy case, the Collateral Agent will not be prohibited fromreleasing or Transferring the Collateral as provided in this **Section 5.04**and shall deliver or cause to be delivered such opinion to the Collateral Agentwithin ten days after the occurrence of such Termination Event, and if (A) thePurchase Contract Agent shall be unable to obtain such opinion within ten daysafter the occurrence of such Termination Event or (B) the Collateral Agentshall continue, after delivery of such opinion, to refuse to effectuate therelease and Transfer of all Pledged Senior Notes, Pledged Applicable OwnershipInterests, Pledged Treasury Securities and the payments by Holders (or thePermitted Investments of such payments) pursuant to **Section 5.05** hereofand Proceeds of any of 

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the foregoing, as the case may be, as provided in this **Section5.04**, then the Purchase Contract Agent shall within fifteen days after the occurrenceof such Termination Event commence an action or proceeding in the court havingjurisdiction of the Company's case under the Bankruptcy Code seeking an orderrequiring the Collateral Agent to effectuate the release and transfer of allPledged Senior Notes, Pledged Applicable Ownership Interests, Pledged TreasurySecurities and the payments by Holders (or the Permitted Investments of suchpayments) pursuant to **Section 5.05** hereof and Proceeds of any of theforegoing, or as the case may be, as provided by this **Section 5.04**; or

                                                               (ii)              commence an action or proceeding like that described in **Section5.04(b)(i)** hereof within ten days after the occurrence of such Termination Event.

Section 5.05         Cash Settlement. 

(a)       Uponreceipt by the Collateral Agent of (1) a notice from the Purchase ContractAgent promptly after the receipt by the Purchase Contract Agent of a noticefrom a Holder of Corporate Units or Treasury Units that such Holder has elected,in accordance with the procedures specified in **Section 5.02(b)(i)** of thePurchase Contract Agreement, to effect a Cash Settlement and (2) payment by suchHolder by deposit in the Collateral Account on or prior to 5:00 p.m. (New YorkCity time) on the fourth Business Day immediately preceding the Purchase ContractSettlement Date of the Purchase Price in lawful money of the United States bycertified or cashier's check or wire transfer of immediately available fundspayable to or upon the order of the Securities Intermediary, then the CollateralAgent shall:

                                                               (i)              instruct the Securities Intermediary promptly to invest any such Cashin Permitted Investments;

                                                               (ii)              instruct the Securities Intermediary to release from the Pledge suchHolder's related Pledged Senior Notes or Pledged Applicable Ownership Interests,as applicable, as to which such Holder has effected a Cash Settlement pursuantto this **Section 5.05(a)**; and

                                                              (iii)              instruct the Securities Intermediary to Transfer all such PledgedSenior Notes, Pledged Applicable Ownership Interests or the Pledged TreasurySecurities, as the case may be, to the Purchase Contract Agent for distributionto such Holder, in each case free and clear of the Pledge created hereby.

The Company shall instruct the Collateral Agent in writingas to the type of Permitted Investments in which any such Cash shall beinvested; *provided*, *however*, that if the Company fails to deliversuch written instructions by 10:30 a.m. (New York City time) on the day suchCash is received by the Collateral Agent or to be reinvested by the SecuritiesIntermediary, the Collateral Agent shall instruct the Securities Intermediaryto invest such Cash in the Permitted Investments described in clause (6) of thedefinition of Permitted Investments.  In no event shall the Collateral Agent orSecurities Intermediary be liable for the selection of Permitted Investments orfor investment losses incurred thereon.  The Collateral Agent and SecuritiesIntermediary shall have no liability with respect to losses incurred as aresult of the failure of the Company to provide timely written investmentdirection.

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Upon receipt of Proceeds upon the maturity of thePermitted Investments on the Purchase Contract Settlement Date, the CollateralAgent shall (A) instruct the Securities Intermediary to pay the portion of suchProceeds and deliver any certified or cashier's checks received, in an aggregateamount equal to the Purchase Price, to the Company on the Purchase ContractSettlement Date, and (B) release any amounts in excess of the Purchase Priceearned from such Permitted Investments to the Purchase Contract Agent for distributionto such Holder in accordance with the Purchase Contract Agreement.

(b)       Ifa Holder of Corporate Units (unless the Treasury Portfolio has replaced theSenior Notes as a component of such Corporate Units) (i) fails to notify thePurchase Contract Agent of its intention to make a Cash Settlement as providedin **Section 5.02(b)(i)** of the Purchase Contract Agreement or (ii) does notifythe Purchase Contract Agent of its intention to pay the Purchase Price in cash,but fails to make such payment as required by **Section 5.02(b)(ii)** of thePurchase Contract Agreement, such Holder shall be deemed to have consented to thedisposition of such Holder's Pledged Senior Notes in accordance with **Section5.02(b)(iii)** of the Purchase Contract Agreement.

(c)       Assoon as practicable after 5:00 p.m. (New York City time) on the fourth BusinessDay immediately preceding the Purchase Contract Settlement Date, the CollateralAgent shall deliver to the Purchase Contract Agent a notice, substantially inthe form of **Exhibit E** hereto, stating (i) the amount of Cash that it hasreceived with respect to the Cash Settlement of Corporate Units, (ii) theamount of Cash that it has received with respect to the Cash Settlement ofTreasury Units and (iii) the amount of Pledged Senior Notes to be remarketed inthe Final Remarketing pursuant to **Section 5.02(c)** of the PurchaseContract Agreement.

(d)       Ifthere has been a Failed Final Remarketing, as soon as practicable after 5:00p.m. (New York City time) on the Business Day immediately preceding thePurchase Contract Settlement Date, the Collateral Agent shall deliver to the PurchaseContract Agent a notice, stating (i) the amount of Cash that it has receivedwith respect to the Cash Settlement of Corporate Units, (ii) the amount of Cashthat it has received with respect to the Cash Settlement of Treasury Units and(iii) the amount of Pledged Senior Notes with respect to which an automaticdeemed exercise of the Put Right has occurred pursuant to **Section 5.02(c)**of the Purchase Contract Agreement.

Section 5.06         Early Settlement and Cash Merger Early Settlement.  Upon receipt by the Collateral Agent of anotice from the Purchase Contract Agent that a Holder of Units has elected toeffect either (i) Early Settlement of its obligations under the PurchaseContracts forming a part of such Units in accordance with the terms of thePurchase Contracts and **Section 5.07** of the Purchase Contract Agreementor (ii) Cash Merger Early Settlement of its obligations under the PurchaseContracts forming a part of such Units in accordance with the terms of thePurchase Contracts and **Section 5.04(b)(ii)** of the Purchase ContractAgreement (which notice shall set forth the number of such Purchase Contractsas to which such Holder has elected to effect Early Settlement or Cash MergerEarly Settlement), and that the Purchase Contract Agent has received from suchHolder, and paid to the Company as confirmed in writing by the Company, therelated Purchase Price pursuant to the terms of the Purchase Contracts and thePurchase Contract Agreement and that all conditions to such Early Settlement orCash Merger Early Settlement, as the case may be, have been satisfied, then theCollateral Agent shall release from the Pledge, (1) 

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Pledged Senior Notes or the Pledged Applicable Ownership Interests inthe case of a Holder of Corporate Units or (2) Pledged Treasury Securities, inthe case of a Holder of Treasury Units, in each case with a Value equal to the productof (x) the Stated Amount times (y) the number of Purchase Contracts as to whichsuch Holder has elected to effect Early Settlement or Cash Merger EarlySettlement, and shall instruct the Securities Intermediary to Transfer all suchPledged Applicable Ownership Interests or Pledged Senior Notes or PledgedTreasury Securities, as the case may be, to the Purchase Contract Agent fordistribution to such Holder, in each case free and clear of the Pledge createdhereby.  A holder of Treasury Units may settle early only in integral multiplesof 40 Treasury Units, and a Holder of Corporate Units, if the TreasuryPortfolio has replaced the Senior Notes as a component of such Corporate Units,may settle early only in integral multiples of 4,000 Corporate Units.

Section 5.07         Application of Proceeds in Settlement of Purchase Contracts. 

(a)       Ifa Holder of Corporate Units (unless the Treasury Portfolio has replaced theSenior Notes as a component of such Corporate Units) has not elected to make aneffective Cash Settlement by notifying the Purchase Contract Agent in themanner provided for in **Section 5.02(b)(i)** of the Purchase Contract Agreementor does notify the Purchase Contract Agent as provided in **Section 5.02(b)(i)**of the Purchase Contract Agreement of its intention to pay the Purchase Pricein cash, but fails to make such payment as required by **Section 5.02(b)(ii)**of the Purchase Contract Agreement, such Holder shall be deemed to have electedto pay for the shares of Common Stock or Preferred Stock, as applicable, to beissued under such Purchase Contracts from the Proceeds of the Final Remarketingof the related Pledged Senior Notes.  In the event of a Successful FinalRemarketing, the Collateral Agent shall instruct the Securities Intermediary toTransfer the related Pledged Senior Notes to the Remarketing Agent, uponconfirmation of deposit by the Remarketing Agent of the Proceeds of such FinalRemarketing (less, to the extent permitted by the Remarketing Agreement, theRemarketing Fee) in the Collateral Account.  The Collateral Agent shallinstruct the Securities Intermediary to invest the Proceeds of the FinalRemarketing in Permitted Investments set forth in clause (6) of the definitionof Permitted Investments.  On the Purchase Contract Settlement Date, theCollateral Agent shall, in consultation with the Purchase Contract Agent,instruct the Securities Intermediary to remit a portion of the Proceeds fromsuch Final Remarketing equal to the aggregate principal amount of such PledgedSenior Notes to satisfy in full such Holder's obligations to pay the PurchasePrice to purchase the shares of Common Stock or Preferred Stock, as applicable,under the related Purchase Contracts and to remit the balance of the Proceedsfrom the Final Remarketing, if any, to the Purchase Contract Agent fordistribution to such Holder.

