**EXHIBIT 4.12**

**EXECUTION COPY**

**PNM RESOURCES, INC.**

**to**

**U.S. BANK NATIONAL ASSOCIATION,**

**Trustee**

**                                          **

**SUPPLEMENTAL INDENTURE**

**Dated as of October 7, 2005**

**                                          **

**(For Senior Notes)**

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**TABLE OF CONTENTS**

Article 1DEFINITIONS
| Section 1.01. | Relation to Base Indenture | 1 |
|---------------|----------------------------|---|
| Section 1.02. | Definition of Terms        | 1 |

Article 2GENERAL TERMS AND CONDITIONS OF THE SENIOR NOTES
| Section 2.01. | Designation and Principal Amount   | 5 |
|---------------|------------------------------------|---|
| Section 2.02. | Maturity                           | 6 |
| Section 2.03. | Form, Payment and Appointment      | 6 |
| Section 2.04. | Definitive Senior Notes            | 6 |
| Section 2.05. | Interest                           | 6 |
| Section 2.06. | No Defeasance                      | 7 |
| Section 2.07. | No Sinking Fund                    | 7 |
| Section 2.08. | Form of Private Placement Legends  | 7 |
| Section 2.09. | Transfer and Exchange              | 8 |
| Section 2.10. | Sole Issuance Under Base Indenture | 9 |

Article 3REDEMPTION OF THE SENIOR NOTES
| Section 3.01. | Special Event Redemption | 9 |
|---------------|--------------------------|---|
| Section 3.02. | Redemption Procedures    | 9 |

Article 4FORM OF SENIOR NOTE
|         Section 4.01. | Form of Senior Note | 10 |
|----------------------------------------------------------|---------------------|----|

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Article 5ORIGINAL ISSUE OF SENIOR NOTES
| Section 5.01. | Original Issue of Senior Notes | 10 |
|---------------|--------------------------------|----|

Article 6ORIGINAL ISSUE DISCOUNT
| Section 6.01. | Original Issue Discount | 10 |
|---------------|-------------------------|----|

Article 7MISCELLANEOUS
| Section 7.01. | Ratification of Indenture            | 10 |
|---------------|--------------------------------------|----|
| Section 7.02. | Trustee not Responsible for Recitals | 10 |
| Section 7.03. | New York Law to Govern               | 11 |
| Section 7.04. | Separability                         | 11 |
| Section 7.05. | Counterparts                         | 11 |

Article 8REMARKETING
| Section 8.01. | Remarketing Procedures                | 11 |
|---------------|---------------------------------------|----|
| Section 8.02. | Remarketing                           | 12 |
| Section 8.03. | Reset Rate and Extended Maturity Date | 12 |
| Section 8.04. | Failed Remarketing                    | 13 |
| Section 8.05. | Put Right                             | 13 |
| Section 8.06. | Additional Event of Default           | 14 |

Article 9TAX TREATMENT
| Section 9.01. | Tax Treatment | 14 |
|---------------|---------------|----|

ii

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**SUPPLEMENTAL INDENTURE**, dated as of October 7, 2005,between **PNM RESOURCES, INC.**, a corporation duly organized and existingunder the laws of the State of New Mexico (the **"Company"**), having itsprincipal office at Alvarado Square, Albuquerque, New Mexico 87158, and **U.S.BANK NATIONAL ASSOCIATION**, a national banking association, as Trustee (the **"Trustee"**).

**RECITALS OF THE COMPANY**

**WHEREAS**, the Company has heretofore executed anddelivered to the Trustee an Indenture dated as of October 7, 2005 (the **"BaseIndenture"** and together with this Supplemental Indenture, the **"Indenture"**),providing for the issuance from time to time of series of the **Notes** (asdefined in the Base Indenture);

**WHEREAS**, **Section 9.01(7)** of the BaseIndenture provides for the Company and the Trustee to enter into an indenturesupplemental to the Base Indenture to establish the form or terms of Notes ofany series as permitted by **Section 3.01** of the Base Indenture;

**WHEREAS**, pursuant to **Section 2.01****or****3.01**of the Base Indenture, the Company wishes to provide for the issuance of a newseries of Notes to be known as its 5.1% Senior Notes due August 16, 2010 (the **"SeniorNotes"**), the form and terms of such Senior Notes and the terms, provisionsand conditions thereof to be set forth as provided in this SupplementalIndenture;

**WHEREAS**, the Company has requested that the Trusteeexecute and deliver this Supplemental Indenture and all requirements necessaryto make this Supplemental Indenture a valid, binding and enforceable instrumentin accordance with its terms, and to make the Senior Notes, when executed bythe Company and authenticated and delivered by the Trustee, the valid, bindingand enforceable obligations of the Company, have been done and performed, andthe execution and delivery of this Supplemental Indenture has been dulyauthorized in all respects.

**NOW, THEREFORE**, in consideration of the covenants andagreements set forth herein and for other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, the parties heretohereby agree as follows:

# **Article 1****DEFINITIONS**

Section 1.01.       Relation to Base Indenture. This Supplemental Indenture constitutes an integral part of the BaseIndenture.

Section 1.02.       Definition of Terms.  Forall purposes of this Supplemental Indenture:

(a)       Capitalizedterms used herein without definition shall  have the meanings specified in theBase Indenture, or, if not defined in the Base Indenture, in the PurchaseContract Agreement, the Pledge Agreement or the Remarketing Agreement, asapplicable;

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(b)       aterm defined anywhere in this Supplemental Indenture has the same meaningthroughout;

(c)       thesingular includes the plural and vice versa;

(d)       headingsare for convenience of reference only and do not  affect interpretation;

(e)       thefollowing terms have the meanings given to them in this **Article 1**:

**"Accounting Event"** means the receipt by the auditcommittee of the board of directors of the Company of a written report inaccordance with Statement on Auditing Standards (**"SAS"**) No. 97,"Amendment to SAS No. 50 - Reports on the Application of AccountingPrinciples", from the Company's independent auditors, provided at the requestof the management of the Company, to the effect that, as a result of a changein accounting rules after the Issuance Date, the Company must either (i)account for all or any portion of the Purchase Contracts as derivatives underSFAS 133 (or otherwise mark-to-market or measure at fair value all or anyportion of the Purchase Contracts, with changes appearing in the Company'sincome statement) or (ii) account for the Units using the if-converted methodunder SFAS 128, and that such accounting treatment will cease to apply uponredemption of the Senior Notes.

**"Applicable Principal Amount"** means the aggregateprincipal amount of the Senior Notes that are part of Corporate Units on theSpecial Event Redemption Date.