Upon a Failed Final Remarketing, each Holder of CorporateUnits (unless the Treasury Portfolio has replaced the Senior Notes representedby such Corporate Units) that has not elected to make an effective CashSettlement by notifying the Purchase Contract Agent in the manner provided forin **Section 5.02(e)(i)** of the Purchase Contract Agreement or does notifythe Purchase Contract Agent as provided in **Section 5.02(e)(i)** of thePurchase Contract Agreement of its intention to pay the Purchase Price in cash,but fails to make such payment as required by **Section 5.02(e)(ii)** of thePurchase Contract Agreement, shall be deemed to have exercised such Holder'sPut Right with respect to the Senior Notes that are a component of CorporateUnits have elected to have a portion of the Proceeds of the Put Right set-offagainst such Holder's obligation to pay the aggregate Price for the shares ofCommon Stock or Preferred Stock, as 

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applicable, to be issued under the PurchaseContracts underlying such Corporate Units in full satisfaction of such Holders'obligations under the Purchase Contracts.   Following such set-off, the Holder'sobligations to pay the Purchase Price for the shares of Common Stock orPreferred Stock, as applicable, will be deemed to be satisfied in full, and theCollateral Agent shall cause the Securities Intermediary to release the PledgedSenior Notes from the Collateral Account and shall promptly transfer thePledged Senior Notes to the Company.  Thereafter, the Collateral Agent shallpromptly remit the remaining Proceeds of the Holder's exercise of the Put Rightin excess of the aggregate Purchase Price for the shares of Common Stock orPreferred Stock, as applicable, to be issued under such Purchase Contracts tothe Purchase Contract Agent for payment to the Holder of the Corporate Units towhich such Senior Notes relate.

(b)       AHolder of a Treasury Unit or a Corporate Unit (if the Treasury Portfolio hasreplaced the Senior Notes as a component of such Corporate Unit) shall bedeemed to have elected to pay for the shares of Common Stock or PreferredStock, as applicable, to be issued under such Purchase Contracts from theProceeds of the related Pledged Treasury Securities or Pledged ApplicableOwnership Interests, as the case may be.  Promptly, after 11:00 a.m. (New YorkCity time) on the Business Day immediately prior to the Purchase ContractSettlement Date, the Collateral Agent shall invest the Proceeds in thePermitted Investments set forth in Clause (6) of the definition of PermittedInvestments, unless prior to 10:30 a.m. on such date the Company shallotherwise instruct the Collateral Agent in writing as to the type of PermittedInvestments in which any Proceeds shall be invested.  In no event shall theCollateral Agent be liable for the selection of Permitted Investments or forinvestment losses incurred thereon.  The Collateral Agent shall have noliability in respect of losses incurred as a result of the failure of theCompany to provide timely written investment direction.  Without receiving anyinstruction from any Holder, the Collateral Agent shall instruct the SecuritiesIntermediary to remit the Proceeds of the related Pledged Treasury Securitiesor Pledged Applicable Ownership Interests, as the case may be, to the Companyin settlement of such Purchase Contracts on the Purchase Contract SettlementDate.  In the event the sum of the Proceeds from the related Pledged TreasurySecurities or Pledged Applicable Ownership Interests, as the case may be, andthe investment earnings from the investment in Permitted Investments exceedsthe aggregate Purchase Price of the Purchase Contracts being settled thereby,the Collateral Agent shall instruct the Securities Intermediary to transfersuch excess, when received, to the Purchase Contract Agent for distribution toHolders.

(c)       Onor prior to 5:00 p.m. (New York City time) on the fifth Business Dayimmediately preceding the applicable Remarketing Date, but no earlier than thePayment Date immediately preceding such date, Holders of Separate Senior Notesmay elect to have their Separate Senior Notes remarketed under the RemarketingAgreement, by delivering their Separate Senior Notes along with a notice ofsuch election, substantially in the form of **Exhibit F** hereto, to the CollateralAgent.  The Collateral Agent, acting as Custodial Agent, shall hold SeparateSenior Notes in an account separate from the Collateral Account in which thePledged Securities shall be held.  Holders of Separate Senior Notes electing tohave their Separate Senior Notes remarketed will also have the right towithdraw that election by written notice to the Collateral Agent, substantiallyin the form of **Exhibit G** hereto, on or prior to 5:00 p.m. (New York Citytime) on the fifth Business Day immediately preceding the applicable RemarketingDate, upon which notice the Custodial Agent shall return such Separate SeniorNotes to such Holder.  After such time, such election shall become anirrevocable election to have such Separate Senior Notes remarketed in suchRemarketing.

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By 11:00 a.m. (New York City time) on the Business Dayimmediately preceding the applicable Remarketing Date, the Custodial Agentshall notify the Remarketing Agent of the aggregate principal amount of theSeparate Senior Notes to be remarketed and deliver to the Remarketing Agent forremarketing all Separate Senior Notes delivered to the Custodial Agent pursuantto this **Section 5.07(c)** and not validly withdrawn prior to such date.  Inthe event of a Successful Remarketing, after deducting the Remarketing Fee, theRemarketing Agent will remit to the Custodial Agent the remaining portion ofthe proceeds of such Remarketing for payment to the Holders of the remarketedSeparate Senior Notes, in accordance with their respective interests.  In theevent of a Failed Remarketing, the Remarketing Agent will promptly return suchSeparate Senior Notes to the Custodial Agent for distribution to theappropriate Holders.

Section 5.08         Special Event Redemption. If the Collateral Agent receives written notice that a Special Event Redemptionhas occurred while Senior Notes are still credited to the Collateral Account,the Collateral Agent shall apply the Redemption Amount to purchase the TreasuryPortfolio, and the Collateral Agent shall credit the Applicable OwnershipInterests (as specified in clause (i) of the definition of such term) in theTreasury Portfolio to the Collateral Account and shall transfer the ApplicableOwnership Interests (as specified in clause (ii) of the definition of suchterm) in the Treasury Portfolio to the Purchase Contract Agent for distributionto the Holders of the Corporate Units.  Upon credit to the Collateral Account of the Applicable OwnershipInterests (as specified in clause (i) of the definition of such term) in theTreasury Portfolio having a Value equal to the aggregate principal amount ofthe Pledged Senior Notes, the Collateral Agent shall cause the SecuritiesIntermediary to release the Pledged Senior Notes from the Collateral Accountand shall promptly transfer the Pledged Senior Notes to the Company.

# **ARTICLE6****VotingRights - Pledged Senior Notes**

Section 6.01         Voting Rights.  Subject tothe terms of **Section 4.02** of the Purchase Contract Agreement, thePurchase Contract Agent may exercise, or refrain from exercising, any and allvoting and other consensual rights pertaining to the Pledged Senior Notes orany part thereof for any purpose not inconsistent with the terms of thisAgreement and in accordance with the terms of the Purchase Contract Agreement; provided,that the Purchase Contract Agent shall not exercise or shall not refrain fromexercising such right, as the case may be, if, in the reasonable judgment ofthe Purchase Contract Agent, such action would impair or otherwise have amaterial adverse effect on the value of all or any of the Pledged Senior Notes;and *provided*, *further*, that the Purchase Contract Agent shallgive the Company and the Collateral Agent at least five Business Days' priorwritten notice of the manner in which it intends to exercise, or its reasonsfor refraining from exercising, any such right.  Upon receipt of any noticesand other communications in respect of any Pledged Senior Notes, includingnotice of any meeting at which holders of the Senior Notes are entitled to voteor solicitation of consents, waivers or proxies of holders of the Senior Notes,the Collateral Agent shall use reasonable efforts to send promptly to thePurchase Contract Agent such notice or communication, and as 

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soon as reasonablypracticable after receipt of a written request therefor from the PurchaseContract Agent, execute and deliver to the Purchase Contract Agent such proxiesand other instruments in respect of such Pledged Senior Notes (in form andsubstance satisfactory to the CollateralAgent) as are prepared by the Company and delivered to the Purchase ContractAgent with respect to the Pledged Senior Notes.

# **ARTICLE7****Rightsand Remedies**

Section 7.01         Rights and Remedies of the Collateral Agent. 

(a)       Inaddition to the rights and remedies specified in **Section 5.07** hereof orotherwise available at law or in equity, after an event of default (as specifiedin **Section 7.01(b)** below) hereunder, the Collateral Agent shall have allof the rights and remedies with respect to the Collateral of a secured party underthe UCC (whether or not the UCC is in effect in the jurisdiction where the rightsand remedies are asserted) and the TRADES Regulations and such additional rightsand remedies to which a secured party is entitled under the laws in effect inany jurisdiction where any rights and remedies hereunder may be asserted.  Withoutlimiting the generality of the foregoing, such remedies may include, to theextent permitted by applicable law, (1) retention of the Pledged Senior Notes,Pledged Treasury Securities or the applicable Pledged Applicable OwnershipInterests in full satisfaction of the Holders' obligations under the PurchaseContracts and the Purchase Contract Agreement or (2) sale of the Pledged SeniorNotes, Pledged Treasury Securities or the applicable Pledged ApplicableOwnership Interests in one or more public or private sales.