**"Business Day"** shall have the meaning specified inthe Purchase Contract Agreement.

**"Corporate Units"** shall have the meaning specifiedin the Purchase Contract Agreement.

**"Coupon Rate"** shall have the meaning set forth in **Section2.05(a)**.

**"Definitive Senior Notes"** shall have the meaningset forth in **Section 2.04**.

**"Final Remarketing Price"** shall have the meaningset forth in **Section 8.02(b)**.

**"Interest Payment Date"** shall have the meaning setforth in **Section 2.05(b)**.

**"Issuance Date"** means the date of initial issuanceof the Senior Notes.

**"Maturity Date"** shall have the meaning specified in**Section 2.02**.

**"Pledge Agreement"** means the Pledge Agreement,dated as of October 7, 2005 among the Company, U.S. Bank National Association,as Collateral Agent, Custodial Agent and Securities Intermediary, and U.S. BankNational Association, as Purchase Contract Agent and attorney-in-fact for theHolders of the Purchase Contracts, as amended from time to time.

"**Private Placement Legend**" shall have the meaningset forth in **Section 2.08(b)**.

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**"Purchase Contract Agreement"** means the PurchaseContract Agreement, dated as of October 7, 2005, between the Company and U.S.Bank National Association, as purchase contract agent, as amended from time totime.

**"Purchase Contract"** shall have the meaningspecified in the Purchase Contract Agreement.

**"Purchase Contract Settlement Date"** shall have themeaning specified in the Purchase Contract Agreement.

**"Put Price"** shall have the meaning set forth in **Section8.05(a)**.

**"Put Right"** shall have the meaning set forth in **Section8.05(a)**. 

**"Quotation Agent"** means any primary U.S. governmentsecurities dealer selected by the Company.

**"Record Date"** means, with respect to any InterestPayment Date for the Senior Notes, the first Business Day of the calendar monthin which such Interest Payment Date falls; *provided* that the Companymay, at its option, select any other day as the Record Date for any InterestPayment Date so long as such Record Date selected is more than one Business Daybut less than 60 Business Days prior to such Interest Payment Date.

**"Redemption Amount"** means, for each Senior Note,the product of the principal amount of such Senior Note and a fraction, thenumerator of which is the Treasury Portfolio Purchase Price and the denominatorof which is the Applicable Principal Amount.

**"Redemption Price"** means, for each Senior Note, theRedemption Amount plus any accrued and unpaid interest on such Senior Note tobut excluding the Special Event Redemption Date.

"**Registration Statement**" means an effectiveregistration statement filed by the Company under the Securities Act pursuantto the Registration Rights Agreement, dated as of October 7, 2005, between theCompany and Cascade Investment, L.L.C.

**"Remarketed Senior Notes"** shall have the meaningset forth in **Section 8.01(c)**.

**"Remarketing Agent"** shall have the meaning set forthin the Remarketing Agreement.

**"Remarketing Agreement"** means the RemarketingAgreement, dated as of October 7, 2005, among the Company, Banc of AmericaSecurities LLC and U.S. Bank National Association, as Purchase Contract Agent,as amended from time to time.

**"Remarketing Price"** shall have the meaning setforth in **Section 8.02(a)**.

**"Resale Restriction Termination Date"** means, forany Restricted Senior Note (or beneficial interest therein), two years (or suchother period specified in Rule 144(k)) from the Issuance Date.

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**"Reset Effective Date"** means the date threeBusiness Days following the date of a Successful Remarketing pursuant to whichthe Coupon Rate is reset to a Reset Rate.

**"Reset Rate"** means the interest rate per annum onthe Senior Notes (i) in the case of a Successful Remarketing prior to the FinalRemarketing Date, as determined by the Remarketing Agent as necessary toremarket the Remarketed Senior Notes at a price per Remarketed Senior Note suchthat the aggregate price for the Remarketed Senior Notes is equal toapproximately 100.25% (but not less than 100%) of the sum of the TreasuryPortfolio Purchase Price and the Separate Senior Notes Purchase Price, and (ii)in the case of a Successful Remarketing on the Final Remarketing Date, as the ratenecessary to remarket the Remarketed Senior Notes at a price per RemarketedSenior Note such that the aggregate price for the Remarketed Senior Notes isequal to approximately 100.25% (but not less than 100%) of the aggregateprincipal amount of the Remarketed Senior Notes; *provided* that if thereare no Corporate Units outstanding and none of the Holders elect to haveSeparate Senior Notes held by them remarketed, or in the case of a FailedRemarketing, the interest rate payable on the Senior Notes will not be resetand the interest rate payable on the Senior Notes shall continue to be theCoupon Rate.

"**Restricted Senior Note**" means any SeniorNote (or beneficial interest therein) until such time as:

             (i)         such Senior Note (orbeneficial interest therein) has been transferred      pursuant to aRegistration Statement;

             (ii)        the Resale RestrictionTermination Date therefor has passed; or

             (iii)       the Private Placement Legend therefor has otherwise been removed       pursuant to **Section 2.09(b)**.

"**Rule 144**" means Rule 144 under theSecurities Act (or any successor rule).

"**Rule 144A**" meansRule 144A under the Securities Act (or any successor rule).

"**Securities Act**"means the Securities Act of 1933, as amended.

**"Separate Senior Notes"** means Senior Notes that areno longer a component of Corporate Units. 

**"Special Event"** shall mean either a Tax Event or anAccounting Event.

**"Special Event Redemption"** means the redemption ofthe Senior Notes pursuant to the terms hereof following the occurrence of aSpecial Event.

**"Special Event Redemption Date"** shall have themeaning set forth in **Section 3.01**.

**"Tax Event"** means the receipt by the Company of anopinion of counsel, rendered by a law firm having a recognized national taxpractice, to the effect that, as a result of any amendment to, change in orannounced proposed change in the laws (or any regulations thereunder) of theUnited States or any political subdivision or taxing authority thereof or

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 therein, or as a result of any official administrative decision, pronouncement,judicial decision or action interpreting or applying such laws or regulations,which amendment or change is effective or which proposed change, pronouncement,action or decision is announced on or after the date hereof, there is more thanan insubstantial increase in the risk that interest payable by the Company onthe Senior Notes is not, or within 90 days of the date of such opinion, willnot be, deductible by the Company, in whole or in part, for United Statesfederal income tax purposes.