(b)       Withoutlimiting any rights or powers otherwise granted by this Agreement to theCollateral Agent, in the event the Collateral Agent is unable to make paymentsto the Company on account of the applicable Pledged Applicable OwnershipInterests, or on account of principal payments of any Pledged Treasury Securitiesas provided in **Article 3** hereof, in satisfaction of the Obligations ofthe Holder of the Units of which such applicable Pledged Applicable Ownership Interestsor such Pledged Treasury Securities, as applicable, are a part under therelated Purchase Contracts, the inability to make such payments shall constitutean event of default hereunder and the Collateral Agent shall have and mayexercise, with reference to such Pledged Treasury Securities or Pledged ApplicableOwnership Interests, as applicable, any and all of the rights and remediesavailable to a secured party under the UCC and the TRADES Regulations afterdefault by a debtor, and as otherwise granted herein or under any other law.

(c)       Withoutlimiting any rights or powers otherwise granted by this Agreement to theCollateral Agent, the Collateral Agent is hereby irrevocably authorized toreceive and collect all payments of (i) the principal amount of the PledgedSenior Notes, (ii) the principal amount of the Pledged Treasury Securities and(iii) the principal amount of the Pledged Applicable Ownership Interests,subject, in each case, to the provisions of **Article 3** hereof, and as otherwisegranted herein.

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(d)       ThePurchase Contract Agent and each Holder of Units agrees that, from time totime, upon the written request of the Collateral Agent or the Purchase ContractAgent, such Holder shall execute and deliver such further documents and do suchother acts and things as the Collateral Agent may reasonably request in orderto maintain the Pledge, and the perfection and priority thereof, and to confirmthe rights of the Collateral Agent hereunder.  The Purchase Contract Agent shallhave no liability to any Holder for executing any documents or taking any suchacts requested by the Collateral Agent hereunder, except for liability for itsown grossly negligent acts, its own grossly negligent failure to act or its ownwillful misconduct.

Section 7.02         Special Event Redemption. Upon the occurrence of a Special Event Redemption while Senior Notes are stillcredited to the Collateral Account, the Collateral Agent is hereby authorizedto present the Pledged Senior Notes for payment as may be required by theirrespective terms and to direct the Indenture Trustee to remit the RedemptionPrice to the Securities Intermediary for credit to the Collateral Account on orprior to 12:30 p.m., New York City time on such Special Event Redemption Date,by federal funds check or wire transfer of immediately available funds.  Uponreceipt of such funds, the Pledged Senior Notes shall be released from theCollateral Account and promptly transferred to the Company.  Upon the creditingof such funds to the Collateral Account, the Collateral Agent, at the writtendirection of the Company, shall instruct the Securities Intermediary to (a)apply an amount of such funds equal to the Redemption Amount to purchase theTreasury Portfolio from the Quotation Agent, (b) credit to the CollateralAccount the Applicable Ownership Interests (specified in clause (i) of the definition of such term) in the Treasury Portfolioand (c) promptly remit the remaining portion of such funds, if any, to thePurchase Contract Agent for payment to the Holders of Corporate Units, in accordancewith their respective interests and the Purchase Contract Agreement.

Section 7.03         Initial Remarketing.  Unlessa Special Event Redemptions has occurred prior to the Initial Remarketing Date,the Collateral Agent shall, by 11:00 a.m., New York City time, on the BusinessDay immediately preceding the Initial Remarketing Date, without any instructionfrom any Holder of Corporate Units, present the related Pledged Senior Notes tothe Remarketing Agent for Initial Remarketing.  In the event of a FailedInitial Remarketing, the Senior Notes presented to the Remarketing Agentpursuant to this **Section 7.03** for Remarketing shall be redeposited intothe Collateral Account.

Section 7.04         Final Remarketing.  Unlessa Special Event Redemption has occurred prior to the Final Remarketing Date, ifa Failed Initial Remarketing has occurred, the Collateral Agent shall, by 11:00a.m., New York City time, on the Business Day immediately preceding the FinalRemarketing Date, without any instruction from any Holder of Corporate Units,present the related Pledged Senior Notes to the Remarketing Agent for FinalRemarketing.  In the event of a Failed Final Remarketing, the Senior Notespresented to the Remarketing Agent pursuant to this **Section 7.04** forRemarketing shall be redeposited into the Collateral Account.

Section 7.05         Successful Initial Remarketing.  In the event of a Successful Initial Remarketing prior to the FinalRemarketing Date, the Collateral Agent shall, at the direction of the Company,instruct the Securities Intermediary to (i) Transfer the Pledged Senior Notesto the Remarketing Agent upon confirmation of deposit by the Remarketing Agentof the Proceeds of such Successful Initial Remarketing (after deducting anyRemarketing Fee in accordance with 

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the Remarketing Agreement) in the CollateralAccount, (ii) apply an amount equal to the Treasury Portfolio Purchase Price topurchase from the Quotation Agent the Treasury Portfolio, (iii) credit theApplicable Ownership Interests (specified in clause (i) of the definition ofsuch term) in the Treasury Portfolio to the Collateral Account, and (iv)promptly remit the remaining portion of such Proceeds to the Purchase ContractAgent for payment to the Holders of CorporateUnits, in accordance with their respective interests and the Purchase ContractAgreement.  With respect to Separate Senior Notes, any Proceeds of such InitialRemarketing (after deducting any Remarketing Fee in accordance with the RemarketingAgreement) attributable to the Separate Senior Notes will be remitted to theCustodial Agent for payment to the holders of Separate Senior Notes.  ThePledged Applicable Ownership Interests thus credited to the Collateral Accountwill secure the obligation of all Holders of Corporate Units to purchase CommonStock of the Company under the Purchase Contracts constituting a part of suchCorporate Units, in substitution for the Pledged Senior Notes, which shall bereleased from the Collateral Account.  In the event of a Failed FinalRemarketing, the Pledged Senior Notes shall remain credited to the CollateralAccount and **Section 5.07** shall apply.

Section 7.06         Substitutions.  Whenever aHolder has the right to substitute Treasury Securities, Senior Notes orsecurity entitlements for any of them or the appropriate Applicable OwnershipInterest (as defined in clause (i) of the definition of such term) in theTreasury Portfolio, as the case may be, for financial assets held in theCollateral Account, such substitution shall not constitute a novation of thesecurity interest created hereby.

# **ARTICLE8****Representationsand Warranties; Covenants**

Section 8.01         Representations and Warranties.  Each Holder from time to time, acting through the Purchase ContractAgent as attorney-in-fact (it being understood that the Purchase Contract Agentshall not be liable for any representation or warranty made by or on behalf ofa Holder), hereby represents and warrants to the Collateral Agent (with respectto such Holder's interest in the Collateral), which representations andwarranties shall be deemed repeated on each day a Holder Transfers Collateral,that:

(a)       suchHolder has the power to grant a security interest in and lien on theCollateral;

(b)       suchHolder is the sole beneficial owner of the Collateral and, in the case ofCollateral delivered in physical form, is the sole holder of such Collateraland is the sole beneficial owner of, or has the right to Transfer, theCollateral it Transfers to the Collateral Agent for credit to the CollateralAccount, free and clear of any security interest, lien, encumbrance, call,liability to pay money or other restriction other than the security interestand lien granted under **Article 2** hereof;

(c)       uponthe Transfer of the Collateral to the Collateral Agent for credit to theCollateral Account, the Collateral Agent, for the benefit of the Company, will havea valid and perfected first priority security interest therein (assuming thatany central clearing operation or any securities intermediary or other entitynot within the control of the Holder involved in the 

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Transfer of theCollateral, including the Collateral Agent and the Securities Intermediary,gives the notices and takes the action required of it hereunder and underapplicable law for perfection of that interest and assuming the establishmentand exercise of control pursuant to **Article 4** hereof); and

(d)       theexecution and performance by the Holder of its obligations under this Agreementwill not result in the creation of any security interest, lien or otherencumbrance on the Collateral other than the security interest and lien grantedunder **Article 2** hereof or violate any provision of any existing law orregulation applicable to it or of any mortgage, charge, pledge, indenture,contract or undertaking to which it is a party or which is binding on it or anyof its assets.

Section 8.02         Covenants.  The Holdersfrom time to time, acting through the Purchase Contract Agent as theirattorney-in-fact (it being understood that the Purchase Contract Agent shallnot be liable for any covenant made by or on behalf of a Holder), herebycovenant to the Collateral Agent that for so long as the Collateral remainssubject to the Pledge:

(a)       neitherthe Purchase Contract Agent nor such Holders will create or purport to createor allow to subsist any mortgage, charge, lien, pledge or any other securityinterest whatsoever over the Collateral or any part of it other than pursuantto this Agreement; and

(b)       neitherthe Purchase Contract Agent nor such Holders will sell or otherwise dispose (orattempt to dispose) of the Collateral or any part of it except for thebeneficial interest therein, subject to the Pledge hereunder, transferred inconnection with the Transfer of the Units.

# **ARTICLE9****TheCollateral Agent, The Custodial Agent and The Securities Intermediary**

It is hereby agreed as follows:

Section 9.01         Appointment, Powers and Immunities.  The Collateral Agent, the Custodial Agent or the SecuritiesIntermediary shall act as agent for the Company hereunder with such powers asare specifically vested in the Collateral Agent, the Custodial Agent or theSecurities Intermediary, as the case may be, by the terms of this Agreement.  TheCollateral Agent, the Custodial Agent and Securities Intermediary shall:

(a)       haveno duties or responsibilities except those expressly set forth in thisAgreement and no implied covenants or obligations shall be inferred from thisAgreement against the Collateral Agent, the Custodial Agent and the SecuritiesIntermediary, nor shall the Collateral Agent, the Custodial Agent and theSecurities Intermediary be bound by the provisions of any agreement by anyparty hereto beyond the specific terms hereof;

(b)       notbe responsible for any recitals contained in this Agreement, or in anycertificate or other document referred to or provided for in, or received by itunder, this Agreement, the Units or the Purchase Contract Agreement, or for thevalue, validity, 

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effectiveness, genuineness, enforceability or sufficiency ofthis Agreement (other than as against the Collateral Agent, the Custodial Agentor the Securities Intermediary, as the case may be), the Units, any Collateralor the Purchase Contract Agreement or any other document referred to orprovided for herein or therein or for any failure by the Company or any otherPerson (except the Collateral Agent, the Custodial Agent or the Securities Intermediary,as the case may be) to perform any of its obligations hereunder or thereunderor for the perfection, priority or, except as expressly required hereby,maintenance of any security interest created hereunder;

(c)       notbe required to initiate or conduct any litigation or collection proceedingshereunder (except pursuant to directions furnished under **Section 9.02**hereof, subject to **Section 9.08** hereof);

(d)       notbe responsible for any action taken or omitted to be taken by it hereunder orunder any other document or instrument referred to or provided for herein or inconnection herewith or therewith, except for its own gross negligence orwillful misconduct; and

(e)       notbe required to advise any party as to selling or retaining, or taking orrefraining from taking any action with respect to, any securities or otherproperty deposited hereunder.

Subject to the foregoing, during the term of thisAgreement, the Collateral Agent, the Custodial Agent and the SecuritiesIntermediary shall take all reasonable action in connection with thesafekeeping and preservation of the Collateral hereunder as determined byindustry standards.

No provision of this Agreement shall require theCollateral Agent, Custodial Agent or the Securities Intermediary to expend orrisk its own funds or otherwise incur any financial liability in the performanceof any of its duties hereunder.  In no event shall the Collateral Agent,Custodial Agent or the Securities Intermediary be liable for any amount inexcess of the Value of the Collateral.

Section 9.02         Instructions of the Company. The Company shall have the right, by one or more written instruments executedand delivered to the Collateral Agent, to direct the time, method and place ofconducting any proceeding for the realization of any right or remedy availableto the Collateral Agent, or of exercising any power conferred on the CollateralAgent, or to direct the taking or refraining from taking of any actionauthorized by this Agreement; *provided*, *however*, that (i) suchdirection shall not conflict with the provisions of any law or of thisAgreement or involve the Collateral Agent in personal liability and (ii) theCollateral Agent shall be indemnified to its satisfaction as provided herein.  Nothingcontained in this **Section 9.02** shall impair the right of the CollateralAgent in its discretion to take any action or omit to take any action which itdeems proper and which is not inconsistent with such direction.  None of theCollateral Agent, the Custodial Agent or the Securities Intermediary has anyobligation or responsibility to file UCC financing statements.

Section 9.03         Reliance by Collateral Agent, Custodial Agent and SecuritiesIntermediary.  Each of the CollateralAgent, the Custodial Agent and the Securities Intermediary shall be entitled,in the absence of bad faith, to rely conclusively upon any certification,order,

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 judgment, opinion, notice orother written communication (including, without limitation, any thereof bye-mail or similar electronic means, telecopy, telex or facsimile) believed byit to be genuine and correct and to have been signed or sent by or on behalf ofthe proper Person or Persons (without being required to determine thecorrectness of any fact stated therein) and consult with and conclusively relyupon advice, opinions and statements of legal counsel and other expertsselected by the Collateral Agent, the Custodial Agent or the SecuritiesIntermediary, as the case may be.  As to any matters not expressly provided forby this Agreement, the Collateral Agent, the Custodial Agent and the SecuritiesIntermediary shall in all cases be fully protected in acting, or in refrainingfrom acting, hereunder in accordance with instructions given by the Company inaccordance with this Agreement.

Section 9.04         Certain Rights.  

(a)       Wheneverin the administration of the provisions of this Agreement the Collateral Agent,the Custodial Agent or the Securities Intermediary shall deem it necessary ordesirable that a matter be proved or established prior to taking or sufferingany action to be taken hereunder, such matter (unless other evidence in respectthereof be herein specifically prescribed) may, in the absence of grossnegligence or bad faith on the part of the Collateral Agent, the CustodialAgent or the Securities Intermediary, be deemed to be conclusively proved andestablished by a certificate signed by one of the Company's officers, anddelivered to the Collateral Agent, the Custodial Agent or the Securities Intermediaryand such certificate, in the absence of gross negligence or bad faith on thepart of the Collateral Agent, the Custodial Agent or the Securities Intermediary,shall be full warrant to the Collateral Agent, the Custodial Agent or theSecurities Intermediary for any action taken, suffered or omitted by it underthe provisions of this Agreement upon the faith thereof.

(b)       TheCollateral Agent, the Custodial Agent or the Securities Intermediary shall notbe bound to make any investigation into the facts or matters stated in anyresolution, certificate, statement, instrument, opinion, report, notice,request, consent, entitlement order, approval or other paper or document.

Section 9.05         Merger, Conversion, Consolidation or Succession to Business.  Any corporation into which the CollateralAgent, the Custodial Agent or the Securities Intermediary may be merged orconverted or with which it may be consolidated, or any corporation resultingfrom any merger, conversion or consolidation to which the Collateral Agent, theCustodial Agent or the Securities Intermediary shall be a party, or anycorporation succeeding to all or substantially all of the corporate trustbusiness of the Collateral Agent, the Custodial Agent or the SecuritiesIntermediary shall be the successor of the Collateral Agent, the CustodialAgent or the Securities Intermediary hereunder without the execution or filingof any paper with any party hereto or any further act on the part of any of theparties hereto except where an instrument of transfer or assignment is requiredby law to effect such succession, anything herein to the contrarynotwithstanding.

Section 9.06         Rights in Other Capacities. The Collateral Agent, the Custodial Agent and the Securities Intermediary andtheir affiliates may (without having to account therefor to the Company) acceptdeposits from, lend money to, make their investments in and generally engage inany kind of banking, trust or other business with the Purchase Contract Agent,any other 

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Person interested hereinand any Holder of Units (and any of their respective subsidiaries oraffiliates) as if it were not acting as the Collateral Agent, the CustodialAgent or the Securities Intermediary, as the case may be, and the CollateralAgent, the Custodial Agent, the Securities Intermediary and their affiliatesmay accept fees and other consideration from the Purchase Contract Agent andany Holder of Units without having to account for the same to the Company; *provided*that each of the Securities Intermediary, the Custodial Agent and theCollateral Agent covenants and agrees with the Company that it shall not accept,receive or permit there to be created in favor of itself and shall take noaffirmative action to permit there to be created in favor of any other Person,any security interest, lien or other encumbrance of any kind in or upon theCollateral other than the lien created by the Pledge.

Section 9.07         Non-reliance on Collateral Agent, the Custodial Agent and SecuritiesIntermediary.  None of the SecuritiesIntermediary, the Custodial Agent or the Collateral Agent shall be required tokeep itself informed as to the performance or observance by the PurchaseContract Agent or any Holder of Units of this Agreement, the Purchase ContractAgreement, the Units or any other document referred to or provided for hereinor therein or to inspect the properties or books of the Purchase Contract Agentor any Holder of Units.  None of the Collateral Agent, the Custodial Agent orthe Securities Intermediary shall have any duty or responsibility to providethe Company with any credit or other information concerning the affairs,financial condition or business of the Purchase Contract Agent or any Holder ofUnits (or any of their respective affiliates) that may come into the possessionof the Collateral Agent, the Custodial Agent or the Securities Intermediary orany of their respective affiliates.