**"Treasury Portfolio"** means a portfolio of (1) U.S.treasury securities (or principal or interest strips thereof) that mature on orprior to November 15, 2008 in an aggregate amount at maturity equal to theApplicable Principal Amount, and (2) (x) in the case of a SuccessfulRemarketing prior to the Final Remarketing Date, for the scheduled InterestPayment Date on the Purchase Contract Settlement Date, U.S. treasury securities(or principal or interest strips thereof) that mature on or prior to November 15,2008 in an aggregate amount at maturity equal to the aggregate interest payment(assuming no reset of the interest rate) that would have been due on thePurchase Contract Settlement Date on the Applicable Principal Amount, and (y)in the case of a Special Event Redemption, for each scheduled Interest PaymentDate that occurs after the Special Event Redemption Date to and including thePurchase Contract Settlement Date, U.S. treasury securities (or principal orinterest strips thereof) that mature on or prior to the business dayimmediately preceding such scheduled Interest Payment Date in an aggregateamount equal to the aggregate interest payment (assuming no reset of theinterest rate) that would have been due on such scheduled Interest Payment Dateon the Applicable Principal Amount. 

**"Treasury Portfolio Purchase Price"** means thelowest aggregate ask-side price quoted by a Primary Treasury Dealer to theQuotation Agent between 9:00 a.m. and 11:00 a.m., New York City time, (i) inthe case of a Special Event Redemption, on the third Business Day immediatelypreceding the Special Event Redemption Date for the purchase of the applicableTreasury Portfolio for settlement on the Special Event Redemption Date, and(ii) in the case of a Successful Remarketing prior to the Final RemarketingDate, on the date of such Successful Remarketing for the purchase of theapplicable Treasury Portfolio for settlement on the third Business Dayimmediately following the date of such Successful Remarketing.

**"Treasury Units"** shall have the meaning specifiedin the Purchase Contract Agreement.

**"Units"** means either the Corporate Units or theTreasury Units or both the Corporate Units and Treasury Units.

The terms **"Company,"****"Trustee,"****"Indenture,"****"Base Indenture"** and **"Senior Notes"** shall have the respectivemeanings set forth in the recitals to this Supplemental Indenture and theparagraph preceding such recitals.

# **Article 2****GENERAL TERMS AND CONDITIONS OF THE SENIOR NOTES**

Section 2.01.       Designation and Principal Amount.  There is hereby authorized a series of Notes designated as 5.1% SeniorNotes due 2010 limited in aggregate principal amount of $100,000,000.  TheSenior Notes may be issued from time to time upon written order of the 

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Companyfor the authentication and delivery of Senior Notes pursuant to **Section 3.03**of the Base Indenture.

Section 2.02.       Maturity.  Unless aSpecial Event Redemption occurs prior to the Maturity Date (defined below), oras provided in **Section 8.02**, the date upon which the Senior Notes shallbecome due and payable at final maturity, together with any accrued and unpaidinterest, is August 16, 2010 (the **"Maturity Date"**).

Section 2.03.       Form, Payment and Appointment.  Except as provided in **Section 2.04**, the Senior Notes shall beissued in fully registered, certificated form, bearing identical terms. Principal of and interest on the Senior Notes will be payable, the transfer ofsuch Senior Notes will be registrable, and such Senior Notes will beexchangeable for Senior Notes of a like aggregate principal amount bearingidentical terms and provisions, at the office or agency of the Companymaintained for such purpose in the Borough of Manhattan, the City of New York,which shall initially be the Corporate Trust Office of the Trustee; *provided*,*however*, that payment of interest may be made at the option of the Companyby check mailed to the Holder at such address as shall appear in the SecurityRegister or by wire transfer to an account appropriately designated by theHolder entitled to payment.

No service charge shall be made for any registration oftransfer or exchange of the Senior Notes, but the Company may require paymentfrom the Holder of a sum sufficient to cover any tax or other governmentalcharge that may be imposed in connection therewith.

The Security Registrar and Paying Agent for the SeniorNotes shall initially be the Trustee.

The Senior Notes shall be issuable in denominations of$1,000 and integral multiples thereof, except that an interest in a Senior Noteheld as a part of a Corporate Unit represents an ownership interest of 1/40th,or 2.5%, of a Senior Note and will therefore correspond to the stated amount of$25 per Corporate Unit.

Section 2.04.       Definitive Senior Notes.  Senior Notes that are no longer a component of theCorporate Units and are released from the **Collateral Account** (as definedin the Pledge Agreement) will be issued in certificated form (a **"DefinitiveSenior Note"**) in the form set forth in **Exhibit A**.

Section 2.05.       Interest.  (a)  The Senior Notes will bear interest initially atthe rate of 5.1% per year (the **"Coupon Rate"**) from the original date ofissuance through and including the earlier of (i) the Maturity Date and (ii)the day immediately preceding any Reset Effective Date.  In the event of a SuccessfulRemarketing of the Senior Notes, the Coupon Rate will be reset by the RemarketingAgent at the appropriate Reset Rate with effect from the related ResetEffective Date, as set forth under **Section 8.03**.  If the Coupon Rate isso reset, the Senior Notes will bear interest at the Reset Rate from therelated Reset Effective Date until the principal thereof and interest thereonis paid or duly made available for payment and shall bear interest, to theextent permitted by law, compounded quarterly, on any overdue principal andpayment of interest at the Coupon Rate through and including the dayimmediately preceding the Reset Effective Date and at the Reset Ratethereafter.

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(b)       Intereston the Senior Notes shall be payable quarterly in arrears on February 16, May16, August 16 and November 16 of each year (each, an **"Interest**Payment**Date"**),commencing November 16, 2005, to the Person in whose name such Senior Note, orany predecessor Senior Note, is registered at the close of business on theRecord Date for such Interest Payment Date.  Interest on the Senior Notes shallaccrue from October 7, 2005.

In the event of a Successful Remarketing of the SeniorNotes, the Interest Payment Dates may be predetermined and Senior Notes willbear interest at the appropriate Reset Rate from the related Reset EffectiveDate payable semi-annually instead of quarterly.

(c)       Theamount of interest payable for any full quarterly or semi-annual period, as thecase may be, will be computed on the basis of a 360-day year consisting oftwelve 30-day months.  The amount of interest payable for any period shorterthan a full quarterly or semi-annual period, as the case may be, for whichinterest is computed will be computed on the basis of a 30-day month and, forany period less than a month, on the basis of the actual number of days elapsedper 30-day month.  In the event that any scheduled Interest Payment Date fallson a day that is not a Business Day, then payment of interest payable on suchInterest Payment Date will be made on the next succeeding day which is aBusiness Day (and without any interest or other payment in respect of any suchdelay), except that, if such Business Day is in the next calendar year, thensuch payment will be made on the preceding Business Day.

Section 2.06.       No Defeasance.  The provisions of **Article XIII** of the Base Indentureshall not apply to the Senior Notes.

Section 2.07.       No Sinking Fund.  The provisions of **Article XII** of the Base Indentureshall not apply to the Senior Notes and the Senior Notes are not entitled tothe benefit of any sinking fund.

Section 2.08.       Form of Private Placement Legends. 

###                         (a)  EachRestricted Senior Note shall bear the following legend:

                               THESESECURITIES HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, ASAMENDED (THE **"SECURITIES ACT"**), AND MAY NOT BE SOLD OR OTHERWISETRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTIONTHEREFROM.  EACH PURCHASER OF ANY OF THESE SECURITIES IS HEREBY NOTIFIED THATTHE SELLER OF ANY OF THESE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THEPROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

                               THESESECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT(A) (1) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIEDINSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACTACQUIRING FOR ITS OWN ACCOUNT OR FOR 

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                                THE ACCOUNT OF A QUALIFIED INSTITUTIONALBUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A (IF AVAILABLE),(2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACTPROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (3) TO AN ACCREDITED INVESTORWITHIN THE MEANING OF RULE 501(a) OF REGULATION D UNDER THE SECURITIES ACTPURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IFAVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THESECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OFTHE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

IN CONNECTION WITH ANY TRANSFER,THE HOLDER WILL DELIVER TO THE TRUSTEE SUCH OPINIONS OF COUNSEL, CERTIFICATESAND/OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE IN FORM REASONABLYSATISFACTORY TO IT AS PROVIDED FOR IN THE INDENTURE TO CONFIRM THAT THETRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS AS PROVIDED FOR IN THEINDENTURE.

(b)  EachRestricted Senior Note shall bear the private placement legends specified thereforin **Section 2.08(a)** on the face thereof (together, the "**PrivatePlacement Legend**").

Section 2.09.       Transfer and Exchange. (a)  Transfers. Any transfer of Restricted Senior Notes shall bemade only upon receipt by the Note Registrar of such opinions of counsel, certificatesand/or other information reasonably required by and satisfactory to it in orderto ensure compliance with the Securities Act or in accordance with **Section2.09(b)**.

 (b) Useand Removal of Private Placement Legends. Upon the transfer, exchange orreplacement of Senior Notes not bearing a Private Placement Legend, the NoteRegistrar shall exchange such Senior Notes for Senior Notes that do not bear aPrivate Placement Legend. Upon the transfer, exchange or replacement of SeniorNotes bearing a Private Placement Legend, the Note Registrar shall deliver onlySenior Notes that bear a Private Placement Legend unless:

(i)        such Senior Notes aretransferred pursuant to a Registration Statement;

                                        (ii)       suchSenior Notes are transferred pursuant to Rule 144 upon delivery to the NoteRegistrar of a certificate of the transferor in a form that may be agreed tobetween the Company and the Note Registrar and an Opinion of Counsel reasonablysatisfactory to the Note Registrar and the Company;

(iii)      such Senior Notes aretransferred, replaced or exchanged after the  Resale Restriction TerminationDate therefor; or

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(iv)      in connection with suchtransfer, exchange or replacement, the Note Registrar and the Company shallhave received an Opinion of Counsel and other evidence reasonably satisfactoryto it to the effect that neither such Private Placement Legend nor the relatedrestrictions on transfer are required in order to maintain compliance with theprovisions of the Securities Act.

            The PrivatePlacement Legend on any Senior Note shall be removed at the request of theHolder on or after the Resale Restriction Termination Date therefor. TheCompany shall deliver to the Note Registrar an Officers' Certificate promptlyupon effectiveness, withdrawal or suspension of any Registration Statement.

Section 2.10.       Sole Issuance Under Base Indenture.  So long as any Senior Notes are outstanding, theCompany may not issue any other Notes pursuant to the Indenture.

# **Article 3REDEMPTION OF THE SENIOR NOTES**

Section 3.01.       Special Event Redemption   If a Special Event shall occur and be continuing, theCompany may, at its option, redeem the Senior Notes in whole, but not in part,on any Interest Payment Date prior to the earlier of the date of a SuccessfulRemarketing or the Purchase Contract Settlement Date, at a price per SeniorNote equal to the Redemption Price, payable on the date of redemption (the **"SpecialEvent Redemption Date"**) to the Holders of the Senior Notes registered atthe close of business on the Record Date for such Interest Payment Date.  Ifthe Company so elects to redeem the Senior Notes, the Company shall appoint theQuotation Agent to assist the Company in determining the Treasury PortfolioPurchase Price.  Notice of any Special Event Redemption will be mailed by theCompany (with a copy to the Trustee) at least 30 days but not more than 60 daysbefore the Special Event Redemption Date to each registered Holder of theSenior Notes at its registered address.  In addition, the Company shall notifythe Collateral Agent in writing that a Special Event has occurred and that theCompany intends to redeem the Senior Notes on the Special Event RedemptionDate.  Unless the Company defaults in the payment of the Redemption Price, onand after the Special Event Redemption Date, (a) interest shall cease to accrueon the Senior Notes, (b) the Senior Notes shall become due and payable at theRedemption Price, and (c) the Senior Notes shall be void and all rights of theHolders in respect of the Senior Notes shall terminate and lapse (other thanthe right to receive the Redemption Price upon surrender of such Senior Notesbut without interest on such Redemption Price).  Following the notice of a SpecialEvent Redemption, neither the Company nor the Trustee shall be required toregister the transfer of or exchange the Senior Notes to be redeemed.

Except as set forth in this **Section 3.01**, theSenior Notes shall not be redeemable by the Company prior to the MaturityDate.  The provisions of this **Article 3** shall supersede any conflictingprovisions contained in **Article 11** of the Base Indenture.

Section 3.02.       Redemption Procedures.  On or prior to 10:00 a.m.  New York City time on theSpecial Event Redemption Date, the Company shall deposit with the Trusteeimmediately available funds in an amount sufficient to pay, on the SpecialEvent Redemption Date, the 

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aggregate Redemption Price for all outstandingSenior Notes.  In exchange for any Senior Notes surrendered for redemption onor after the Special Event Redemption Date, the Trustee shall pay an amountequal to the Redemption Price (a) to the Collateral Agent, in the case ofSenior Notes that are included in Corporate Units, which amount shall beapplied by the Collateral Agent in accordance with the terms of the PledgeAgreement, and (b) to the Holders of the Separate Senior Notes, in the case ofSeparate Senior Notes.