Section 9.08         Compensation and Indemnity. The Company agrees to:

(a)       paythe Collateral Agent, the Custodial Agent and the Securities Intermediary fromtime to time such compensation as shall be agreed in writing between theCompany and the Collateral Agent, the Custodial Agent or the SecuritiesIntermediary, as the case may be, for all services rendered by them hereunder;

(b)       indemnifyand hold harmless the Collateral Agent, the Custodial Agent, the SecuritiesIntermediary and each of their respective directors, officers, agents andemployees (collectively, the **"Indemnitees"**), from and against any andall claims, liabilities, losses, damages, fines, penalties and expenses(including reasonable fees and expenses of counsel) and taxes (other than thosebased upon, determined by or measured by the income of the Collateral Agent,the Custodial Agent and Securities Intermediary) (collectively, **"Losses"**and individually, a **"Loss"**) that may be imposed on, incurred by, or assertedagainst, the Indemnitees or any of them for following any instructions or otherdirections upon which either the Collateral Agent, the Custodial Agent or theSecurities Intermediary is entitled to rely pursuant to the terms of thisAgreement, *provided* that the Collateral Agent, the Custodial Agent orthe Securities Intermediary has not acted with gross negligence or engaged inwillful misconduct or bad faith with respect to the specific Loss against whichindemnification is sought; and

(c)       inaddition to and not in limitation of paragraph (b) immediately above, indemnifyand hold the Indemnitees and each of them harmless from and against any and allLosses that may be imposed on, incurred by or asserted against, the Indemniteesor any of them in connection with or arising out of the Collateral Agent's, theCustodial Agent's or the 

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Securities Intermediary's acceptance or performance ofits powers and duties under this Agreement, provided that the CollateralAgent, the Custodial Agent or the Securities Intermediary has not acted with grossnegligence or engaged in willful misconduct or bad faith with respect to thespecific Loss against which indemnification is sought.

The provisions of this **Section 9.08** and **Section11.07** shall survive the resignation or removal of the Collateral Agent,Custodial Agent or Securities Intermediary and the termination of thisAgreement.

Section 9.09         Failure to Act.  In theevent of any ambiguity in the provisions of this Agreement or any disputebetween or conflicting claims by or among the parties hereto or any otherPerson with respect to any funds or property deposited hereunder, then at itssole option, each of the Collateral Agent, the Custodial Agent and theSecurities Intermediary shall be entitled, after prompt notice to the Companyand the Purchase Contract Agent, to refuse to comply with any and all claims,demands or instructions with respect to such property or funds so long as suchdispute or conflict shall continue, and the Collateral Agent, the CustodialAgent and the Securities Intermediary shall not be or become liable in any wayto any of the parties hereto for its failure or refusal to comply with suchconflicting claims, demands or instructions.  The Collateral Agent, theCustodial Agent and the Securities Intermediary shall be entitled to refuse toact until either:

(a)       suchconflicting or adverse claims or demands shall have been finally determined bya court of competent jurisdiction or settled by agreement between theconflicting parties as evidenced in a writing satisfactory to the CollateralAgent, the Custodial Agent or the Securities Intermediary; or

(b)       theCollateral Agent, the Custodial Agent or the Securities Intermediary shall havereceived security or an indemnity satisfactory to it sufficient to save itharmless from and against any and all loss, liability or reasonableout-of-pocket expense which it may incur by reason of its acting.

The Collateral Agent, the Custodial Agent and the SecuritiesIntermediary may in addition elect to commence an interpleader action or seek otherjudicial relief or orders as the Collateral Agent, the Custodial Agent or theSecurities Intermediary may deem necessary.  Notwithstanding anything containedherein to the contrary, none of the Collateral Agent, the Custodial Agent orthe Securities Intermediary shall be required to take any action that is in itsopinion contrary to law or to the terms of this Agreement, or which would inits opinion subject it or any of its officers, employees or directors toliability.

Section 9.10         Resignation of Collateral Agent, the Custodial Agent and SecuritiesIntermediary.  

(a)       Subjectto the appointment and acceptance of a successor Collateral Agent, CustodialAgent or Securities Intermediary as provided below:

                                                               (i)              the Collateral Agent, the Custodial Agent and the SecuritiesIntermediary may resign at any time by giving notice thereof to the Company andthe Purchase Contract Agent as attorney-in-fact for the Holders of Units;

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                                                               (ii)              the Collateral Agent, the Custodial Agent and the SecuritiesIntermediary may be removed at any time by the Company; and

                                                              (iii)              if the Collateral Agent, the Custodial Agent or the SecuritiesIntermediary fails to perform any of its material obligations hereunder in anymaterial respect for a period of not less than 20 days after receiving writtennotice of such failure by the Purchase Contract Agent and such failure shall becontinuing, the Collateral Agent, the Custodial Agent and the SecuritiesIntermediary may be removed by the Purchase Contract Agent, acting at thedirection of the Holders of Units.

The Purchase Contract Agent shall promptly notify theCompany of any removal of the Collateral Agent, the Custodial Agent or theSecurities Intermediary pursuant to clause (iii) of this **Section 9.10**.  Uponany such resignation or removal, the Company shall have the right to appoint asuccessor Collateral Agent, Custodial Agent or Securities Intermediary, as thecase may be, which shall not be an Affiliate of the Purchase Contract Agent.  Ifno successor Collateral Agent, Custodial Agent or Securities Intermediary shallhave been so appointed and shall have accepted such appointment within 30 days afterthe retiring Collateral Agent's, Custodial Agent's or Securities Intermediary'sgiving of notice of resignation or the Company's or the Purchase Contract Agent'sgiving notice of such removal, then the retiring or removed Collateral Agent,Custodial Agent or Securities Intermediary may petition any court of competentjurisdiction, at the expense of the Company, for the appointment of a successorCollateral Agent, Custodial Agent or Securities Intermediary.  The CollateralAgent, the Custodial Agent and the Securities Intermediary shall each be a bankor a national banking association which has an office (or an agency office) inNew York City with a combined capital and surplus of at least $50,000,000.  Uponthe acceptance of any appointment as Collateral Agent, Custodial Agent orSecurities Intermediary hereunder by a successor Collateral Agent, CustodialAgent or Securities Intermediary, as the case may be, such successor CollateralAgent, Custodial Agent or Securities Intermediary, as the case may be, shallthereupon succeed to and become vested with all the rights, powers, privilegesand duties of the retiring Collateral Agent, Custodial Agent or SecuritiesIntermediary, as the case may be, and the retiring Collateral Agent, CustodialAgent or Securities Intermediary, as the case may be, shall take allappropriate action, subject to payment of any amounts then due and payable toit hereunder, to transfer any money and property held by it hereunder(including the Collateral) to such successor.  The retiring Collateral Agent,Custodial Agent or Securities Intermediary shall, upon such succession, bedischarged from its duties and obligations as Collateral Agent, Custodial Agentor Securities Intermediary hereunder.  After any retiring Collateral Agent's,Custodial Agent's or Securities Intermediary's resignation hereunder asCollateral Agent, Custodial Agent or Securities Intermediary, the provisions ofthis **Article 9** shall continue in effect for its benefit in respect ofany actions taken or omitted to be taken by it while it was acting as the CollateralAgent, Custodial Agent or Securities Intermediary.  Any resignation or removalof the Collateral Agent, Custodial Agent or Securities Intermediary hereunder,at a time when such Person is acting as the Collateral Agent, Custodial Agentor Securities Intermediary, shall be deemed for all purposes of this Agreementas the simultaneous resignation or removal of the Collateral Agent, SecuritiesIntermediary or Custodial Agent, as the case may be.

(b)       BecauseU.S. Bank National Association is serving as the Collateral Agent hereunder andthe Purchase Contract Agent under the Purchase Contract Agreement, if an event

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of default (other than an event of default occurring as a result of a FailedFinal Remarketing) occurs hereunder or under the Purchase Contract Agreement, U.S.Bank National Association will resign as the Collateral Agent, but continue toact as the Purchase Contract Agent.  A successor Collateral Agent will beappointed in accordance with the terms hereof.  If any such event of default iscured or waived prior to the appointment of a successor Collateral Agent, theduty of U.S. Bank National Association to resign in respect of such event ofdefault shall cease.

Section 9.11         Right to Appoint Agent or Advisor.  The Collateral Agent shall have the right to appoint agents oradvisors in connection with any of its duties hereunder, and the CollateralAgent shall not be liable for any action taken or omitted by, or in relianceupon the advice of, such agents or advisors selected in good faith.  Theappointment of agents pursuant to this **Section 9.11** shall be subject toprior written consent of the Company, which consent shall not be unreasonablywithheld.

Section 9.12         Survival.  The provisionsof this **Article 9** shall survive termination of this Agreement and theresignation or removal of the Collateral Agent, the Custodial Agent or theSecurities Intermediary.

Section 9.13         Exculpation.  Anythingcontained in this Agreement to the contrary notwithstanding, in no event shallthe Collateral Agent, the Custodial Agent or the Securities Intermediary ortheir officers, directors, employees or agents be liable under this Agreementto any third party for indirect, special, punitive, or consequential loss ordamage of any kind whatsoever, including, but not limited to, lost profits,whether or not the likelihood of such loss or damage was known to the CollateralAgent, the Custodial Agent or the Securities Intermediary, or any of them andregardless of the form of action.

# **ARTICLE10****Amendment**

Section 10.01     Amendment Without Consent of Holders.  Without the consent of any Holders, the Company, when duly authorized,the Collateral Agent, the Custodial Agent, the Securities Intermediary and thePurchase Contract Agent, at any time and from time to time, may amend thisAgreement, in form satisfactory to the Company, the Collateral Agent, theCustodial Agent, the Securities Intermediary and the Purchase Contract Agent,to:

(a)       evidencethe succession of another Person to the Company and the assumption by any suchsuccessor of the covenants of the Company;

(b)       evidenceand provide for the acceptance of appointment hereunder by a successor CollateralAgent, Custodial Agent, Securities Intermediary or Purchase Contract Agent;

(c)       addto the covenants of the Company for the benefit of the Holders, or surrenderany right or power herein conferred upon the Company, *provided* that suchcovenants or such surrender do not adversely affect the validity, perfection orpriority of the Pledge created hereunder;

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(d)       cureany ambiguity (or formal defect), correct or supplement any provisions hereinwhich may be inconsistent with any other such provisions herein; or

(e)       makeany other provisions with respect to such matters or questions arising underthis Agreement, *provided* that such action shall not adversely affect theinterests of the Holders in any material respect.