# **Article 4****FORM OF SENIOR NOTE**

Section 4.01.       Form of Senior Note.  The Senior Notes and the Trustee's Certificate ofAuthentication to be endorsed thereon are to be substantially in the formsattached as **Exhibit A** hereto, with such changes therein as the officersof the Company executing the Senior Notes (by manual or facsimile signature)may approve, such approval to be conclusively evidenced by their executionthereof.

# **Article 5****ORIGINAL ISSUE OF SENIOR NOTES**

Section 5.01.       Original Issue of Senior Notes.  Senior Notes in the aggregate principal amount of$100,000,000 may from time to time, upon execution of this SupplementalIndenture, be executed by the Company and delivered to the Trustee forauthentication, and the Trustee shall thereupon authenticate and deliver saidSenior Notes to or upon the written order of the Company pursuant to **Section3.03** of the Base Indenture without any further action by the Company (otherthan as required by the Base Indenture).

# **Article 6****ORIGINAL ISSUE DISCOUNT**

Section 6.01.       Original Issue Discount.  The Company shall file with the Trustee promptly atthe end of each calendar year (i) a written notice specifying the amount oforiginal issue discount (including daily rates and accrual periods) accrued onSenior Notes that are Outstanding as of the end of the year and (ii) such otherspecific information relating to such original issue discount as may then berelevant under the Internal Revenue Code of 1986, as amended from time to time.

# **Article 7****MISCELLANEOUS**

Section 7.01.       Ratification of Indenture.  The Indenture, as supplemented by this SupplementalIndenture, is in all respects ratified and confirmed, and this SupplementalIndenture shall be deemed part of the Indenture in the manner and to the extentherein and therein provided.

Section 7.02.       Trustee not Responsible for Recitals.  The recitals herein contained are made by the Companyand not by the Trustee, and the Trustee assumes no responsibility for thecorrectness thereof.  The Trustee makes no representation as to the validity orsufficiency of this Supplemental Indenture.

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Section 7.03.       New York Law to Govern.  THIS SUPPLEMENTAL INDENTURE AND EACH SENIOR NOTE SHALLBE DEEMED TO BE CONTRACTS MADE UNDER THE LAWS OF THE STATE OF NEW YORK ANDSHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OFNEW YORK.

Section 7.04.       Separability.  In case any one or more of the provisions contained inthis Supplemental Indenture or in the Senior Notes shall for any reason be heldto be invalid, illegal or unenforceable in any respect, then, to the extentpermitted by law, such invalidity, illegality or unenforceability shall notaffect any other provisions of this Supplemental Indenture or of the SeniorNotes, but this Supplemental Indenture and the Senior Notes shall be construedas if such invalid or illegal or unenforceable provision had never beencontained herein or therein.

Section 7.05.       Counterparts.  This Supplemental Indenture may be executed in anynumber of counterparts each of which shall be an original, but such counterpartsshall together constitute but one and the same instrument. 

# **Article 8****REMARKETING**

Section 8.01.       Remarketing Procedures.  (a)  Unless a Special Event Redemption or a SuccessfulRemarketing has occurred prior to the applicable Remarketing Date, the Companyshall engage the Remarketing Agent pursuant to the Remarketing Agreement forthe Remarketing of the Senior Notes.  The Company will request, not later thanseven nor more than 15 calendar days prior to the applicable Remarketing Date,that the Trustee notify the Holders of Separate Senior Notes, Corporate Unitsand Treasury Units of the procedures to be followed in the applicableRemarketing.

(b)       EachHolder of Separate Senior Notes may elect to have Separate Senior Notes held bysuch Holder remarketed in any Remarketing.  A Holder making such an electionmust, pursuant to the Pledge Agreement, notify the Custodial Agent and deliversuch Separate Senior Notes to the Custodial Agent on or prior to 5:00 p.m. (NewYork City time) on or prior to the fifth Business Day immediately preceding theapplicable Remarketing Date (but no earlier than the Interest Payment Dateimmediately preceding the applicable Remarketing Date).  Any such notice anddelivery may not be conditioned upon the level at which the Reset Rate isestablished in the Remarketing.  Any such notice and delivery may be withdrawnon or prior to 5:00 p.m. (New York City time) on the fifth Business Dayimmediately preceding the applicable Remarketing Date in accordance with the provisionsset forth in the Pledge Agreement.  Any such notice and delivery not withdrawnby such time will be irrevocable with respect to such Remarketing.  Pursuant to**Section 5.07(c)** of the Pledge Agreement, promptly after 11:00 a.m., NewYork City time, on the Business Day immediately preceding the applicable RemarketingDate, the Custodial Agent, based on the notices and deliveries received by itprior to such time, shall notify the Remarketing Agent of the principal amountof Separate Senior Notes to be tendered for remarketing and shall cause suchSeparate Senior Notes to be presented to the Remarketing Agent.  Under **Section5.02** of the Purchase Contract Agreement, Senior Notes that are componentsof Corporate Units will be deemed tendered for Remarketing and will beremarketed in accordance with the terms of the Remarketing Agreement. 

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(c)       Theright of each Holder of Senior Notes that are included in Corporate Units tohave such Senior Notes, and each Holder of Separate Senior Notes to have anySeparate Senior Notes (together, the **"Remarketed Senior Notes"**),remarketed and sold on any Remarketing Date shall be limited to the extent that(i) the Remarketing Agent conducts a Remarketing pursuant to the terms of theRemarketing Agreement, (ii) a Special Event Redemption has not occurred priorto such Remarketing Date, (iii) the Remarketing Agent is able to find apurchaser or purchasers for Remarketed Senior Notes at the Remarketing Price orthe Final Remarketing Price, as the case may be, and (iv) the purchaser orpurchasers deliver the purchase price therefor to the Remarketing Agent as andwhen required.

(d)       Neitherthe Trustee, the Company nor the Remarketing Agent shall be obligated in anycase to provide funds to make payment upon tender of Senior Notes forremarketing. 

Section 8.02.       Remarketing.  (a)  Unless a Special Event Redemption has occurredprior to the Initial Remarketing Date, on the Initial Remarketing Date, theRemarketing Agent shall, pursuant and subject to the terms of the RemarketingAgreement, use commercially reasonable efforts to remarket the RemarketedSenior Notes at a price (the **"Remarketing Price"**) equal to approximately100.25% (but in no event less than 100%) of the sum of the Treasury PortfolioPurchase Price and the Separate Senior Note Purchase Price.

(b)       Inthe case of a Failed Initial Remarketing and unless a Special Event Redemptionhas occurred prior to the Final Remarketing Date, on the Final RemarketingDate, the Remarketing Agent shall use commercially reasonable efforts toremarket the Remarketed Senior Notes at a price (the **"Final RemarketingPrice"**) equal to approximately 100.25% of the aggregate principal amount ofthe Remarketed Senior Notes.  It is understood and agreed that Remarketing onany Remarketing Date will be considered successful and no further attempts willbe made if the resulting proceeds are at least 100% of the sum of the TreasuryPortfolio Purchase Price and the Separate Senior Note Purchase Price, and 100%of the aggregate principal amount of the Remarketed Senior Notes in the case ofthe Final Remarketing.

Section 8.03.       Reset Rate and Extended Maturity Date.  (a)  In connection with each Remarketing, theRemarketing Agent shall determine, in consultation with the Company, the ResetRate (rounded to the nearest one-thousandth (0.001) of one percent per annum)that the Remarketed Senior Notes should bear in order to have an aggregatemarket value equal to the Remarketing Price or the Final Remarketing Price, asthe case may be, and that in the sole discretion of the Remarketing Agent willenable it to remarket all of the Remarketed Senior Notes at the RemarketingPrice or Final Remarketing Price, as the case may be, in such Remarketing.

(b)       Anythingherein to the contrary notwithstanding, the Remarketing Agent shall have noobligation to determine whether there is any limitation under applicable law onthe Reset Rate or, if there is any such limitation, the maximum permissibleReset Rate on the Senior Notes and shall rely solely upon written notice fromthe Company (which the Company agrees to provide prior to the eighth BusinessDay before the Initial Remarketing Date) as to whether or not there is any suchlimitation in any applicable jurisdiction. 

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(c)       Inconnection with a Remarketing, the Remarketing Agent, in consultation with theCompany, may extend the Maturity Date to a date selected by the Company that istwo or three years from the date on which the Reset Rate is set.  Such extendedmaturity date (the **"Extended Maturity Date"**), if any, will be specifiedin the remarketing announcement and will become effective on the date on whichthe Reset Rate is set.

(d)       Inconnection with a Remarketing, the Company may also elect to add any additionalfinancial covenants as the Company may determine.  Such an election would takeeffect upon a Successful Remarketing, on the Purchase Contract SettlementDate.  In addition, as provided in **Section 2.05(b)** herein, upon aSuccessful Remarketing, the Interest Payment Dates may be redetermined to providefor payment of interest semi-annually instead of quarterly.

(e)       Inthe event of a Failed Remarketing or if no Senior Notes are included inCorporate Units and none of the Holders of the Separate Senior Notes elect tohave their Senior Notes remarketed in any Remarketing, the applicable interestrate on the Senior Notes will not be reset and will continue to be the CouponRate and the Maturity Date will not be extended.

(f)        In the event of a Successful Remarketing, the Coupon Rate shallbe reset at the Reset Rate as determined by the Remarketing Agent under the RemarketingAgreement and the Maturity Date will be extended to the Extended Maturity Date..

Section 8.04.       Failed Remarketing.  (a)  If,by 4:00 p.m.  (New York City time) on any Remarketing Date, the RemarketingAgent is unable to remarket all of the Remarketed Senior Notes at theRemarketing Price or the Final Remarketing Price, as the case may be, pursuantto the terms and conditions hereof, a Failed Remarketing shall be deemed tohave occurred, and the Remarketing Agent shall so advise by telephone thePurchase Contract Agent and the Company.  Whether or not there has been aFailed Remarketing will be determined in the sole reasonable discretion of theRemarketing Agent.  Promptly following any Failed Remarketing, the RemarketingAgent shall return Separate Senior Notes submitted for remarketing, if any, tothe Custodial Agent for distribution to the appropriate Holders.

(b)       TheCompany shall cause a notice of such Failed Remarketing to be published in adaily newspaper in the English language of general circulation in the City ofNew York, which is expected to be *The Wall Street Journal*.  

Section 8.05.       Put Right.  (a)  Subjectto paragraph (b) hereof, if there has not been a Successful Remarketing priorto the Purchase Contract Settlement Date, Holders of Separate Senior Notes andHolders of Senior Notes that are a component of Corporate Units will, subjectto this **Section 8.05**, have the right (the **"Put Right"**) to requirethe Company to purchase their Senior Notes, on the Purchase Contract SettlementDate, at a price per Senior Note equal to $1000.00 plus accrued and unpaidinterest to but excluding the Purchase Contract Settlement Date (the **"PutPrice"**).

(b)       ThePut Right of Holders of Senior Notes that are part of Corporate Units will beautomatically exercised unless such Holders (1) prior to 11:00 a.m., New YorkCity time, 

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on the second Business Day immediately preceding the PurchaseContract Settlement Date, provide written notice to the Purchase Contract Agentof their intention to settle the related Purchase Contract with separate cash,and (2) on or prior to 5:00 p.m., New York City time, on the Business Dayimmediately preceding the Purchase Contract Settlement Date, deliver to theCollateral Agent $25 in cash per Purchase Contract, in each case pursuant tothe Purchase Contract Agreement and such Holders shall be deemed to haveelected to pay the Purchase Price for the shares of Common Stock or PreferredStock, as applicable, to be issued under the related Purchase Contract from aportion of the Proceeds of the Put Right of such Senior Notes equal to thePurchase Price in full satisfaction of such Holders' obligations under thePurchase Contracts, and any remaining amount of the Put Price followingsatisfaction of the related Purchase Contract will be paid to such Holder.

(c)       ThePut Right of a Holder of a Separate Senior Note shall only be exercisable upondelivery of a notice to the Trustee by such Holder on or prior to the secondBusiness Day prior to the Purchase Contract Settlement Date.  On or prior tothe Purchase Contract Settlement Date, the Company shall deposit with theTrustee immediately available funds in an amount sufficient to pay, on the PurchaseContract Settlement Date, the aggregate Put Price of all Separate Senior Noteswith respect to which a Holder has exercised a Put Right.  In exchange for anySeparate Senior Notes surrendered pursuant to the Put Right, the Trustee shallthen distribute such amount to the Holders of such Separate Senior Notes.

Section 8.06.       Additional Event of Default. In addition to the events listed as Events of Default in **Section 5.01**of the Base Indenture, it shall be an additional Event of Default with respectto the Senior Notes, if the Company shall not have satisfied its obligation topay the Put Price when due with respect to any Separate Senior Note followingexercise of the Put Right in accordance with **Section 8.05**.