Section 10.02     Amendment with Consent of Holders.  With the consent of the Holders of not less than a majority of thePurchase Contracts at the time outstanding, including without limitation theconsent of the Holders obtained in connection with a tender or an exchangeoffer, by Act of such Holders delivered to the Company, the Purchase ContractAgent, the Custodial Agent, the Securities Intermediary and the CollateralAgent, as the case may be, the Company, when duly authorized by a BoardResolution, the Purchase Contract Agent, the Collateral Agent, the SecuritiesIntermediary and the Collateral Agent may amend this Agreement for the purposeof modifying in any manner the provisions of this Agreement or the rights ofthe Holders in respect of the Units; *provided*, *however*, that nosuch supplemental agreement shall, without the unanimous consent of the Holdersof each Outstanding Unit adversely affected thereby in any material respect:

(a)       changethe amount or type of Collateral underlying a Unit (except for the rights ofholders of Corporate Units to substitute the Treasury Securities for thePledged Senior Notes or the Pledged Applicable Ownership Interests, as the casemay be, or the rights of Holders of Treasury Units to substitute Senior Notesor the Applicable Ownership Interests (as specified in clause (i) of thedefinition of such term) in the Treasury Portfolio, as applicable, for thePledged Treasury Securities), unless such change is not adverse to the Holders,impair the right of the Holder of any Unit to receive distributions on theunderlying Collateral or otherwise adversely affect the Holder's rights in orto such Collateral; or

(b)       otherwiseeffect any action that would require the consent of the Holder of eachOutstanding Unit affected thereby pursuant to the Purchase Contract Agreementif such action were effected by a modification or amendment of the provisionsof the Purchase Contract Agreement; or

(c)       reducethe percentage of Purchase Contracts the consent of whose Holders is requiredfor the modification or amendment of the provisions of this Agreement;

*provided* that if any amendment or proposalreferred to above would adversely affect only the Corporate Units or only theTreasury Units, then only the affected class of Holders as of the record datefor the Holders entitled to vote thereon will be entitled to vote on suchamendment or proposal, and such amendment or proposal shall not be effectiveexcept with the consent of Holders of not less than a majority of such class; *provided*,*further*, that the unanimous consent of the Holders of each outstandingPurchase Contract of such class affected thereby shall be required to approveany amendment or proposal specified in clauses (a) through (c) above.

It shall not be necessary for any Act of Holders underthis Section to approve the particular form of any proposed amendment, but itshall be sufficient if such Act shall approve the substance thereof.

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Section 10.03     Execution of Amendments.  Inexecuting any amendment permitted by this Article, the Collateral Agent, theCustodial Agent, the Securities Intermediary and the Purchase Contract Agentshall be entitled to receive and (subject to **Section 7.01** of thePurchase Contract Agreement with respect to the Purchase Contract Agent) shallbe fully authorized and protected in relying upon, an Opinion of Counsel and anofficers' certificate stating that the execution of such amendment isauthorized or permitted by this Agreement and that all conditions precedent, ifany, to the *execution* and delivery of such amendment have been satisfied.  TheCollateral Agent, Custodial Agent, Securities Intermediary and PurchaseContract Agent may, but shall not be obligated to, enter into any suchamendment which affects their own respective rights, duties or immunities underthis Agreement or otherwise.

Section 10.04     Effect of Amendments.  Uponthe execution of any amendment under this Article, this Agreement shall bemodified in accordance therewith, and such amendment shall form a part of thisAgreement for all purposes; and every Holder of Certificates theretofore orthereafter authenticated, executed on behalf of the Holders and delivered underthe Purchase Contract Agreement shall be bound thereby.

Section 10.05     Reference of Amendments.  Certificatesauthenticated, executed on behalf of the Holders and delivered after theexecution of any amendment pursuant to this Section may, and shall if requiredby the Collateral Agent or the Purchase Contract Agent, bear a notation in formapproved by the Purchase Contract Agent and the Collateral Agent as to anymatter provided for in such amendment.  If the Company shall so determine, newCertificates so modified as to conform, in the opinion of the Collateral Agent,the Purchase Contract Agent and the Company, to any such amendment may beprepared and executed by the Company and authenticated, executed on behalf ofthe Holders and delivered by the Purchase Contract Agent in accordance with thePurchase Contract Agreement in exchange for Certificates representingOutstanding Units.

# **ARTICLE11****Miscellaneous**

Section 11.01     No Waiver.  No failure onthe part of the Company, the Collateral Agent, the Custodial Agent, the SecuritiesIntermediary or any of their respective agents to exercise, and no course ofdealing with respect to, and no delay in exercising, any right, power or remedyhereunder shall operate as a waiver thereof; nor shall any single or partialexercise by the Company, the Collateral Agent, the Custodial Agent, theSecurities Intermediary or any of their respective agents of any right, power or remedy hereunder preclude anyother or further exercise thereof or the exercise of any other right, power orremedy.  The remedies herein are cumulative and are not exclusive of anyremedies provided by law.

Section 11.02     Governing Law; Submission to Jurisdiction.  THIS AGREEMENT SHALL BE GOVERNED BY, ANDCONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.  The Company,the Collateral Agent, the Custodial Agent, the Securities Intermediary and theHolders from time to time of the Units, acting through the Purchase ContractAgent as their attorney-in-fact, hereby submit to the nonexclusive jurisdictionof the United States District Court for the Southern District of New York andof any New York 

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state court sitting in New York City for the purposes of alllegal proceedings arising out of or relating to this Agreement or thetransactions contemplated hereby.  The Company, the Collateral Agent, theCustodial Agent, the Securities Intermediary and the Holders from time to timeof the Units, acting through the Purchase Contract Agent as theirattorney-in-fact, irrevocably waive, to the fullest extent permitted byapplicable law, any objection that they may now or hereafter have to the layingof the venue of any such proceeding brought in such a court and any claim thatany such proceeding brought in such a court has been brought in an inconvenientforum.

Section 11.03     Notices.  All notices,requests, consents and other communications provided for herein (including,without limitation, any modifications of, or waivers or consents under, thisAgreement) shall be given or made in writing (including, without limitation, bytelecopy) delivered to the intended recipient at the **"Address for Notices"**specified below its name on the signature pages hereof or, as to any party, atsuch other address as shall be designated by such party in a notice to theother parties.  Except as otherwise provided in this Agreement, all suchcommunications shall be deemed to have been duly given when transmitted bytelecopier or personally delivered or, in the case of a mailed notice, uponreceipt, in each case given or addressed as aforesaid.

Section 11.04     Successors and Assigns.  ThisAgreement shall be binding upon and inure to the benefit of the respectivesuccessors and assigns of the Company, the Collateral Agent, the CustodialAgent, the Securities Intermediary and the Purchase Contract Agent, and theHolders from time to time of the Units, by their acceptance of the same, shallbe deemed to have agreed to be bound by the provisions hereof and to haveratified the agreements of, and the grant of the Pledge hereunder by, thePurchase Contract Agent.

Section 11.05     Counterparts.  ThisAgreement may be executed in any number of counterparts, all of which takentogether shall constitute one and the same instrument, and any of the partieshereto may execute this Agreement by signing any such counterpart.

Section 11.06     Severability.  If anyprovision hereof is invalid and unenforceable in any jurisdiction, then, to thefullest extent permitted by law, (i) the other provisions hereof shall remainin full force and effect in such jurisdiction and shall be liberally construedin order to carry out the intentions of the parties hereto as nearly as may bepossible and (ii) the invalidity or unenforceability of any provision hereof inany jurisdiction shall not affect the validity or enforceability of suchprovision in any other jurisdiction.

Section 11.07     Expenses, Etc.  TheCompany agrees to reimburse the Collateral Agent, the Custodial Agent and theSecurities Intermediary for:

(a)       allreasonable costs and expenses of the Collateral Agent, the Custodial Agent andthe Securities Intermediary (including, without limitation, the reasonable feesand expenses of counsel to the Collateral Agent, the Custodial Agent and theSecurities Intermediary), in connection with (i) the negotiation, preparation,execution and delivery or performance of this Agreement and (ii) anymodification, supplement or waiver of any of the terms of this Agreement;

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(b)       allreasonable costs and expenses of the Collateral Agent, the Custodial Agent andthe Securities Intermediary (including, without limitation, reasonable fees andexpenses of counsel) in connection with (i) any enforcement or proceedingsresulting or incurred in connection with causing any Holder of Units to satisfyits obligations under the Purchase Contracts forming a part of the Units and(ii) the enforcement of this **Section 11.07**;

(c)       alltransfer, stamp, documentary or other similar taxes, assessments or chargeslevied by any governmental or revenue authority in respect of this Agreement orany other document referred to herein and all costs, expenses, taxes,assessments and other charges incurred in connection with any filing,registration, recording or perfection of any security interest contemplatedhereby;

(d)       allreasonable fees and expenses of any agent or advisor appointed by theCollateral Agent and consented to by the Company under **Section 9.11** ofthis Agreement; and

(e)       anyother out-of-pocket costs and expenses reasonably incurred by the CollateralAgent, the Custodial Agent and the Securities Intermediary in connection withthe performance of their duties hereunder.