# **Article 9****TAX TREATMENT**

Section 9.01.       Tax Treatment.  TheCompany agrees, and by acceptance of a Corporate Unit, each Holder of aCorporate Unit will be deemed to have agreed (1) for United States federal,state and local income and franchise tax purposes to treat the acquisition of aCorporate Unit as the acquisition of the Senior Note and the Purchase Contractconstituting the Corporate Unit and (2) to treat the Senior Note asindebtedness for United States federal, state and local income and franchisetax purposes.  A Holder of Senior Notes may obtain the comparable yield andprojected payment schedule for the Senior Notes, determined by the Companypursuant to Treas.  Reg.  Sec. 1.1275-4, by submitting a written request forsuch information to the Company at the following address:  PNM Resources, Inc.,Alvarado Square MS-2704, Albuquerque, New Mexico 87158, Attention: Treasurer.

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SIGNATURE PAGE FOLLOWS]

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[SIGNATURE PAGE TOSUPPLEMENTAL INDENTURE]

IN WITNESS WHEREOF, the parties hereto have caused thisSupplemental Indenture to be duly executed, as of the day and year firstwritten above.

**PNM RESOURCES, INC.**

By: /s/ Terry R.Horn      Terry R. Horn,       Vice President, CorporateSecretary,          and Acting Chief FinancialOfficer

**U.S. BANKNATIONAL ASSOCIATION**as Trustee

By: /s/ Marlene J. Fahey       MarleneJ. Fahey       VicePresident

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**EXHIBIT A**

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE U.S.SECURITIES ACT OF 1933, AS AMENDED (THE **"SECURITIES ACT"**), AND MAY NOTBE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR ANAPPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF ANY OF THESE SECURITIES ISHEREBY NOTIFIED THAT THE SELLER OF ANY OF THESE SECURITIES MAY BE RELYING ONTHE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDEDBY RULE 144A THEREUNDER.

THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OROTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO THE TRANSFEROR REASONABLYBELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144AUNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AQUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE144A (IF AVAILABLE), (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THESECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (3) TO ANACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a) OF REGULATION D UNDER THESECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIESACT (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDERTHE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWSOF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TOTHE TRUSTEE SUCH OPINIONS OF COUNSEL, CERTIFICATES AND/OR OTHER INFORMATION ASIT MAY REASONABLY REQUIRE IN FORM REASONABLY SATISFACTORY TO IT AS PROVIDED FORIN THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOINGRESTRICTIONS AS PROVIDED FOR IN THE INDENTURE.

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PNM RESOURCES, INC.5.1% Senior Notes due 2010

No. ..............                                                                                                               $..................

PNM RESOURCES, INC., a corporation duly organized andexisting under the laws of the State of New Mexico (hereinafter called the **"Company"**,which term includes any successor Person under the Indenture hereinafterreferred to), for value received, hereby promises to pay to ___________, orregistered assigns, the principal sum of up to _______________ Dollars ($_______________)on August 16, 2010 (such date is hereinafter referred to as the **"MaturityDate"**), and to pay interest thereon from October 7, 2005 or from the mostrecent Interest Payment Date to which interest has been paid or duly providedfor, quarterly in arrears on February 16, May 16, August 16 and November 16 ofeach year, commencing November 16, 2005, at the rate of 5.1% per annum throughand including the day immediately preceding the Reset Effective Date, if any,and thereafter semi-annually at the Reset Rate, if any, on the basis of a 360-dayyear consisting of twelve 30-day months, until the principal hereof is paid orduly provided for or made available for payment, and (to the extent that thepayment of such interest shall be legally enforceable) to pay interest,compounded quarterly, at the rate of 5.1% per annum on any overdue principaland payment of interest through and including the day immediately preceding theReset Effective Date, if any, and thereafter at the Reset Rate and onsemi-annual Interest Payment Dates, if any.  The amount of interest payable forany period shorter than a full quarterly period or, following a SuccessfulRemarketing, semi-annual period as applicable, for which interest is computedwill be computed on the basis of a 30-day month and, for any period less than amonth, on the basis of the actual number of days elapsed per 30-day month.  Theinterest so payable, and punctually paid or duly provided for, on any InterestPayment Date will, as provided in the Indenture, be paid to the Person in whosename this Senior Note (or one or more Predecessor Senior Notes) is registeredat the close of business on the Record Date for such Interest Payment Date.  Anysuch interest not so punctually paid or duly provided for will forthwith ceaseto be payable to the Holder on such Record Date and may either be paid to thePerson in whose name this Senior Note (or one or more Predecessor Senior Notes)is registered at the close of business on a Special Record Date (as defined inthe Base Indenture) for the payment of such Defaulted Interest (as defined inthe Base Indenture) to be fixed by the Trustee, notice whereof shall be givento Holders of Senior Notes not less than 10 days prior to such Special RecordDate, or be paid at any time in any other lawful manner not inconsistent withthe requirements of any securities exchange on which the Senior Notes may belisted, and upon such notice as may be required by such exchange, all as morefully provided in said Indenture.

Payment of the principal of and interest on this SeniorNote will be made at the office or agency of the Company maintained for thatpurpose in the Borough of Manhattan, the City of New York, which shallinitially be the Corporate Trust Office of the Trustee, in such coin orcurrency of the United States of America as at the time of payment is legaltender for payment of public and private debts; *provided*, *however*,that payment of interest may be made at the option of the Company by checkmailed to the address of the Person entitled thereto as such address shall appearin the Security Register. 

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Reference is hereby made to the further provisions ofthis Senior Note set forth on the reverse hereof, which further provisionsshall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication hereon has beenexecuted by the Trustee referred to on the reverse hereof by manual signature,this Senior Note shall not be entitled to any benefit under the Indenture or bevalid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused thisinstrument to be duly executed.

Dated:

                                                                                       PNM RESOURCES, INC.

                                                                                       By:                                                                  

Name:

Title:

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TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Senior Notesreferred to in the within-mentioned Indenture.

Dated:                                                 

                                                                                    U.S.BANK NATIONAL ASSOCIATION

                                                                                    asTrustee

By:                                                                 

                                                                                                                             Authorized Signatory

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FORM OF REVERSE OF SENIOR NOTE

This Senior Note is one of a duly authorized issue ofsenior notes of the Company (herein called the **"Senior Notes"**), issuedand to be issued in one or more series under an Indenture, dated as of October7, 2005, between the Company and U.S. Bank National Association, a nationalbanking association, as trustee (herein called the **"Trustee"**, which termincludes any successor trustee)(the **"Base Indenture"**), as supplementedby the Supplemental Indenture between the Company and the Trustee (the **"SupplementalIndenture"** and together with the Base Indenture, the **"Indenture"**),to which Indenture reference is hereby made for a statement of the respectiverights, limitations of rights, duties and immunities thereunder of the Company,the Trustee and the Holders of the Senior Notes and of the terms upon which theSenior Notes are, and are to be, authenticated and delivered.  This Senior Noteis one of the series designated on the face hereof, limited in aggregateprincipal amount to $100,000,000.