Section 11.08     Security Interest Absolute. All rights of the Collateral Agent and security interests hereunder, and allobligations of the Holders from time to time hereunder, shall be absolute andunconditional irrespective of:

(a)       anylack of validity or enforceability of any provision of the Purchase Contractsor the Units or any other agreement or instrument relating thereto;

(b)       anychange in the time, manner or place of payment of, or any other term of, or anyincrease in the amount of, all or any of the obligations of Holders of theUnits under the related Purchase Contracts, or any other amendment or waiver ofany term of, or any consent to any departure from any requirement of, thePurchase Contract Agreement or any Purchase Contract or any other agreement orinstrument relating thereto; or

(c)       anyother circumstance which might otherwise constitute a defense available to, ordischarge of, a borrower, a guarantor or a pledgor.

Section 11.09     Notice of Special Event, Special Event Redemption and TerminationEvent.  Upon the occurrence of a SpecialEvent, a Special Event Redemption or a Termination Event, the Company shalldeliver written notice to the Purchase Contract Agent, the Collateral Agent andthe Securities Intermediary.  Upon the written request of the Collateral Agentor the Securities Intermediary, the Company shall inform such party whether ornot a Special Event, a Special Event Redemption or a Termination Event hasoccurred.

[REMAINDER OF PAGEINTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

31

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[SIGNATURE PAGE TO PLEDGEAGREEMENT]

IN WITNESS WHEREOF, the parties hereto have caused thisAgreement to be duly executed as of the day and year first above written.
| PNM RESOURCES, INC.                                                                                                                                                                                         | U.S. BANK NATIONAL ASSOCIATION  as Purchase Contract Agent and as attorney-in-fact of the Holders from time  to time of the Units                                                                            |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| By: /s/  Terry R. Horn  Terry R. Horn  Vice President, Corporate Secretary, and Acting Chief Financial Officer                                                                                              | By:  /s/  Marlene J. Fahey  Marlene J. Fahey  Vice President                                                                                                                                            |
| Address for Notices:                                                                                                                                                                                        | Address for Notices:                                                                                                                                                                                         |
| PNM Resources, Inc.  Alvarado Square MS-2704  Albuquerque, New Mexico 87158

Telephone  No.: (505) 241-2700   Telecopier No.:  (505) 241-2369  Attention:  Treasurer                              | U.S. Bank National Association  100 Wall Street, Suite 1600  New York, New York 10005

Telephone No.: (212) 361-2505   Telecopier No.:  (212) 509-3384  Attention:  Corporate Trust Administration |
| U.S. Bank National  Association,  as Collateral Agent, Custodial Agent and Securities Intermediary                                                                                                          |                                                                                                                                                                                                              |
|                                                                                                                                                                                                             |                                                                                                                                                                                                              |
| By: /s/  Marlene J. Fahey   Marlene J. Fahey  Vice President                                                                                                                                                |                                                                                                                                                                                                              |
| Address for Notices:                                                                                                                                                                                        |                                                                                                                                                                                                              |
| U.S. Bank National Association  100 Wall Street, Suite 1600  New York, New York 10005

Telephone No.: (212) 361-2505  Telecopier No.:  (212) 509-3384  Attention:  Corporate Trust Administration |                                                                                                                                                                                                              |

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**EXHIBIT A**

**INSTRUCTION FROM PURCHASE CONTRACT AGENTTO COLLATERAL AGENT**(Creation of Treasury Units)

U.S. BankNational Association

asPurchase Contract Agent100 Wall Street, Suite 1600New York, New York 10005

Telephone No.: (212) 361-2505Telecopier No.:  (212) 509-3384Attention:  Corporate Trust Administration

Re: ___________ Corporate Units of PNM Resources, Inc.(the **"Company"**)

The securities account of U.S. Bank National Association,as Collateral Agent, maintained by the Securities Intermediary and designated "U.S.Bank National Association, as Collateral Agent of PNM Resources, Inc., aspledgee of U.S. Bank National Association, as the Purchase Contract Agent onbehalf of and as attorney-in-fact for the Holders" (the **"Collateral Account"**)

Please refer to the Pledge Agreement, dated as of October7, 2005 (the **"Pledge Agreement"**), among the Company, you, as CollateralAgent, as Securities Intermediary and as Custodial Agent and the undersigned,as Purchase Contract Agent and as attorney-in-fact for the holders of CorporateUnits from time to time.  Capitalized terms used herein but not defined shallhave the meaning set forth in the Pledge Agreement.

We hereby notify you in accordance with Section 5.02 ofthe Pledge Agreement that the holder of securities named below (the **"Holder"**)has elected to substitute $___ Value of Treasury Securities or securityentitlements with respect thereto in exchange for an equal Value of PledgedSenior Notes relating to _____ Corporate Units and has delivered to theundersigned a notice stating that the Holder has Transferred such Treasury Securitiesor security entitlements with respect thereto to the Securities Intermediary,for credit to the Collateral Account.

A-1

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We hereby request that youinstruct the Securities Intermediary, upon confirmation that such TreasurySecurities or security entitlements thereto have been credited to theCollateral Account, to release to the undersigned an equal Value of PledgedSenior Notes in accordance with Section 5.02 of the Pledge Agreement.

Date:                                                   

U.S. Bank National Association, asPurchase Contract Agent and as attorney-in-fact of the Holders from time totime of the Units

By:                                                                 

Name:

Title:

Please print name and address of Holder electing tosubstitute Treasury Securities or security entitlements with respect theretofor the Pledged Senior Notes:

___________________________                                                                                        

                        Name                                                SocialSecurity or other Taxpayer

                                                                                    IdentificationNumber, if any 

___________________________

         Address

___________________________

___________________________

A-2

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**EXHIBIT B**

**INSTRUCTION FROM COLLATERAL AGENT TO SECURITIES INTERMEDIARY**(Creation of Treasury Units)

U.S. BankNational Associationas Securities Intermediary100 Wall Street, Suite 1600New York, New York 10005

Telephone No.: (212) 361-2505Telecopier No.:  (212) 509-3384Attention:  Corporate Trust Administration

Re: __________ Corporate Units of PNM Resources, Inc.(the **"Company"**)

The securities account of U.S. Bank National Association,as Collateral Agent, maintained by the Securities Intermediary and designated "U.S.Bank National Association, as Collateral Agent of PNM Resources, Inc. as pledgeeof U.S. Bank National Association, as the Purchase Contract Agent on behalf ofand as attorney-in-fact for the Holders" (the **"Collateral Account"**)

Please refer to the Pledge Agreement, dated as of October7, 2005 (the **"Pledge Agreement"**), among the Company, you, as CollateralAgent, as Securities Intermediary and as Custodial Agent and the undersigned,as Purchase Contract Agent and as attorney-in-fact for the holders of CorporateUnits from time to time.  Capitalized terms used herein but not defined shallhave the meanings set forth in the Pledge Agreement.

B-1

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When you have confirmed that $                   Value of Treasury Securities or security entitlements thereto has been creditedto the Collateral Account by or for the benefit of _________, as Holder ofCorporate Units (the **"Holder"**), you are hereby instructed to releasefrom the Collateral Account an equal Value of Pledged Senior Notes or securityentitlements with respect thereto relating to Corporate Units of the Holder byTransfer to the Purchase Contract Agent.

Dated:______________________

U.S. Bank National Association,as Collateral Agent

By:                                                                 

Name:

Title:

Please print name and address of Holder:

___________________________                                                                                        

                        Name                                                SocialSecurity or other Taxpayer 

                                                                                    IdentificationNumber, if any 

___________________________

                     Address

___________________________

___________________________

B-2

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**EXHIBIT C**

**INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT**(Recreation of Corporate Units)

U.S. BankNational Associationas Purchase Contract Agent100 Wall Street, Suite 1600New York, New York 10005

Telephone No.: (212) 361-2505Telecopier No.:  (212) 509-3384Attention:  Corporate Trust Administration

Re: __________ Treasury Units of PNM Resources, Inc. (the**"Company"**)

Please refer to the Pledge Agreement dated as of October 7,2005 (the **"Pledge Agreement"**), among the Company, you, as CollateralAgent, as Securities Intermediary, as Custodial Agent and the undersigned, asPurchase Contract Agent and as attorney-in-fact for the holders of TreasuryUnits from time to time.  Capitalized terms used herein but not defined shallhave the meaning set forth in the Pledge Agreement.

We hereby notify you in accordance with Section 5.03 ofthe Pledge Agreement that the holder of securities named below (the **"Holder"**)has elected to substitute $__________ Value of Senior Notes or securityentitlements with respect thereto in exchange for $__________ an equal Value ofPledged Treasury Securities with respect to _______ Treasury Units and hasdelivered to the undersigned a notice stating that the holder has Transferredsuch Senior Notes or security entitlements with respect thereto to theSecurities Intermediary, for credit to the Collateral Account.

C-1

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We hereby request that you instruct the SecuritiesIntermediary, upon confirmation that such Senior Notes or security entitlementswith respect thereto have been credited to the Collateral Account, to releaseto the undersigned $__________ an equal Value of Treasury Securities in accordancewith Section 5.03 of the Pledge Agreement.

Dated:                                                              U.S.Bank National Association,as Purchase Contract Agent

By:                                                                 

Name:

Title:

Please print name and address of Holder electing tosubstitute Senior Notes or security entitlements with respect thereto forPledged Treasury Securities:

___________________________                                                                                        

                        Name                                                SocialSecurity or other    Taxpayer

                                                                                    IdentificationNumber, if any 

___________________________

                     Address

___________________________

___________________________

C-2

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**EXHIBIT D**

**INSTRUCTION FROM COLLATERAL AGENT TO SECURITIES INTERMEDIARY**(Recreation of Corporate Units)

U.S. BankNational Associationas Securities Intermediary100 Wall Street, Suite 1600New York, New York 10005

Telephone No.: (212) 361-2505Telecopier No.:  (212) 509-3384Attention:  Corporate Trust Administration

Re: ____ Treasury Units of PNM Resources, Inc. (the **"Company"**)

The securities account of U.S. Bank National Association,as Collateral Agent, maintained by the Securities Intermediary and designated "U.S.Bank National Association, as Collateral Agent of PNM Resources, Inc., as pledgeeof U.S. Bank National Association, as the Purchase Contract Agent on behalf ofand as attorney-in-fact for the Holders" (the **"Collateral Account"**)

Please refer to the Pledge Agreement dated as of October 7,2005 (the **"Pledge Agreement"**), among the Company, you, as SecuritiesIntermediary, Custodial Agent and Collateral Agent and U.S. Bank NationalAssociation, as Purchase Contract Agent and as attorney-in-fact for the holdersof Corporate Units from time to time.  Capitalized terms used herein but notdefined shall have the meanings set forth in the Pledge Agreement.

D-1

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When you have confirmed that $___________ Value of SeniorNotes or security entitlements with respect thereto has been credited to theCollateral Account by or for the benefit of _______________, as Holder ofTreasury Units (the **"Holder"**), you are hereby instructed to release fromthe Collateral Account an equal Value of Treasury Securities or securityentitlements with respect thereto relating to ____ treasury Units of the Holderby Transfer to the Purchase Contract Agent.

Dated:                                                              U.S.Bank National Association,as Collateral Agent

By:                                                                  

Name:

Title:

Please print name and address of Holder:

___________________________                                                                                        

                  Name                                                         SocialSecurity or other Taxpayer

                                                                                       IdentificationNumber, if any 

___________________________

               Address

___________________________

___________________________

D-2

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**EXHIBIT E**

**NOTICE OF CASHSETTLEMENT FROM COLLATERAL AGENT TO PURCHASE CONTRACT AGENT**(Cash Settlement Amounts)

U.S. BankNational Association

asPurchase Contract Agent100 Wall Street, Suite 1600New York, New York 10005

Telephone No.: (212) 361-2505Telecopier No.:  (212) 509-3384Attention:  Corporate Trust Administration

Re:       __________Corporate Units of PNM Resources, Inc. (the **"Company"**)

            __________ Treasury Units of the Company

Please refer to the Pledge Agreement dated as of October 7,2005 (the **"Pledge Agreement"**), by and among you, the Company, and U.S.Bank National Association, as Collateral Agent, Custodial Agent and SecuritiesIntermediary.  Unless otherwise defined herein, terms defined in the PledgeAgreement are used herein as defined therein.

In accordance with Section 5.05(c) of the PledgeAgreement, we hereby notify you that as of 5:00 p.m. (New York City time) onthe fourth Business Day immediately preceding __________ (the **"PurchaseContract Settlement Date"**), we have received (i) $___________ inimmediately available funds paid in an aggregate amount equal to the PurchasePrice due to the Company on the Purchase Contract Settlement Date with respectto ___________ Corporate Units, and (ii) based on the funds received set forthin clause (i) above, an aggregate principal amount of $___________ of PledgedSenior Notes are to be tendered for purchase in the Final Remarketing.

Dated:                                                              U.S.Bank National Association,as Collateral Agent

By:                                                                  

Name:

Title:

E-1

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**EXHIBIT F**

**INSTRUCTION TOCUSTODIAL AGENT REGARDING REMARKETING**

U.S. BankNational Associationas Custodial Agent100 Wall Street, Suite 1600New York, New York 10005

Telephone No.: (212) 361-2505Telecopier No.:  (212) 509-3384Attention:  Corporate Trust Administration

Re: Senior Notes Due 2010 of PNM Resources, Inc. (the **"Company"**)

The undersigned hereby notifies you in accordance withSection 5.07(c) of the Pledge Agreement, dated as of October 7, 2005 (the **"PledgeAgreement"**), among the Company, you, as Collateral Agent, Custodial Agentand Securities Intermediary and U.S. Bank National Association, as the PurchaseContract Agent and as attorney-in-fact for the holders of Corporate Units fromtime to time, that the undersigned elects to deliver $__________ aggregateprincipal amount of Separate Senior Notes for delivery to the Remarketing Agenton or prior to 5:00 p.m. (New York City time) on the fifth Business Dayimmediately preceding the Initial Remarketing Date for remarketing pursuant to Section5.07(c) of the Pledge Agreement.  The undersigned will, upon request of the RemarketingAgent, execute and deliver any additional documents deemed by the RemarketingAgent or by the Company to be necessary or desirable to complete the sale,assignment and transfer of the Separate Senior Notes tendered hereby.  Capitalizedterms used herein but not defined shall have the meaning set forth in thePledge Agreement.

The undersigned hereby instructs you, upon receipt of theProceeds of such remarketing from the Remarketing Agent, to deliver suchProceeds to the undersigned in accordance with the instructions indicatedherein under "A.  Payment Instructions."  The undersigned hereby instructs you,in the event of a Failed Final Remarketing, upon receipt of the Separate SeniorNotes tendered herewith from the Remarketing Agent, to deliver such SeparateSenior Notes to the person(s) and the address(es) indicated herein under "B.  DeliveryInstructions."

F-1

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With this notice, the undersigned hereby (i) representsand warrants that the undersigned has full power and authority to tender, sell,assign and transfer the Separate Senior Notes tendered hereby and that theundersigned is the record owner of any Senior Notes tendered herewith inphysical form, (ii) agrees to be bound by the terms and conditions of Section5.07(c) of the Pledge Agreement and (iii) acknowledges and agrees that after5:00 p.m. (New York City time) on the fifth Business Day immediately precedingthe Remarketing Date, such election shall become an irrevocable election tohave such Separate Senior Notes remarketed in the Remarketing.  In the case ofa Failed Remarketing, such Separate Senior Notes shall be returned to theundersigned.

Dated:                                                              By:                                                                 

Name:

Title:

SignatureGuarantee:                                        

___________________________                                                                                        

                     Name                                                      SocialSecurity or other Taxpayer

                                                                                       IdentificationNumber, if any 

___________________________

                  Address

___________________________

___________________________

F-2

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A.  PAYMENT INSTRUCTIONS

Proceeds of the remarketing should be paid by check inthe name of the person(s) set forth below and mailed to the address set forthbelow.

Name(s)

(Please Print)

Address

(Please Print)

(Zip Code)

(Taxpayer Identification orSocial Security Number)

B.  DELIVERY INSTRUCTIONS

In the event of a Failed Final Remarketing, Senior Notesthat are in physical form should be delivered to the person(s) set forth belowand mailed to the address set forth below.

Name(s)

(Please Print)

Address

(Please Print)

(Zip Code)

(Tax Identification or SocialSecurity Number)

F-3

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**EXHIBIT G**

**INSTRUCTION TOCUSTODIAL AGENT REGARDING WITHDRAWAL FROM REMARKETING**

U.S. BankNational Associationas Custodial Agent100 Wall Street, Suite 1600New York, New York 10005

Telephone No.: (212) 361-2505Telecopier No.:  (212) 509-3384Attention:  Corporate Trust Administration

Re:  Senior Notes due 2010 of PNM Resources, Inc. (the **"Company"**)

The undersigned herebynotifies you in accordance with Section 5.07(c) of the Pledge Agreement, datedas of October 7, 2005 (the **"Pledge Agreement"**), among the Company andyou, as Collateral Agent, Custodial Agent and Securities Intermediary, and U.S.Bank National Association, as Purchase Contract Agent and as attorney-in-factfor the holders of Corporate Units from time to time, that the undersignedelects to withdraw the $__________ aggregate principal amount of SeparateSenior Notes delivered to the Collateral Agent on __________, 2010 forremarketing pursuant to Section 5.07(c) of the Pledge Agreement.  Theundersigned hereby instructs you to return such Senior Notes to the undersignedin accordance with the undersigned's instructions.  With this notice, the undersignedhereby agrees to be bound by the terms and conditions of Section 5.07(c) of thePledge Agreement.  Capitalized terms used herein but not defined shall have themeaning set forth in the Pledge Agreement.

Dated:                                                              By:                                                                 

Name:

Title:

Signature Guarantee:                                       

___________________________                                                                                        

                     Name                                                         SocialSecurity or other Taxpayer

                                                                                          IdentificationNumber, if any

___________________________

                  Address

___________________________

___________________________

G-1