If a Special Event shall occur and be continuing, theCompany may, at its option, redeem the Senior Notes of this series in whole,but not in part, on any Interest Payment Date prior to the earlier of the dateof a Successful Remarketing and the Purchase Contract Settlement Date, at aprice per Senior Note equal to the Redemption Price as set forth in theIndenture.

If there has not been a Successful Remarketing prior tothe Purchase Contract Settlement Date, the Holders of Senior Notes will havethe right to require the Company to purchase their Senior Notes on the PurchaseContract Settlement Date, all as more fully described in the SupplementalIndenture. 

The Senior Notes are not entitled to the benefit of anysinking fund and will not be subject to defeasance. 

If an Event of Default with respect to Senior Notes ofthis series shall occur and be continuing, the principal of the Senior Notes ofthis series may be declared due and payable in the manner and with the effectprovided in the Indenture.

The Indenture permits, with certain exceptions as thereinprovided, the amendment thereof and the modification of the rights andobligations of the Company and the rights of the Holders of the Senior Notes atany time by the Company and the Trustee with the consent of the Holders of atleast a majority in principal amount of the Senior Notes at the timeOutstanding.  The Indenture also contains provisions permitting the Holders ofspecified percentages in principal amount of the Senior Notes at the timeOutstanding, on behalf of the Holders of all Senior Notes, to waive complianceby the Company with certain provisions of the Indenture and certain pastdefaults under the Indenture and their consequences.  Any such consent orwaiver by the Holder of this Senior Note shall be conclusive and binding uponsuch Holder and upon all future Holders of this Senior Note and of any SeniorNote issued upon the registration of transfer hereof or in exchange herefor orin lieu hereof, whether or not notation of such consent or waiver is made uponthis Senior Note.

As provided in and subject to the provisions of theIndenture, the Holder of this Senior Note shall not have the right to instituteany proceeding with respect to the Indenture or for the appointment of areceiver or trustee or for any other remedy thereunder, unless such Holdershall 

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have previously given the Trustee written notice of a continuing Event ofDefault with respect to the Senior Notes of this series, the Holders of notless than a majority in aggregate principal amount of the Senior Notes of allseries at the time Outstanding in respect of which an Event of Default shallhave occurred and be continuing shall have made written request to the Trusteeto institute proceedings in respect of such Event of Default as Trustee andoffered the Trustee reasonable indemnity, and the Trustee shall not havereceived from the Holders of a majority in principal amount of Senior Notes ofall series at the time Outstanding in respect of which an Event of Defaultshall have occurred and be continuing a direction inconsistent with suchrequest, and shall have failed to institute any such proceeding, for 60 daysafter receipt of such notice, request and offer of indemnity.  The foregoingshall not apply to any suit instituted by the Holder of this Senior Note forthe enforcement of any payment of principal hereof or any premium or interesthereon on or after the respective due dates expressed herein.

No reference herein to the Indenture and no provision ofthis Senior Note or of the Indenture shall alter or impair the obligation ofthe Company, which is absolute and unconditional, to pay the principal of andinterest on this Senior Note at the times, place and rate, and in the coin orcurrency, herein prescribed.

As provided in the Indenture and subject to certainlimitations therein set forth, the transfer of this Senior Note is registrablein the Securities Register, upon surrender of this Senior Note for registrationof transfer at the office or agency of the Company in any place where theprincipal of and interest on this Senior Note are payable, duly endorsed by, oraccompanied by a written instrument of transfer in form satisfactory to theCompany and the Securities Registrar duly executed by the Holder hereof or hisattorney duly authorized in writing, and thereupon one or more new Senior Notesof this series, of authorized denominations and for the same aggregateprincipal amount, will be issued to the designated transferee or transferees.

The Senior Notes of this series are issuable only inregistered form without coupons in denominations of $1,000 and any integralmultiple thereof.  As provided in the Indenture and subject to certain limitationstherein set forth, Senior Notes of this series are exchangeable for a likeaggregate principal amount of Senior Notes of this series of a differentauthorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registrationof transfer or exchange, but the Company may require payment of a sumsufficient to cover any tax or other governmental charge payable in connectiontherewith. 

Prior to due presentment of this Senior Note forregistration of transfer, the Company, the Trustee and any agent of the Companyor the Trustee may treat the Person in whose name this Senior Note isregistered as the owner hereof for all purposes, whether or not this SeniorNote be overdue, and neither the Company, the Trustee nor any such agent shallbe affected by notice to the contrary.

All terms used in this Senior Note which are defined inthe Indenture shall have the meanings assigned to them in the Indenture. 

This Senior Note shall be governed by the laws of NewYork.

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The Company agrees, and by acceptance of a Corporate Unit,each Holder of a Corporate Unit will be deemed to have agreed (1) for UnitedStates federal, state and local income and franchise tax purposes to treat theacquisition of a Corporate Unit as the acquisition of the Senior Note and thePurchase Contract constituting the Corporate Unit and (2) to treat the SeniorNote as indebtedness for United States federal, state and local income andfranchise tax purposes.  A Holder of Senior Notes may obtain the comparableyield and projected payment schedule for the Senior Notes, determined by theCompany pursuant to Treas. Reg. Sec. 1.1275-4, by submitting a written requestfor it to the Company at the following address: PNM Resources, Inc., Alvarado SquareMS-2704, Albuquerque, New Mexico 87158, Attention: Treasurer.

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ASSIGNMENT

FOR VALUE RECEIVED, theundersigned assigns and transfers this Senior Note to:

                                                                                                                                               

                                                                                                                                               

(Insert assignee's socialsecurity or taxpayer identification number)

                                                                                                                                               

                                                                                                                                               

                                                                                                                                               

(Insert address and zip codeof assignee) and irrevocably appoints

                                                                                                                                               

                                                                                                                                               

                                                                                                                                               

agent to transfer this Senior Note on the books of theCompany.  The agent may substitute another to act for him or her.

Date:                                      

Signature:

                                                                       

Signature Guarantee:

                                                                       

(Sign exactly as your name appears on the other side ofthis Senior Note)

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SIGNATURE GUARANTEE

Signatures must be guaranteedby an "eligible guarantor institution" meeting the requirements of theRegistrar, which requirements include membership or participation in theSecurity Transfer Agent Medallion Program (**"STAMP"**) or such other"signature guarantee program" as may be determined by the Registrar in additionto, or in substitution for, STAMP, all in accordance with the SecuritiesExchange Act of 1934, as amended.

By:                                                      

Name:Title: