exh4-2_093008.htm


    


     

    EXHIBIT
4.2

     

    EXECUTION
COPY

     

     PNM
RESOURCES, INC.

     

     

    and

     

     

    U.S.
BANK NATIONAL ASSOCIATION,

     

     

    as
Collateral Agent, Custodial Agent and Securities Intermediary

     

     

    and

     

    U.S.
BANK NATIONAL ASSOCIATION,

    as
Purchase Contract Agent

    


    


    


    


    AMENDED
AND RESTATED

    PLEDGE
AGREEMENT

    


    


    


    


    Dated
as of August 4, 2008

    


    


    


    


    


    


    


    


    




    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    


     

    Table
of Contents

     

     

    


     

     

    ARTICLE
1

     

     

    Definitions

     

    
      	 
      	 
      	
               Page

            
	
              Section
      1.01

            	
              Definitions

            	
              2

            


    

     

    ARTICLE
2

     

     

    Pledge

     

    
      	
              Section
      2.01

            	
              Pledge                                                                                          

            	
              5

            
	
              Section
      2.02

            	
              Control                                                                                          

            	
              5

            
	
              Section
      2.03

            	
              Termination                                                                                          

            	
              5

            


    

     

    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

            	
              6

            
	
              Section
      3.05

            	
              Assets
      Not Properly Released

            	
              6

            


    

     

    ARTICLE
4

     

     

    Control

     

    
      	
              Section
      4.01

            	
              Establishment
      of Collateral Account

            	
              7

            
	
              Section
      4.02

            	
              Treatment
      as Financial Assets

            	
              7

            
	
              Section
      4.03

            	
              Sole
      Control by Collateral Agent

            	
              7

            
	
              Section
      4.04

            	
              Securities
      Intermediary’s Location

            	
              7

            
	
              Section
      4.05

            	
              No
      Other Claims

            	
              7

            
	
              Section
      4.06

            	
              Investment
      and Release

            	
              8

            
	
              Section
      4.07

            	
              Statements
      and Confirmations

            	
              8

            
	
              Section
      4.08

            	
              Tax
      Allocations

            	
              8

            
	
              Section
      4.09

            	
              No
      Other Agreements

            	
              8

            
	
              Section
      4.10

            	
              Powers
      Coupled with an Interest

            	
              8

            
	
              Section
      4.11

            	
              Waiver
      of Lien; Waiver of Set-off

            	
              8

            


    

     

    ARTICLE
5

     

     

    Initial
Deposit; Creation of Treasury Units and Recreation of Corporate
Units

     

     

    
      	
              Section
      5.01

            	
              Initial
      Deposit of Senior Notes

            	
              8

            
	
              Section
      5.02

            	
              Creation
      of Treasury Units

            	
              8

            


    

     

    
      
        i

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	
              Section
      5.03

            	
              Recreation
      of Corporate Units

            	
              9

            
	
              Section
      5.04

            	
              Termination
      Event

            	
              10

            
	
              Section
      5.05

            	
              Cash
      Settlement

            	
              11

            
	
              Section
      5.06

            	
              Early
      Settlement and Cash Merger Early Settlement

            	
              12

            
	
              Section
      5.07

            	
              Application
      of Proceeds in Settlement of Purchase Contracts

            	
              12

            
	
              Section
      5.08

            	
              Special
      Event Redemptions

            	
              14

            


    

     

    


     

    ARTICLE
6

     

     

    Voting
Rights – Pledged Senior Notes

     

    
      	
              Section
      6.01

            	
              Voting
      Rights

            	
              14

            


    

     

    ARTICLE
7

     

     

    Rights
and Remedies

     

    
      	
              Section
      7.01

            	
              Rights
      and Remedies of the Collateral Agent

            	
              14

            
	
              Section
      7.02

            	
              Special
      Event Redemption

            	
              15

            
	
              Section
      7.03

            	
              Remarketing

            	
              15

            
	
              Section
      7.04

            	
              Intentionally
      Omitted

            	
              15

            
	
              Section
      7.05

            	
              Successful
      Remarketing

            	
              16

            
	
              Section
      7.06

            	
              Substitutions

            	
              16

            
	
              Section
      7.07

            	
              Legal
      Holidays

            	
              16

            


    

     

     

     

    ARTICLE
8

     

     

    Representations
and Warranties; Covenants

     

    
      	
              Section
      8.01

            	
              Representations
      and Warranties

            	
              16

            
	
              Section
      8.02

            	
              Covenants

            	
              17

            


    

     

     

     

    ARTICLE
9

     

     

    The
Collateral Agent, The Custodial Agent and the Securities
Intermediary

     

    
      	
              Section
      9.01

            	
              Appointment,
      Powers and Immunities

            	
              17

            
	
              Section
      9.02

            	
              Instructions
      of the Company

            	
              18

            
	
              Section
      9.03

            	
              Reliance
      by Collateral Agent, Custodial Agent and Securities
      Intermediary

            	
              18

            
	
              Section
      9.04

            	
              Certain
      Rights

            	
              18

            
	
              Section
      9.05

            	
              Merger,
      Conversion, Consolidation or Succession to Business

            	
              18

            
	
              Section
      9.06

            	
              Rights
      in Other Capacities

            	
              19

            
	
              Section
      9.07

            	
              Non-reliance
      on Collateral Agent, the Custodial Agent and Securities
      Intermediary

            	
              19

            
	
              Section
      9.08

            	
              Compensation
      and Indemnity.  The Company agrees to:

            	
              19

            
	
              Section
      9.09

            	
              Failure
      to Act

            	
              19

            
	
              Section
      9.10

            	
              Resignation
      of Collateral Agent, the Custodial Agent and Securities
      Intermediary

            	
              20

            
	
              Section
      9.11

            	
              Right
      to Appoint Agent or Advisor

            	
              21

            
	
              Section
      9.12

            	
              Survival

            	
              21

            


    

     

     

    
      
        ii

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
      9.13

            	
              Exculpation

            	
              21

            
	 
      	 
      	 
      


    

     

     

    ARTICLE
10

     

     

    Amendments

     

    
      	
              Section
      10.01

            	
              Amendment
      Without Consent of Holders

            	
              21

            
	
              Section
      10.02

            	
              Amendment
      with Consent of Holders

            	
              22

            
	
              Section
      10.03

            	
              Execution
      of Amendments

            	
              22

            
	
              Section
      10.04

            	
              Effect
      of Amendments

            	
              23

            
	
              Section
      10.05

            	
              Reference
      of Amendments

            	
              23

            


    

     

    ARTICLE
11

     

     

    Miscellaneous

     

    
      	
              Section
      11.01

            	
              No
      Waiver

            	
              23

            
	
              Section
      11.02

            	
              Governing
      Law; Submission to Jurisdiction

            	
              23

            
	
              Section
      11.03

            	
              Notices

            	
              23

            
	
              Section
      11.04

            	
              Successors
      and Assigns

            	
              23

            
	
              Section
      11.05

            	
              Counterparts

            	
              23

            
	
              Section
      11.06

            	
              Severability

            	
              24

            
	
              Section
      11.07

            	
              Expenses,
      Etc.

            	
              24

            
	
              Section
      11.08

            	
              Security
      Interest Absolute

            	
              24

            


    

     

    


     

     

    EXHIBITS

     

     

    Exhibit A
– Instruction from Purchase Contract Agent to Collateral Agent (Creation of
Treasury Units)

     

    Exhibit B
– Instruction from Collateral Agent to Securities Intermediary (Creation to
Treasury Units)

     

    Exhibit C
– Instruction from Collateral Agent to Collateral Agent (Recreation of Corporate
Units)

     

    Exhibit D
– Instruction from Collateral Agent to Securities Intermediary (Recreation of
Corporate 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

    


    
      
        
          iii 


        

        
           


          
            

          

        

        
           


        

      

    

    


    AMENDED AND RESTATED PLEDGE
AGREEMENT, dated as of August 4, 2008, among PNM RESOURCES, INC., a New
Mexico corporation (the
“Company”), and U.S.
BANK NATIONAL ASSOCIATION, a national banking association, as collateral
agent (in such capacity, together with its successors in such capacity, the
“Collateral Agent”), as
custodial agent (in such capacity, together with its successors in such
capacity, the “Custodial
Agent”), and as securities intermediary (as defined in Section
8-102(a)(14) of the UCC) with respect to the Collateral Account (in such
capacity, together with its successors in such capacity, the “Securities Intermediary”),
and as purchase contract agent and as attorney-in-fact of the Holders from time
to time of the Units (in such capacity, together with its successors in such
capacity, the “Purchase
Contract Agent”) under the Purchase Contract Agreement.

     

     

    RECITALS

     

     

    WHEREAS, the Company, the
Collateral Agent, the Custodial Agent, the Securities Intermediary and the
Purchase Contract Agent are parties to a Pledge Agreement, dated as of October
7, 2005 (the “Original
Agreement”), relating to the Units.

     

     

    WHEREAS, the Company and the
Purchase Contract Agent are parties to the Purchase Contract Agreement, dated as
of October 7, 2005 (the “Original Purchase Contract
Agreement”), pursuant to which 4,000,000 Corporate Units have been issued
and are outstanding.

     

     

    WHEREAS, each Corporate Unit,
at issuance, consisted of a unit comprised of (a) a stock purchase contract (a
“Purchase Contract”)
pursuant to which the Holder will purchase from the Company on the Purchase
Contract Settlement Date, for an amount equal to $25 (the “Stated Amount”), a number of
shares of either the Company’s Common Stock or Preferred Stock, in each case on
the terms and subject to conditions set forth in the Original Purchase Contract
Agreement, and (b) a 1/40, or 2.5%, beneficial ownership interest in a Senior
Note.

     

     

    WHEREAS, pursuant to the terms
of the Original Purchase Contract Agreement and the Purchase Contracts, the
Holders of the Units irrevocably authorized the Purchase Contract Agent, as
attorney-in-fact of such Holders, among other things, to execute and deliver the
Original Agreement on behalf of such Holders and to grant the pledge provided
therein of the Collateral to secure the Obligations.

     

     

    WHEREAS, the Original Purchase
Contract Agreement is being amended and restated as of the date hereof pursuant
to the Amended and Restated Purchase Contract Agreement, dated as of August 4,
2008 (the Original Purchase Contract Agreement, as amended pursuant to such
Amended and Restated Purchase Contract Agreement, as modified and supplemented
and in effect from time to time, the “Purchase Contract
Agreement”).

     

     

    WHEREAS, Section 10.02 of the
Original Agreement provides that, with the consent of the Holders, by Act of
such Holders delivered to the Company, the Purchase Contract Agent, the
Custodial Agent, the Securities Intermediary and the Collateral Agent, as the
case may be, the Company, when duly authorized by a Board Resolution, the
Purchase Contract Agent, the Custodial Agent, the Securities Intermediary and
the Collateral Agent may amend the Original Agreement for the purpose of
modifying in any manner the provisions of the Original Agreement or the rights
of the Holders in respect of the Units.

     

     

    WHEREAS, the Company proposes
to amend the Original Agreement as herein provided (the “Amendment”) and to effect the
Amendment by amending and restating the Original Agreement in its entirety as
provided herein.

     

     

    WHEREAS, the Company has
solicited the consent of the Holders of the outstanding Units to the Amendment
and has received from the Holders and delivered to the Purchase Contract Agent,
the Custodial Agent, the Securities Intermediary and the Collateral Agent, in
accordance with Section 10.02 of the Original Agreement, Acts of the Holders of
all of the outstanding Units.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    WHEREAS, the Company hereby
requests that the Purchase Contract Agent, the Custodial Agent, the Securities
Intermediary and the Collateral Agent join the Company in the execution and
delivery of this Amended and Restated Pledge Agreement.

     

     

    WHEREAS, the execution and
delivery of this Amended and Restated Pledge Agreement by the Company has been
duly authorized by the Company by a Board Resolution.

     

     

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

     

    ARTICLE
1

     

     

    Definitions

     

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

     

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

     

    (b) the words
“herein,” “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section, Exhibit or other subdivision;

     

    (c) the
following terms which are defined in the UCC shall have the meanings set forth
therein: “certificated
security,” “control,” “financial asset,” “entitlement order,” “securities
account” and “security
entitlement”;

     

    (d) capitalized
terms used herein and not defined herein have the meanings assigned to them in
the Purchase Contract Agreement; and

     

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

     

     

    “Agreement” means this Amended
and Restated Pledge Agreement, as the same may be amended, modified or
supplemented from time to time.

     

     

    “Amendment” has the meaning
given such term in the seventh paragraph of the recitals of this
Agreement.

     

     

    “Cash” means any coin or
currency of the United States as at the time shall be legal tender for payment
of public and private debts.

     

     

    “Collateral” means the
collective reference to:

     

    (i) the
Collateral Account and all investment property and other financial assets from
time to time credited to the Collateral Account and all security entitlements
with respect thereto, including, without limitation, (A) the Senior Notes and
security entitlements relating thereto that are a component of the Corporate
Units from time to time, (B) the Applicable Ownership 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 time to time, (C) any Treasury Securities
and security entitlements relating thereto delivered from time to time upon
creation of Treasury Units in accordance with Section 5.02 hereof and (D)
payments made by Holders pursuant to Section 5.05
hereof;

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (ii) all
Proceeds of any of the foregoing (whether such Proceeds arise before or after
the commencement of any proceeding under any applicable bankruptcy, insolvency
or other similar law, by or against the pledgor or with respect to the pledgor);
and

     

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

     

     

    “Collateral Account” means the
securities account of the Collateral Agent, maintained by the Securities
Intermediary and designated “U.S. Bank National Association, as Collateral Agent
of PNM Resources, Inc., as pledgee of U.S. Bank National Association, as the
Purchase Contract Agent on behalf of and as attorney-in-fact for the
Holders”.

     

     

    “Collateral Agent” has the
meaning specified in the paragraph preceding 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 become
such pursuant to the applicable provisions of the Purchase Contract Agreement,
and thereafter “Company”
shall mean such successor.

     

     

    “Custodial Agent” has the
meaning specified in the paragraph preceding the recitals of this
Agreement.

     

     

    “Indemnitees” has the meaning
given such term in Section
9.08(b).

     

     

    “Loss” or “Losses” has the
meaning given such term in Section 9.08(b).

     

     

    “Obligations” means, with
respect to each Holder, all obligations and liabilities of such Holder under
such Holder’s Purchase Contract, the Purchase Contract Agreement and this
Agreement or any other document made, delivered or given in connection herewith
or therewith, in each case whether on account of principal, interest (including,
without limitation, interest accruing before and after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to such Holder, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding), fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Company or the Collateral Agent or the
Securities Intermediary that are required to be paid by the Holder pursuant to
the terms of any of the foregoing agreements).

     

     

    “Officers’ Certificate” means
a certificate signed by (i) either the Company’s Chief Executive Officer, its
President or one of its Vice Presidents, and (ii) either the Company’s Corporate
Secretary or one of its Assistant Corporate Secretaries or its Treasurer or one
of its Assistant Treasurers, and delivered to Collateral Agent, Custodial Agent,
Securities Intermediary or Purchase Contract Agent, as applicable.

     

     

    “Original Agreement” has the
meaning given such term in the first paragraph of the recitals of this
Agreement.

     

     

    “Original Purchase Contract
Agreement” has the meaning given such term in the second paragraph of the
recitals of this Agreement.

     

     

    “Permitted Investments” means
any one of the following, in each case maturing on the Business Day following
the date of acquisition:

     

     

    (1)           any
evidence of indebtedness with an original maturity 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 in support of the timely
payment thereof or such indebtedness constitutes a general obligation of
it);

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

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

     

     

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

     

     

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

     

     

    (5)           investments
in commercial paper, other than commercial paper issued by the Company or its
Affiliates, of any corporation incorporated under the laws of the United States
of America or any State thereof, which commercial paper has a rating at the time
of purchase at least equal to “A-1” by Standard & Poor’s
Ratings Services (“S&P”) or at least equal
to “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 affiliate of 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 any individual,
corporation, partnership, joint venture, trust, unincorporated organization or
government or any agency, instrumentality or political subdivision
thereof.

     

     

    “Pledge” means the lien and
security interest created by this Agreement.

     

     

    “Pledged Applicable Ownership
Interests” means the Holder’s Applicable Ownership Interests (as
specified in clause (i) of the definition thereof) in the Treasury Portfolio and
security entitlements with respect thereto from time to time credited to the
Collateral Account and not then released from the Pledge.

     

     

    “Pledged Senior Notes” means
Senior Notes and security entitlements with respect thereto from time to time
credited to the Collateral Account and not then released from the
Pledge.

     

     

    “Pledged Securities” means the
Pledged Senior Notes, the Pledged Applicable Ownership Interests and the Pledged
Treasury Securities, collectively.

     

     

    “Pledged Treasury Securities”
means Treasury Securities and security entitlements with respect thereto from
time to time credited to the Collateral Account and not then released from the
Pledge.

     

     

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

     

     

    “Purchase Contract” has the
meaning specified in the third paragraph of the recitals of this
Agreement.

     

     

    “Purchase Contract Agent” has
the meaning specified in the paragraph preceding the recitals of this
Agreement.

     

     

    “Purchase Contract Agreement”
has the meaning specified in the fifth paragraph of the recitals of this
Agreement.

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    “Purchase Contract Settlement
Date” means November 16, 2008.

     

     

    “Remarketing Agreement” means
the Remarketing Agreement, dated as of October 7, 2005, as amended and
supplemented by a letter agreement, dated as of August 4, 2008, among the
Company, the Remarketing Agent, and the Purchase Contract Agent, as amended from
time to time.

     

     

    “Securities Intermediary” has
the meaning specified in the paragraph preceding the recitals of this
Agreement.

     

     

    “Stated Amount” has the
meaning specified in the third paragraph of the recitals of this
Agreement.

     

     

    “TRADES” means the
Treasury/Reserve Automated Debt Entry System maintained by the Federal Reserve
Bank of New York pursuant to the TRADES Regulations.

     

     

    “TRADES Regulations” means the
regulations of the United States Department of the Treasury, published at 31
C.F.R. Part 357, as amended from time to time.  Unless otherwise defined
herein, all terms defined in the TRADES Regulations are used herein as therein
defined.

     

     

    “Transfer” means (i) in the
case of certificated securities in registered form, delivery as provided in §
8-301(a) of the UCC, endorsed to the transferee or in blank by an effective
endorsement, (ii) in the case of Treasury Securities, registration of the
transferee as the owner of such Treasury Securities on TRADES and (iii) in the
case of security entitlements, including, without limitation, security
entitlements with respect to Treasury Securities, a securities intermediary
indicating by book entry that such security 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 in effect in the State of New York from time to
time.

     

     

    “Value” means, with respect to
any item of Collateral on any date, as to (1) Cash, the face amount thereof, (2)
Treasury Securities or Senior Notes, the aggregate principal amount thereof at
maturity and (3) Applicable Ownership Interests (as specified in clause (i) of
the definition of such term), the appropriate percentage of the aggregate
principal amount at maturity 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, hereby pledges and grants to the Collateral Agent, as agent of
and for the benefit of the Company, a continuing first priority security
interest in and to, and a lien upon and right of set-off against, all of such
Person’s right, title and interest in and to the Collateral to secure the prompt
and complete payment and performance 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 party by 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
Collateral Agent shall have control of the Collateral Account pursuant to the
provisions of Article 4
of this Agreement.

     

    Section
2.03 Termination.  As
to each Holder, this Agreement and the Pledge created hereby shall terminate
upon the satisfaction of such Holder’s Obligations.  Upon such termination,
the Collateral Agent shall, except as otherwise provided herein, instruct the
Securities Intermediary to Transfer such Holder’s portion of the 

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    Collateral
to the Purchase Contract Agent for distribution to such Holder, free and clear
of the Pledge created hereby.

     

    ARTICLE
3

     

     

    Distributions
on Pledged Collateral

     

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

     

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

     

    Section
3.03 Principal Payments Prior to
or on Purchase Contract Settlement Date.

     

     

    (a)           Subject
to the provisions of Sections
5.06 and 5.08,
and except as provided in Section 3.03(b) below, if no
Termination Event shall have occurred, all principal payments received by the
Securities Intermediary in respect of (1) the Pledged Senior Notes, (2) the
Pledged Applicable Ownership Interests and (3) the Pledged Treasury Securities,
shall be held and invested in Permitted Investments until the Purchase Contract
Settlement Date, and transferred to the Company on the Purchase Contract
Settlement Date as provided in Section 5.07 hereof.  Any
balance remaining in the Collateral Account shall be released from the Pledge
and transferred to the Purchase Contract Agent for the benefit of the applicable
Holders for distribution to such Holders in accordance with their respective
interests, free and clear of the Pledge created thereby.  The Company shall
instruct the Collateral Agent in writing as to the type of Permitted Investments
in which any payments made under this Section 3.03(a) shall be
invested; provided,
however, that if the
Company fails to deliver such instructions by 10:30 a.m. (New York City time) on
the day such payments are received by the Collateral Agent, the Collateral Agent
shall invest such payments in the Permitted Investments as described in clause
(6) of the definition of Permitted Investments.  The Collateral Agent shall
have no liability in respect of losses incurred as a result of the failure of
the Company to provide timely written investment direction.

     

     

    (b)           All
principal payments received by the Securities Intermediary in respect of (1) the
Senior Notes, (2) the Applicable Ownership Interests (as specified in clause (i)
of the definition thereof) in the Treasury Portfolio and (3) the Treasury
Securities or security entitlements thereto, that, in each case, have been
released from the Pledge pursuant hereto shall be transferred to the Purchase
Contract Agent for the benefit of the applicable Holders for distribution to
such Holders in accordance with their respective interests.

     

    Section
3.04 Payments to Purchase
Contract Agent.  The Securities Intermediary shall use
commercially reasonable efforts to deliver payments to the Purchase Contract
Agent hereunder to the account designated by the Purchase Contract Agent for
such purpose not later than 12:00 noon (New York City time) on the Business Day
such payment is received by the Securities Intermediary; provided, however, that if such payment
is received on a day that is not a Business Day or after 11:00 a.m. (New York
City time) on a Business Day, then the Securities Intermediary shall use
commercially reasonable efforts to deliver such payment to the Purchase Contract
Agent no later than 10:30 a.m. (New York City time) on the next succeeding
Business Day.

     

    Section
3.05 Assets Not Properly
Released.  If the Purchase Contract Agent or any Holder shall
receive any principal payments on account of financial assets credited to the
Collateral Account and not released therefrom in accordance with this Agreement,
the Purchase Contract Agent or such Holder shall hold the same as trustee of an
express trust for the benefit of the Company and, upon receipt of an Officers’
Certificate of the Company so directing, promptly deliver the same to the
Securities Intermediary for credit to the Collateral Account or to the Company
for application to the Obligations of the Holders, and the Purchase Contract
Agent and Holders shall 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    acquire
no right, title or interest in any such payments of principal amounts so
received.  The Purchase Contract Agent shall have no liability under this
Section 3.05 unless and
until it has been notified in writing that such payment was delivered 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.

     

    ARTICLE
4

     

     

    Control

     

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

     

     

    (a)           the
Securities Intermediary has established the Collateral Account;

     

     

    (b)           the
Collateral Account is a securities account;

     

     

    (c)            subject
to the terms of this Agreement, the Securities Intermediary shall identify in
its records the Collateral Agent as the entitlement holder entitled to exercise
the rights that comprise any financial asset credited to the Collateral
Account;

     

     

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

     

     

    (e)           all
securities or other property underlying any financial assets credited to the
Collateral Account shall be (i) registered in the name of the Purchase Contract
Agent and endorsed to the Securities Intermediary or in blank, (ii) registered
in the name of the Securities Intermediary or (iii) credited to another
securities account maintained in the name of the Securities Intermediary. 
In no case will any financial asset credited to the Collateral Account be
registered in the name of the Purchase Contract Agent or any Holder or specially
endorsed to the Purchase Contract Agent or any Holder unless such financial
asset has been further endorsed to the Securities Intermediary or in
blank.

     

    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 be treated as a financial asset.

     

    Section
4.03 Sole Control by Collateral
Agent.  Except as provided in Section 6.01, at all times
prior to the termination of the Pledge, the Collateral Agent shall have sole
control of the Collateral Account, and the Securities Intermediary shall take
instructions and directions with respect to the Collateral Account solely from
the Collateral Agent.  If at any time the Securities Intermediary shall
receive an entitlement order issued by the Collateral Agent and relating to the
Collateral Account, the Securities Intermediary shall comply with such
entitlement order without further consent by the Purchase Contract Agent or any
Holder or any other Person.  Except as otherwise permitted under this
Agreement, until termination of the Pledge, the Securities Intermediary will not
comply with any entitlement orders 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 the Securities Intermediary, the Collateral Agent, the Purchase
Contract Agent and the Holders with respect thereto, shall be governed by the
laws of the State of New York.  Regardless of any provision in any other
agreement, for purposes of the UCC, New York shall be deemed to be the
Securities Intermediary’s jurisdiction.

     

    Section
4.05 No Other
Claims.  Except for the claims and interest of the Collateral
Agent and of the Purchase Contract Agent and the Holders in the Collateral
Account, the Securities Intermediary (without having conducted any
investigation) does not know of any claim to, or interest in, the Collateral
Account or in any financial asset credited thereto.  If any Person asserts
any lien, encumbrance or adverse claim (including any writ, garnishment,
judgment, warrant of attachment, execution or similar process) against the
Collateral Account or in any

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    financial
asset carried therein, the Securities Intermediary will promptly notify the
Collateral Agent and the Purchase Contract Agent.

     

    Section
4.06 Investment and
Release.  All proceeds of financial assets from time to time
deposited in the Collateral Account shall be invested and reinvested as provided
in this Agreement.  At no time prior to termination of the Pledge with
respect to any particular property shall such property be released from the
Collateral Account except in accordance with this Agreement or upon written
instructions of the Collateral Agent.

     

    Section
4.07 Statements and
Confirmations.  The Securities Intermediary will promptly send
copies of all statements, confirmations and other correspondence concerning the
Collateral Account and any financial assets credited thereto simultaneously to
each of the Purchase Contract Agent and the Collateral Agent at their addresses
for notices under this Agreement.

     

    Section
4.08 Tax
Allocations.  The Purchase Contract Agent shall report all
items of income, gain, expense and loss recognized in the Collateral Account, to
the extent such reporting is required by law, to the Internal Revenue Service
authorities in the manner required by law.  Neither the Securities
Intermediary nor the Collateral Agent shall have any tax reporting duties
hereunder.

     

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

     

    Section
4.10 Powers Coupled with an
Interest.   The rights and powers granted in this Article
4 to the Collateral Agent have been granted in order to perfect its security
interests in the Collateral Account, are powers coupled with an interest and
will be affected neither by the bankruptcy of the Purchase Contract Agent or any
Holder nor by the lapse of time.   The obligations of the
Securities Intermediary under this Article 4 shall continue in effect until the
termination of the Pledge with respect to any and all Collateral.

     

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

     

    ARTICLE
5

     

    


     

    Initial
Deposit; Creation of Treasury Units and Recreation of Corporate
Units

     

    Section
5.01 Initial Deposit of Senior
Notes.

     

     

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

     

     

    (b)           The
Collateral 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 assets
credited to the Collateral Account to be registered in the name of the
Securities Intermediary, the Collateral Agent or their respective nominees;
provided, however, that unless any
Event of Default (as defined in the Indenture) shall have occurred and be
continuing, the Collateral Agent agrees not to cause any Senior Notes to be so
re-registered.

     

    Section
5.02 Creation of Treasury
Units.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (a)           Unless
the Treasury Portfolio has replaced the Senior Notes as a component of the
Corporate Units, a Holder of Corporate Units shall have the right, at any time
on or prior to 5:00 p.m.  (New York City time) on the seventh Business
Day immediately preceding the Purchase Contract Settlement Date, to create
Treasury Units by substitution of Treasury Securities or security entitlements
with respect thereto for the Pledged Senior Notes comprising a part of all or a
portion of such Holder’s Corporate Units, in integral multiples of 40 Corporate
Units by:

     

     

    (i)           transferring
to the Purchase Contract Agent, for credit to the Collateral Account, Treasury
Securities or security entitlements with respect thereto having a Value equal to
the aggregate principal amount of the Pledged Senior Notes to be released,
accompanied by a notice, substantially in the form of Exhibit C to the Purchase
Contract Agreement, whereupon the Purchase Contract Agent shall deliver to the
Collateral Agent a notice, substantially in the form of Exhibit A hereto, (A) stating
that such Holder has notified the Purchase Contract Agent that such Holder has
Transferred Treasury Securities or security entitlements with respect thereto to
the Collateral Agent for credit to the Collateral Account, (B) stating the Value
of the Treasury Securities or security entitlements with respect thereto
Transferred by such Holder and (C) requesting that the Collateral Agent release
from the Pledge the Pledged Senior Notes 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 Treasury Securities or security
entitlements with respect thereto have been credited to the Collateral Account
as described in such notice, the Collateral Agent shall instruct the Securities
Intermediary by a notice, substantially in the form of Exhibit B hereto, to release
such Pledged Senior Notes from the Pledge by Transfer to the Purchase Contract
Agent for distribution to such Holder, free and clear of the Pledge created
hereby.

     

     

    If the
Treasury Portfolio has replaced the Senior Notes as a component of the Corporate
Units and subject to the conditions of the Purchase Contract Agreement, a Holder
of Corporate Units may, at any time on or prior to the second Business Day
immediately preceding the Purchase Contract Settlement Date, substitute Treasury
Securities for the Applicable Ownership Interests in the Treasury Portfolio with
respect to such Corporate Units, but only in multiples of 4,000 Corporate
Units.   In such an event, the Holder shall transfer the required
amount of Treasury Securities to the Securities Intermediary, for credit to the
Collateral Account, and the Purchase Contract Agent shall request the Collateral
Agent to instruct the Securities Intermediary to release the Pledge of and
transfer to the Holder the appropriate Applicable Ownership Interests in the
Treasury Portfolio in the manner set forth above.

     

     

    (b)           Upon
credit to the Collateral Account of Treasury Securities or security entitlements
with respect thereto delivered by a Holder of Corporate Units and receipt of the
related instruction from the Collateral Agent, the Securities Intermediary shall
release such Pledged Senior Notes or Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, from the Pledge and shall promptly
Transfer the same to the Purchase Contract Agent for distribution to such
Holder, free and clear of the Pledge created hereby.

     

    Section
5.03 Recreation of Corporate
Units.

     

     

    (a)           Unless
the Treasury Portfolio has replaced the Senior Notes as a component of the
Corporate Units, at any time on or prior to 5:00 p.m. (New York City time) on
the seventh Business Day immediately preceding the Purchase Contract Settlement
Date, a Holder of Treasury Units shall have the right to recreate Corporate
Units by substitution of Senior Notes or security entitlements with respect
thereto for Pledged Treasury Securities in integral multiples of 40 Treasury
Units by:

     

     

    (i)           transferring
to the Securities Intermediary, for credit to the Collateral Account, Senior
Notes or security entitlements with respect thereto having a principal amount
equal to the Value of the Pledged Treasury Securities to be released,
accompanied by a notice, substantially in the form of Exhibit C to the Purchase
Contract Agreement, whereupon the Purchase Contract Agent shall deliver to the
Collateral Agent a notice, substantially in the form of Exhibit C hereto, stating that
such Holder has 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    Transferred
the Senior Notes or security entitlements with respect thereto to the Collateral
Account for credit to the Collateral Account and requesting that the Collateral
Agent release from the 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 Senior Notes or security
entitlements with respect thereto have been credited to the Collateral Account
as described in such notice, the Collateral Agent shall instruct the Securities
Intermediary by a notice substantially in the form of Exhibit D hereto to release
such Pledged Treasury Securities from the Pledge by Transfer to the Purchase
Contract Agent for distribution to such Holder, free and clear of the Pledge
created hereby.

     

     

    If the
Treasury Portfolio has replaced the Senior Notes as a component of the Corporate
Units, a Holder of Treasury Units may, at any time on or prior to the second
Business Day immediately preceding the Purchase Contract Settlement Date,
substitute the Applicable Ownership Interests in the Treasury Portfolio for the
Pledged Treasury Securities with respect to such Treasury Units, but only in
multiples of 4,000 Treasury Units.   In such an event, the Holder
shall Transfer the required Applicable Ownership Interests in the Treasury
Portfolio to the Securities Intermediary, for credit to the Collateral Account,
and the Purchase Contract Agent shall request the Collateral Agent to instruct
the Securities Intermediary to release and Transfer to the Holder the Pledged
Treasury Securities in the manner set forth above.

     

     

    (b)           Upon
credit to the Collateral Account of Senior Notes or security entitlements with
respect thereto or Applicable Ownership Interests in the Treasury Portfolio
delivered by a Holder of Treasury Units and receipt of the related instruction
from the Collateral Agent, the Securities Intermediary shall release such
Pledged Treasury Securities from the Pledge and shall promptly Transfer the same
to the Purchase Contract Agent for distribution to such Holder, free and clear
of the Pledge created hereby.

     

    Section
5.04 Termination
Event.

     

     

    (a)           Upon
receipt by the Collateral Agent of written notice from the Company or the
Purchase Contract Agent that a Termination Event has occurred, the Collateral
Agent shall release all Collateral from the Pledge and shall promptly instruct
the Securities Intermediary to Transfer:

     

     

    (i)           any
Pledged Senior Notes or security entitlements with respect thereto or 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 the Holders for distribution to such
Holders, in accordance with their respective interests, 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 its interest in the
Applicable Ownership Interests (as specified in clause (i) of the definition of
such term) in the Treasury Portfolio, the Purchase Contract Agent shall dispose
of such interest for cash and deliver to such Holder cash in lieu of delivering
the Applicable Ownership Interests (as specified in clause (i) of the definition
of such term) in the Treasury Portfolio.

     

     

    (b)           If
such Termination Event shall result from the Company’s becoming a debtor under
the Bankruptcy Code, and if the Collateral Agent shall for any reason fail
promptly to effectuate the release and Transfer of all Pledged Senior Notes,
Pledged Applicable Ownership Interests, Pledged Treasury Securities and payments
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:

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (i)           use
its best efforts to obtain an opinion of a nationally recognized law firm to the
effect that, notwithstanding the Company being the debtor in such a bankruptcy
case, the Collateral Agent will not be prohibited from releasing or Transferring
the Collateral as provided in this Section 5.04 and shall deliver
or cause to be delivered such opinion to the Collateral Agent within ten days
after the occurrence of such Termination Event, and if (A) the Purchase Contract
Agent shall be unable to obtain such opinion within ten days after the
occurrence of such Termination Event or (B) the Collateral Agent shall continue,
after delivery of such opinion, to refuse to effectuate the release and Transfer
of all Pledged Senior Notes, Pledged Applicable Ownership Interests, Pledged
Treasury Securities and the payments by Holders (or the Permitted Investments of
such payments) pursuant to Section 5.05 hereof and
Proceeds of any of the foregoing, as the case may be, as provided in this Section 5.04, then the
Purchase Contract Agent shall within fifteen days after the occurrence of such
Termination Event commence an action or proceeding in the court having
jurisdiction of the Company’s case under the Bankruptcy Code seeking an order
requiring the Collateral Agent to effectuate the release and transfer of all
Pledged Senior Notes, Pledged Applicable Ownership Interests, Pledged Treasury
Securities and the payments by Holders (or the Permitted Investments of such
payments) pursuant to Section
5.05 hereof and Proceeds of any of the foregoing, or as the case may be,
as provided by this Section
5.04; or

     

     

    (ii)           commence
an action or proceeding like that described in Section 5.04(b)(i) hereof
within ten days after the occurrence of such Termination Event.

     

    Section
5.05 Cash
Settlement.

     

     

    (a)           Upon
receipt by the Collateral Agent of (1) a notice from the Purchase Contract Agent
promptly after the receipt by the Purchase Contract Agent of a notice from 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 the
Purchase Contract Agreement, to effect a Cash Settlement and (2) payment by such
Holder by deposit in the Collateral Account at or prior to 11:00 a.m. (New York
City time) on the sixth Business Day immediately preceding the Purchase Contract
Settlement Date of the Purchase Price in lawful money of the United States by
certified or cashier’s check or wire transfer of immediately available funds
payable to or upon the order of the Securities Intermediary, then the Collateral
Agent shall:

     

     

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

     

     

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

     

     

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

     

     

    The Company shall instruct the
Collateral Agent in writing as to the type of Permitted Investments in which any
such Cash shall be invested; provided, however, that if the Company fails to deliver
such written instructions by 10:30 a.m. (New York City time) on the day such
Cash is received by the Collateral Agent or to be reinvested by the Securities
Intermediary, the Collateral Agent shall instruct the Securities Intermediary to
invest such Cash in the Permitted Investments described in clause (6) of the
definition of Permitted Investments.  In no event shall the Collateral
Agent or Securities Intermediary be liable for the selection of Permitted
Investments or for investment losses incurred thereon.  The Collateral
Agent and Securities Intermediary shall have no liability with respect to losses
incurred as a result of the failure of the Company to provide timely written
investment direction.  Upon receipt of Proceeds upon the
maturity of the Permitted Investments on the Purchase Contract Settlement Date,
the Collateral Agent shall (A) instruct the Securities Intermediary to pay the
portion of such Proceeds and deliver any certified or cashier’s checks received,
in an aggregate amount equal to the Purchase Price, to the Company on the


     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    Purchase Contract Settlement Date, and
(B) release any amounts in excess of the Purchase Price earned from such
Permitted Investments to the Purchase Contract Agent for distribution to such
Holder in accordance with the Purchase Contract Agreement.

     

     

    (b)           If
a Holder of Corporate Units (unless the Treasury Portfolio has replaced the
Senior Notes as a component of such Corporate Units) (i) fails to notify the
Purchase Contract Agent of its intention to make a Cash Settlement as provided
in Section 5.02(b)(i) of
the Purchase Contract Agreement or (ii) does notify the 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 the Purchase Contract Agreement, such Holder shall be
deemed to have consented to the disposition of such Holder’s Pledged Senior
Notes in accordance with Section 5.02(b)(iii) of the
Purchase Contract Agreement.

     

     

    (c)           As
soon as practicable after 5:00 p.m. (New York City time) on the sixth Business
Day immediately preceding the Purchase Contract Settlement Date, the Collateral
Agent shall deliver to the Purchase Contract Agent a notice, substantially in
the form of Exhibit E
hereto, stating (i) the amount of Cash that it has received with respect to the
Cash Settlement of Corporate Units, (ii) the amount of Cash that it has received
with respect to the Cash Settlement of Treasury Units and (iii) the amount of
Pledged Senior Notes to be remarketed in the Remarketing pursuant to Section 5.02(a) of the
Purchase Contract Agreement.

     

     

    (d)            If
there has been a Failed Final Remarketing, as soon as practicable after 5:00
p.m. (New York City time) on the Business Day immediately preceding the Purchase
Contract Settlement Date, the Collateral Agent shall deliver to the Purchase
Contract Agent a notice, stating (i) the amount of Cash that it has received
with respect to the Cash Settlement of Corporate Units, (ii) the amount of Cash
that 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 automatic
deemed exercise of the Put Right has occurred pursuant to Section 5.02(a) of the
Purchase Contract Agreement.

     

    Section
5.06 Early Settlement and Cash
Merger Early Settlement.  Upon receipt by the Collateral Agent of a
notice from the Purchase Contract Agent that a Holder of Units has elected to
effect either (i) Early Settlement of its obligations under the Purchase
Contracts forming a part of such Units in accordance with the terms of the
Purchase Contracts and Section
5.07 of the Purchase Contract Agreement or (ii) Cash Merger Early
Settlement of its obligations under the Purchase Contracts forming a part of
such Units in accordance with the terms of the Purchase Contracts and Section 5.04(b)(ii) of the
Purchase Contract Agreement (which notice shall set forth the number of such
Purchase Contracts as to which such Holder has elected to effect Early
Settlement or Cash Merger Early Settlement), and that the Purchase Contract
Agent has received from such Holder, and paid to the Company as confirmed in
writing by the Company, the related Purchase Price pursuant to the terms of the
Purchase Contracts and the Purchase Contract Agreement and that all conditions
to such Early Settlement or Cash Merger Early Settlement, as the case may be,
have been satisfied, then the Collateral Agent shall release from the Pledge,
(1) Pledged Senior Notes or the Pledged Applicable Ownership Interests in the
case of a Holder of Corporate Units or (2) Pledged Treasury Securities, in the
case of a Holder of Treasury Units, in each case with a Value equal to the
product of (x) the Stated Amount times (y) the number of Purchase Contracts as
to which such Holder has elected to effect Early Settlement or Cash Merger Early
Settlement, and shall instruct the Securities Intermediary to Transfer all such
Pledged Applicable Ownership Interests or Pledged Senior Notes or Pledged
Treasury Securities, as the case may be, to the Purchase Contract Agent for
distribution to such Holder, in each case free and clear of the Pledge created
hereby.  A Holder of Treasury Units may settle early only in integral
multiples of 40 Treasury Units, and a Holder of Corporate Units, if the Treasury
Portfolio 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)           If
a Holder of Corporate Units (unless the Treasury Portfolio has replaced the
Senior Notes as a component of such Corporate Units) has not elected to make an
effective Cash Settlement by notifying the Purchase Contract Agent in the manner
provided for in Section
5.02(b)(i) of the Purchase Contract Agreement or 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 Price in 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 elected to pay
for the shares of Common 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    Stock or
Preferred Stock, as applicable, to be issued under such Purchase Contracts from
the Proceeds of the Remarketing of the related Pledged Senior Notes.  In
the event of a Successful Remarketing, the Collateral Agent shall instruct the
Securities Intermediary to Transfer the related Pledged Senior Notes to the
Remarketing Agent, upon confirmation of deposit by the Remarketing Agent of the
Proceeds of such Remarketing in the Collateral Account.  On the Purchase
Contract Settlement Date, the Collateral Agent shall, in consultation with the
Purchase Contract Agent, instruct the Securities Intermediary to remit a portion
of the Proceeds from such Remarketing equal to the aggregate principal amount of
such Pledged Senior Notes to satisfy in full such Holder’s obligations to pay
the Purchase Price to purchase the shares of Common Stock or Preferred Stock, as
applicable, under the related Purchase Contracts and to remit the balance of the
Proceeds from the Remarketing, if any, to the Purchase Contract Agent for
distribution to such Holder.

     

     

    Upon a
Failed Final Remarketing, each Holder of Corporate Units (unless the Treasury
Portfolio has replaced the Senior Notes represented by such Corporate Units)
that has not elected to make an effective Cash Settlement by notifying the
Purchase Contract Agent in the manner provided for in Section 5.02(c)(i) of the
Purchase Contract Agreement or does notify the Purchase Contract Agent as
provided in Section
5.02(c)(i) of the Purchase Contract Agreement of its intention to pay the
Purchase Price in cash, but fails to make such payment as required by Section 5.02(c)(ii) of the
Purchase Contract Agreement, shall be deemed to have exercised such Holder’s Put
Right with respect to the Senior Notes that are a component of Corporate Units
have elected to have a portion of the Proceeds of the Put Right set-off against
such Holder’s obligation to pay the aggregate Price for the shares of Common
Stock or Preferred Stock, as applicable, to be issued under the Purchase
Contracts underlying such Corporate Units in full satisfaction of such Holders’
obligations under the Purchase Contracts.   Following such set-off,
the Holder’s obligations to pay the Purchase Price for the shares of Common
Stock or Preferred Stock, as applicable, will be deemed to be satisfied in full,
and the Collateral Agent shall cause the Securities Intermediary to release the
Pledged Senior Notes from the Collateral Account and shall promptly transfer the
Pledged Senior Notes to the Company.  Thereafter, the Collateral Agent
shall promptly remit the remaining Proceeds of the Holder’s exercise of the Put
Right in excess of the aggregate Purchase Price for the shares of Common Stock
or Preferred Stock, as applicable, to be issued under such Purchase Contracts to
the Purchase Contract Agent for payment to the Holder of the Corporate Units to
which such Senior Notes relate.

     

     

    (b)           A
Holder of a Treasury Unit or a Corporate Unit (if the Treasury Portfolio has
replaced the Senior Notes as a component of such Corporate Unit) shall be deemed
to have elected to pay for the shares of Common Stock or Preferred Stock, as
applicable, to be issued under such Purchase Contracts from the Proceeds of the
related Pledged Treasury Securities or Pledged Applicable Ownership Interests,
as the case may be.  Promptly, after 11:00 a.m. (New York City time) on the
Business Day immediately prior to the Purchase Contract Settlement Date, the
Collateral Agent shall invest the Proceeds in the Permitted Investments set
forth in Clause (6) of the definition of Permitted Investments, unless prior to
10:30 a.m. on such date the Company shall otherwise instruct the Collateral
Agent in writing as to the type of Permitted Investments in which any Proceeds
shall be invested.  In no event shall the Collateral Agent be liable for
the selection of Permitted Investments or for investment losses incurred
thereon.  The Collateral Agent shall have no liability in respect of losses
incurred as a result of the failure of the Company to provide timely written
investment direction.  Without receiving any instruction from any Holder,
the Collateral Agent shall instruct the Securities Intermediary to remit the
Proceeds of the related Pledged Treasury Securities or Pledged Applicable
Ownership Interests, as the case may be, to the Company in settlement of such
Purchase Contracts on the Purchase Contract Settlement Date.  In the event
the sum of the Proceeds from the related Pledged Treasury Securities or Pledged
Applicable Ownership Interests, as the case may be, and the investment earnings
from the investment in Permitted Investments exceeds the aggregate Purchase
Price of the Purchase Contracts being settled thereby, the Collateral Agent
shall instruct the Securities Intermediary to transfer such excess, when
received, to the Purchase Contract Agent for distribution to
Holders.

     

     

    (c)           On
or prior to 5:00 p.m. (New York City time) on the seventh Business Day
immediately preceding the Initial Remarketing Date, but no earlier than the
Payment Date immediately preceding such date, Holders of Separate Senior Notes
may elect to have their Separate Senior Notes remarketed under the Remarketing
Agreement, by delivering their Separate Senior Notes along with a notice of such
election, substantially in the form of Exhibit F hereto, to the
Collateral Agent.  The Collateral Agent, acting as Custodial Agent, shall
hold Separate Senior Notes in an account separate from the Collateral Account in
which the Pledged Securities shall be held.  Holders of Separate Senior
Notes electing to have their Separate Senior Notes remarketed will also have the
right to 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    withdraw
that election by written notice to the Collateral Agent, substantially in the
form of Exhibit G
hereto, on or prior to 5:00 p.m. (New York City time) on the seventh Business
Day immediately preceding the Initial Remarketing Date, upon which notice the
Custodial Agent shall return such Separate Senior Notes to such Holder. 
After such time, such election shall become an irrevocable election to have such
Separate Senior Notes remarketed in such Remarketing.

     

    By 12:00
noon (New York City time) on the Business Day immediately preceding the Initial
Remarketing Date, the Custodial Agent shall notify the Remarketing Agent of the
aggregate principal amount of the Separate Senior Notes to be
remarketed.  In the event of a Successful Remarketing, the Custodial
Agent shall deliver all remarketed Separate Senior Notes to the Remarketing
Agent and the Remarketing Agent will remit to the Custodial Agent the remaining
portion of the proceeds of such Remarketing for payment to the Holders of the
remarketed Separate Senior Notes, in accordance with their respective
interests.  In the event of a Failed Final Remarketing, the Custodial Agent
will promptly return such Separate Senior Notes to the appropriate
Holders.

     

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

     

    ARTICLE
6

     

     

    Voting
Rights - Pledged Senior Notes

     

    Section
6.01 Voting
Rights.   Subject to the terms of Section 4.02 of the Purchase
Contract Agreement, the Purchase Contract Agent may exercise, or refrain from
exercising, any and all voting and other consensual rights pertaining to the
Pledged Senior Notes or any part thereof for any purpose not inconsistent with
the terms of this Agreement and in accordance with the terms of the Purchase
Contract Agreement; provided, that the Purchase
Contract Agent shall not exercise or shall not refrain from exercising such
right, as the case may be, if, in the reasonable judgment of the Purchase
Contract Agent, such action would impair or otherwise have a material adverse
effect on the value of all or any of the Pledged Senior Notes; and provided, further, that the Purchase
Contract Agent shall give the Company and the Collateral Agent at least five
Business Days’ prior written notice of the manner in which it intends to
exercise, or its reasons for refraining from exercising, any such right. 
Upon receipt of any notices and other communications in respect of any Pledged
Senior Notes, including notice of any meeting at which holders of the Senior
Notes are entitled to vote or solicitation of consents, waivers or proxies of
holders of the Senior Notes, the Collateral Agent shall use reasonable efforts
to send promptly to the Purchase Contract Agent such notice or communication,
and as soon as reasonably practicable after receipt of a written request
therefor from the Purchase Contract Agent, execute and deliver to the Purchase
Contract Agent such proxies and other instruments in respect of such Pledged
Senior Notes (in form and substance satisfactory to the Collateral Agent) as are
prepared by the Company and delivered to the Purchase Contract Agent with
respect to the Pledged Senior Notes.

     

    ARTICLE
7

     

     

    Rights
and Remedies

     

    Section
7.01 Rights and Remedies of the
Collateral Agent.

     

     

    (a)           In
addition to the rights and remedies specified in Section 5.07 hereof or
otherwise available at law or in equity, after an event of default (as specified
in Section 7.01(b)
below) hereunder, the Collateral Agent shall have all of the rights and remedies
with respect to the Collateral of a secured party under the 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    UCC
(whether or not the UCC is in effect in the jurisdiction where the rights and
remedies are asserted) and the TRADES Regulations and such additional rights and
remedies to which a secured party is entitled under the laws in effect in any
jurisdiction where any rights and remedies hereunder may be asserted. 
Without limiting the generality of the foregoing, such remedies may include, to
the extent permitted by applicable law, (1) retention of the Pledged Senior
Notes, Pledged Treasury Securities or the applicable Pledged Applicable
Ownership Interests in full satisfaction of the Holders’ obligations under the
Purchase Contracts and the Purchase Contract Agreement or (2) sale of the
Pledged Senior Notes, Pledged Treasury Securities or the applicable Pledged
Applicable Ownership Interests in one or more public or private
sales.

     

     

    (b)           Without
limiting any rights or powers otherwise granted by this Agreement to the
Collateral Agent, in the event the Collateral Agent is unable to make payments
to the Company on account of the applicable Pledged Applicable Ownership
Interests, or on account of principal payments of any Pledged Treasury
Securities as provided in Article 3 hereof, in
satisfaction of the Obligations of the Holder of the Units of which such
applicable Pledged Applicable Ownership Interests or such Pledged Treasury
Securities, as applicable, are a part under the related Purchase Contracts, the
inability to make such payments shall constitute an event of default hereunder
and the Collateral Agent shall have and may exercise, with reference to such
Pledged Treasury Securities or Pledged Applicable Ownership Interests, as
applicable, any and all of the rights and remedies available to a secured party
under the UCC and the TRADES Regulations after default by a debtor, and as
otherwise granted herein or under any other law.

     

     

    (c)           Without
limiting any rights or powers otherwise granted by this Agreement to the
Collateral Agent, the Collateral Agent is hereby irrevocably authorized to
receive and collect all payments of (i) the principal amount of the Pledged
Senior 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
otherwise granted herein.

     

     

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

     

    Section
7.02 Special Event
Redemption.   Upon the occurrence of a Special Event
Redemption while Senior Notes are still credited to the Collateral Account, the
Collateral Agent is hereby authorized to present the Pledged Senior Notes for
payment as may be required by their respective terms and to direct the Indenture
Trustee to remit the Redemption Price to the Securities Intermediary for credit
to the Collateral Account on or prior 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.  Upon receipt of such funds, the Pledged
Senior Notes shall be released from the Collateral Account and promptly
transferred to the Company.  Upon the crediting of such funds to the
Collateral Account, the Collateral Agent, at the written direction of the
Company, shall instruct the Securities Intermediary to (a) apply an amount of
such funds equal to the Redemption Amount to purchase the Treasury Portfolio
from the Quotation Agent, (b) credit to the Collateral Account the Applicable
Ownership Interests (specified in clause (i) of the definition of such term) in
the Treasury Portfolio and (c) promptly remit the remaining portion of such
funds, if any, to the Purchase Contract Agent for payment to the Holders of
Corporate Units, in accordance with their respective interests and the Purchase
Contract Agreement.

     

    Section
7.03 Remarketing.   Unless
a Special Event Redemption, an Early Settlement or a Cash Merger Early
Settlement has occurred prior to the Initial Remarketing Date, the Collateral
Agent shall, by 12:00 noon, New York City time, on the Business Day immediately
preceding the Initial Remarketing Date, without any instruction from any Holder
of Corporate Units, notify the Remarketing Agent of the aggregate principal
amount of Pledged Senior Notes to be remarketed. 

     

    Section
7.04 Intentionally
Omitted.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    Section
7.05 Successful
Remarketing.   In the event of a Successful Remarketing,
the Collateral Agent shall on the Purchase Contract Settlement Date, at the
direction of the Company, instruct the Securities Intermediary to (i) Transfer
the Pledged Senior Notes to the Remarketing Agent upon confirmation of deposit
by the Remarketing Agent of the Proceeds of such Successful Remarketing in the
Collateral Account and (ii) remit a portion of such Proceeds equal to the
aggregate principal amount of the Pledged Senior Notes to satisfy in full the
Obligations of Holders of Corporate Units to pay the Purchase Price for the
shares of Common Stock or Preferred Stock, as applicable, under the related
Purchase Contracts, less the amount of any accrued and unpaid Contract
Adjustment Payments payable to such Holders, and to remit the balance of such
Proceeds, if any, to the Purchase Contract Agent for distribution to
Holders.  With respect to Separate Senior Notes, any Proceeds of such
Successful Remarketing attributable to the Separate Senior Notes will be
remitted to the Custodial Agent for payment to the holders of Separate Senior
Notes.  In the event of a Failed Final Remarketing, the Pledged Senior
Notes shall be redeposited into and remain credited to the Collateral Account
and Section 5.07 shall
apply.

     

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

     

    Section
7.07 Legal
Holidays.   In case the Purchase Contract Settlement Date
shall not be a Business Day (notwithstanding any other provision of this Pledge
Agreement), any Remarketing of Senior Notes shall not settle on such date and
remarketed Senior Notes shall be settled on the next succeeding Business Day
with the same force and effect as if made on such Purchase Contract Settlement
Date, and without any adjustment of the Purchase Price.

     

    ARTICLE
8

     

     

    Representations
and Warranties; Covenants

     

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

     

     

    (a)           such
Holder has the power to grant a security interest in and lien on the
Collateral;

     

     

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

     

     

    (c)           upon
the Transfer of the Collateral to the Collateral Agent for credit to the
Collateral Account, the Collateral Agent, for the benefit of the Company, will
have a valid and perfected first priority security interest therein (assuming
that any central clearing operation or any securities intermediary or other
entity not within the control of the Holder involved in the Transfer of the
Collateral, including the Collateral Agent and the Securities Intermediary,
gives the notices and takes the action required of it hereunder and under
applicable law for perfection of that interest and assuming the establishment
and exercise of control pursuant to Article 4 hereof);
and

     

     

    (d)           the
execution and performance by the Holder of its obligations under this Agreement
will not result in the creation of any security interest, lien or other
encumbrance on the Collateral other than the security interest and lien granted
under Article 2 hereof
or violate any provision of any existing law or regulation 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 any of its assets.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    Section
8.02 Covenants.   The
Holders from time to time, acting through the Purchase Contract Agent as their
attorney-in-fact (it being understood that the Purchase Contract Agent shall not
be liable for any covenant made by or on behalf of a Holder), hereby covenant to
the Collateral Agent that for so long as the Collateral remains subject to the
Pledge:

     

     

    (a)           neither
the Purchase Contract Agent nor such Holders will create or purport to create or
allow to subsist any mortgage, charge, lien, pledge or any other security
interest whatsoever over the Collateral or any part of it other than pursuant to
this Agreement; and

     

     

    (b)           neither
the Purchase Contract Agent nor such Holders will sell or otherwise dispose (or
attempt to dispose) of the Collateral or any part of it except for the
beneficial interest therein, subject to the Pledge hereunder, transferred in
connection with the Transfer of the Units.

     

    ARTICLE
9

     

     

    The
Collateral 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 Securities Intermediary shall act as agent for the Company hereunder with
such powers as are specifically vested in the Collateral Agent, the Custodial
Agent or the Securities Intermediary, as the case may be, by the terms of this
Agreement.  The Collateral Agent, the Custodial Agent and Securities
Intermediary shall:

     

     

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

     

     

    (b)           not
be responsible for any recitals contained in this Agreement, or in any
certificate or other document referred to or provided for in, or received by it
under, this Agreement, the Units or the Purchase Contract Agreement, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement (other than as against the Collateral Agent, the Custodial Agent
or the Securities Intermediary, as the case may be), the Units, any Collateral
or the Purchase Contract Agreement or any other document referred to or provided
for herein or therein or for any failure by the Company or any other Person
(except the Collateral Agent, the Custodial Agent or the Securities
Intermediary, as the case may be) to perform any of its obligations hereunder or
thereunder or for the perfection, priority or, except as expressly required
hereby, maintenance of any security interest created hereunder;

     

     

    (c)           not
be required to initiate or conduct any litigation or collection proceedings
hereunder (except pursuant to directions furnished under Section 9.02 hereof, subject
to Section 9.08
hereof);

     

     

    (d)           not
be responsible for any action taken or omitted to be taken by it hereunder or
under any other document or instrument referred to or provided for herein or in
connection herewith or therewith, except for its own gross negligence or willful
misconduct; and

     

     

    (e)           not
be required to advise any party as to selling or retaining, or taking or
refraining from taking any action with respect to, any securities or other
property deposited hereunder.

     

     

    Subject
to the foregoing, during the term of this Agreement, the Collateral Agent, the
Custodial Agent and the Securities Intermediary shall take all reasonable action
in connection with the safekeeping and preservation of the Collateral hereunder
as determined by industry standards.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    No
provision of this Agreement shall require the Collateral Agent, Custodial Agent
or the Securities Intermediary to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties
hereunder.  In no event shall the Collateral Agent, Custodial Agent or the
Securities Intermediary be liable for any amount in excess 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 executed and delivered to the Collateral Agent, to
direct the time, method and place of conducting any proceeding for the
realization of any right or remedy available to the Collateral Agent, or of
exercising any power conferred on the Collateral Agent, or to direct the taking
or refraining from taking of any action authorized by this Agreement; provided, however, that (i) such
direction shall not conflict with the provisions of any law or of this Agreement
or involve the Collateral Agent in personal liability and (ii) the Collateral
Agent shall be indemnified to its satisfaction as provided herein.  Nothing
contained in this Section
9.02 shall impair the right of the Collateral Agent in its discretion to
take any action or omit to take any action which it deems proper and which is
not inconsistent with such direction.  None of the Collateral Agent, the
Custodial Agent or the Securities Intermediary has any obligation or
responsibility to file UCC financing statements.

     

    Section
9.03 Reliance by Collateral
Agent, Custodial Agent and Securities Intermediary.   Each
of the Collateral Agent, the Custodial Agent and the Securities Intermediary
shall be entitled, in the absence of bad faith, to rely conclusively upon any
certification, order, judgment, opinion, notice or other written
communication (including, without limitation, any thereof by e-mail or similar
electronic means, telecopy, telex or facsimile) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons (without being required to determine the correctness of any fact stated
therein) and consult with and conclusively rely upon advice, opinions and
statements of legal counsel and other experts selected by the Collateral Agent,
the Custodial Agent or the Securities Intermediary, as the case may be.  As
to any matters not expressly provided for by this Agreement, the Collateral
Agent, the Custodial Agent and the Securities Intermediary shall in all cases be
fully protected in acting, or in refraining from acting, hereunder in accordance
with instructions given by the Company in accordance with this
Agreement.

     

    Section
9.04 Certain
Rights.

     

    (a)           Whenever
in the administration of the provisions of this Agreement the Collateral Agent,
the Custodial Agent or the Securities Intermediary shall deem it necessary or
desirable that a matter be proved or established prior to taking or suffering
any action to be taken hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may, in the absence of gross
negligence or bad faith on the part of the Collateral Agent, the Custodial Agent
or the Securities Intermediary, be deemed to be conclusively proved and
established by a certificate signed by one of the Company’s officers, and
delivered to the Collateral Agent, the Custodial Agent or the Securities
Intermediary and such certificate, in the absence of gross negligence or bad
faith on the part of the Collateral Agent, the Custodial Agent or the Securities
Intermediary, shall be full warrant to the Collateral Agent, the Custodial Agent
or the Securities Intermediary for any action taken, suffered or omitted by it
under the provisions of this Agreement upon the faith thereof.

     

     

    (b)           The
Collateral Agent, the Custodial Agent or the Securities Intermediary shall not
be bound to make any investigation into the facts or matters stated in any
resolution, 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 Collateral Agent, the Custodial Agent or the Securities
Intermediary may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Collateral Agent, the Custodial Agent or the Securities Intermediary shall
be a party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Collateral Agent, the Custodial Agent or the
Securities Intermediary shall be the successor of the Collateral Agent, the
Custodial Agent or the Securities Intermediary hereunder without the execution
or filing of any paper with any party hereto or any further act on the part of
any of the parties hereto except where an instrument of transfer or assignment
is required by law to effect such succession, anything herein to the contrary
notwithstanding.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    Section
9.06 Rights in Other
Capacities.   The Collateral Agent, the Custodial Agent
and the Securities Intermediary and their affiliates may (without having to
account therefor to the Company) accept deposits from, lend money to, make their
investments in and generally engage in any kind of banking, trust or other
business with the Purchase Contract Agent, any other Person interested herein
and any Holder of Units (and any of their respective subsidiaries or affiliates)
as if it were not acting as the Collateral Agent, the Custodial Agent or the
Securities Intermediary, as the case may be, and the Collateral Agent, the
Custodial Agent, the Securities Intermediary and their affiliates may accept
fees and other consideration from the Purchase Contract Agent and any Holder of
Units without having to account for the same to the Company; provided that each of the
Securities Intermediary, the Custodial Agent and the Collateral 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 no affirmative 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 the Collateral other than the lien
created by the Pledge.

     

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

     

    Section
9.08 Compensation and
Indemnity.   The Company agrees to:

     

     

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

     

     

    (b)           indemnify
and hold harmless the Collateral Agent, the Custodial Agent, the Securities
Intermediary and each of their respective directors, officers, agents and
employees (collectively, the “Indemnitees”), from and
against any and all claims, liabilities, losses, damages, fines, penalties and
expenses (including reasonable fees and expenses of counsel) and taxes (other
than those based 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 asserted against, the Indemnitees or any of them for
following any instructions or other directions upon which either the Collateral
Agent, the Custodial Agent or the Securities Intermediary is entitled to rely
pursuant to the terms of this Agreement, provided that the Collateral
Agent, the Custodial Agent or the Securities Intermediary has not acted with
gross negligence or engaged in willful misconduct or bad faith with respect to
the specific Loss against which indemnification is sought; and

     

     

    (c)           in
addition to and not in limitation of paragraph (b) immediately above, indemnify
and hold the Indemnitees and each of them harmless from and against any and all
Losses that may be imposed on, incurred by or asserted against, the Indemnitees
or any of them in connection with or arising out of the Collateral Agent’s, the
Custodial Agent’s or the Securities Intermediary’s acceptance or performance of
its powers and duties under this Agreement, provided that the Collateral Agent,
the Custodial Agent or the Securities Intermediary has not acted with gross
negligence or engaged in willful misconduct or bad faith with respect to the
specific Loss against which indemnification is sought.

     

     

    The
provisions of this Section
9.08 and Section
11.07 shall survive the resignation or removal of the Collateral Agent,
Custodial Agent or Securities Intermediary and the termination of this
Agreement.

     

    Section
9.09 Failure to
Act.   In the event of any ambiguity in the provisions of
this Agreement or any dispute between or conflicting claims by or among the
parties hereto or any other Person with respect to any funds or property
deposited hereunder, then at its sole option, each of the Collateral Agent, the
Custodial Agent and the Securities Intermediary shall be entitled, after prompt
notice to the Company and the Purchase Contract Agent, to

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     refuse
to comply with any and all claims, demands or instructions with respect to such
property or funds so long as such dispute or conflict shall continue, and the
Collateral Agent, the Custodial Agent and the Securities Intermediary shall not
be or become liable in any way to any of the parties hereto for its failure or
refusal to comply with such conflicting claims, demands or instructions. 
The Collateral Agent, the Custodial Agent and the Securities Intermediary shall
be entitled to refuse to act until either:

     

     

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

     

     

    (b)           the
Collateral Agent, the Custodial Agent or the Securities Intermediary shall have
received security or an indemnity satisfactory to it sufficient to save it
harmless from and against any and all loss, liability or reasonable
out-of-pocket expense which it may incur by reason of its acting.

     

     

    The
Collateral Agent, the Custodial Agent and the Securities Intermediary may in
addition elect to commence an interpleader action or seek other judicial relief
or orders as the Collateral Agent, the Custodial Agent or the Securities
Intermediary may deem necessary.  Notwithstanding anything contained herein
to the contrary, none of the Collateral Agent, the Custodial Agent or the
Securities Intermediary shall be required to take any action that is in its
opinion contrary to law or to the terms of this Agreement, or which would in its
opinion subject it or any of its officers, employees or directors to
liability.

     

    Section
9.10 Resignation of Collateral
Agent, the Custodial Agent and Securities Intermediary.

     

     

    (a)           Subject
to the appointment and acceptance of a successor Collateral Agent, Custodial
Agent or Securities Intermediary as provided below:

     

     

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

     

     

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

     

     

    (ii)           
if the Collateral Agent, the Custodial Agent or the Securities Intermediary
fails to perform any of its material obligations hereunder in any material
respect for a period of not less than 20 days after receiving written notice of
such failure by the Purchase Contract Agent and such failure shall be
continuing, the Collateral Agent, the Custodial Agent and the Securities
Intermediary may be removed by the Purchase Contract Agent, acting at the
direction of the Holders of Units.

     

     

    The
Purchase Contract Agent shall promptly notify the Company of any removal of the
Collateral Agent, the Custodial Agent or the Securities Intermediary pursuant to
clause (iii) of this Section
9.10.  Upon any such resignation or removal, the Company shall have
the right to appoint a successor Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be, which shall not be an Affiliate of the
Purchase Contract Agent.  If no successor Collateral Agent, Custodial Agent
or Securities Intermediary shall have been so appointed and shall have accepted
such appointment within 30 days after the retiring Collateral Agent’s, Custodial
Agent’s or Securities Intermediary’s giving of notice of resignation or the
Company’s or the Purchase Contract Agent’s giving notice of such removal, then
the retiring or removed Collateral Agent, Custodial Agent or Securities
Intermediary may petition any court of competent jurisdiction, at the expense of
the Company, for the appointment of a successor Collateral Agent, Custodial
Agent or Securities Intermediary.  The Collateral Agent, the Custodial
Agent and the Securities Intermediary shall each be a bank or a national banking
association which has an office (or an agency office) in New York City with a
combined capital and surplus of at least $50,000,000.  Upon the acceptance
of any appointment as Collateral Agent, Custodial Agent or Securities
Intermediary hereunder by a successor Collateral Agent, Custodial Agent or
Securities Intermediary, as the case may be, such successor Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be, shall thereupon
succeed to and become vested with all the 

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    rights,
powers, privileges and duties of the retiring Collateral Agent, Custodial Agent
or Securities Intermediary, as the case may be, and the retiring Collateral
Agent, Custodial Agent or Securities Intermediary, as the case may be, shall
take all appropriate action, subject to payment of any amounts then due and
payable to it 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,
be discharged from its duties and obligations as Collateral Agent, Custodial
Agent or Securities Intermediary hereunder.  After any retiring Collateral
Agent’s, Custodial Agent’s or Securities Intermediary’s resignation hereunder as
Collateral Agent, Custodial Agent or Securities Intermediary, the provisions of
this Article 9 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Collateral Agent, Custodial Agent or
Securities Intermediary.  Any resignation or removal of the Collateral
Agent, Custodial Agent or Securities Intermediary hereunder, at a time when such
Person is acting as the Collateral Agent, Custodial Agent or Securities
Intermediary, shall be deemed for all purposes of this Agreement as the
simultaneous resignation or removal of the Collateral Agent, Securities
Intermediary or Custodial Agent, as the case may be.

     

     

    (b)           Because
U.S. Bank National Association is serving as the Collateral Agent hereunder and
the Purchase Contract Agent under the Purchase Contract Agreement, if an event
of default (other than an event of default occurring as a result of a Failed
Final Remarketing) occurs hereunder or under the Purchase Contract Agreement,
U.S. Bank National Association will resign as the Collateral Agent, but continue
to act as the Purchase Contract Agent.  A successor Collateral Agent will
be appointed in accordance with the terms hereof.  If any such event of
default is cured or waived prior to the appointment of a successor Collateral
Agent, the duty of U.S. Bank National Association to resign in respect of such
event of default shall cease.

     

    Section
9.11 Right to Appoint Agent or
Advisor.   The Collateral Agent shall have the right to
appoint agents or advisors in connection with any of its duties hereunder, and
the Collateral Agent shall not be liable for any action taken or omitted by, or
in reliance upon the advice of, such agents or advisors selected in good
faith.  The appointment of agents pursuant to this Section 9.11 shall be subject
to prior written consent of the Company, which consent shall not be unreasonably
withheld.

     

    Section
9.12 Survival.   The
provisions of this Article
9 shall survive termination of this Agreement and the resignation or
removal of the Collateral Agent, the Custodial Agent or the Securities
Intermediary.

     

    Section
9.13 Exculpation.   Anything
contained in this Agreement to the contrary notwithstanding, in no event shall
the Collateral Agent, the Custodial Agent or the Securities Intermediary or
their officers, directors, employees or agents be liable under this Agreement to
any third party for indirect, special, punitive, or consequential loss or damage
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 Collateral Agent, the
Custodial Agent or the Securities Intermediary, or any of them and regardless of
the form of action.

     

    ARTICLE
10

     

     

    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 the Purchase Contract Agent, at any time and from
time to time, may amend this Agreement, in form satisfactory to the Company, the
Collateral Agent, the Custodial Agent, the Securities Intermediary and the
Purchase Contract Agent, to:

     

     

    (a)           evidence
the succession of another Person to the Company and the assumption by any such
successor of the covenants of the Company;

     

     

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

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    (c)           add
to the covenants of the Company for the benefit of the Holders, or surrender any
right or power herein conferred upon the Company, provided that such covenants
or such surrender do not adversely affect the validity, perfection or priority
of the Pledge created hereunder;

     

     

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

     

     

    (e)           make
any other provisions with respect to such matters or questions arising under
this Agreement, provided that such action
shall not adversely affect the interests 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 the Purchase Contracts at the time outstanding, including
without limitation the consent of the Holders obtained in connection with a
tender or an exchange offer, by Act of such Holders delivered to the Company,
the Purchase Contract Agent, the Custodial Agent, the Securities Intermediary
and the Collateral Agent, as the case may be, the Company, when duly authorized
by a Board Resolution, the Purchase Contract Agent, the Collateral Agent, the
Securities Intermediary and the Collateral Agent may amend this Agreement for
the purpose of modifying in any manner the provisions of this Agreement or the
rights of the Holders in respect of the Units; provided, however, that no such
supplemental agreement shall, without the unanimous consent of the Holders of
each Outstanding Unit adversely affected thereby in any material
respect:

     

     

    (a)           change
the amount or type of Collateral underlying a Unit (except for the rights of
holders of Corporate Units to substitute the Treasury Securities for the Pledged
Senior Notes or the Pledged Applicable Ownership Interests, as the case may be,
or the rights of Holders of Treasury Units to substitute Senior Notes or the
Applicable Ownership Interests (as specified in clause (i) of the definition of
such term) in the Treasury Portfolio, as applicable, for the Pledged Treasury
Securities), unless such change is not adverse to the Holders, does not impair
the right of the Holder of any Unit to receive distributions on the underlying
Collateral or otherwise adversely affect the Holder’s rights in or to such
Collateral;

     

     

    (b)           otherwise
effect any action that would require the consent of the Holder of each
Outstanding Unit affected thereby pursuant to the Purchase Contract Agreement if
such action were effected by a modification or amendment of the provisions of
the Purchase Contract Agreement; or

     

     

    (c)           reduce
the percentage of Purchase Contracts the consent of whose Holders is required
for the modification or amendment of the provisions of this
Agreement;

     

     

    provided that if any
amendment or proposal referred to above would adversely affect only the
Corporate Units or only the Treasury Units, then only the affected class of
Holders as of the record date for the Holders entitled to vote thereon will be
entitled to vote on such amendment or proposal, and such amendment or proposal
shall not be effective except 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 outstanding Purchase Contract of such class
affected thereby shall be required to approve any amendment or proposal
specified in clauses (a) through (c) above.

     

     

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

     

    Section
10.03 Execution of
Amendments.   In executing any amendment permitted by this
Article, the Collateral Agent, the Custodial Agent, the Securities Intermediary
and the Purchase Contract Agent shall be entitled to receive and (subject to
Section 7.01 of the
Purchase Contract Agreement with respect to the Purchase Contract Agent) shall
be fully authorized and protected in relying upon, an Opinion of Counsel and an
Officers’ Certificate stating that the execution of such amendment is authorized
or permitted by this Agreement and that all conditions precedent, if any, to the
execution and delivery
of such amendment have been satisfied.  The Collateral Agent, Custodial
Agent, Securities Intermediary and Purchase Contract Agent may, but shall not be
obligated to, enter into any such amendment which affects their own respective
rights, duties or immunities under this Agreement or otherwise.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

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

     

    Section
10.05 Reference of
Amendments.   Certificates authenticated, executed on
behalf of the Holders and delivered after the execution of any amendment
pursuant to this Section may, and shall if required by the Collateral Agent or
the Purchase Contract Agent, bear a notation in form approved by the Purchase
Contract Agent and the Collateral Agent as to any matter provided for in such
amendment.  If the Company shall so determine, new Certificates so modified
as to conform, in the opinion of the Collateral Agent, the Purchase Contract
Agent and the Company, to any such amendment may be prepared and executed by the
Company and authenticated, executed on behalf of the Holders and delivered by
the Purchase Contract Agent in accordance with the Purchase Contract Agreement
in exchange for Certificates representing Outstanding Units.

     

    ARTICLE
11

     

     

    Miscellaneous

     

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

     

    Section
11.02 Governing Law; Submission to
Jurisdiction.   THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.  The
Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary
and the Holders from time to time of the Units, acting through the Purchase
Contract Agent as their attorney-in-fact, hereby submit to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York state court sitting in New York City for the
purposes of all legal proceedings arising out of or relating to this Agreement
or the transactions contemplated hereby.  The Company, the Collateral
Agent, the Custodial Agent, the Securities Intermediary and the Holders from
time to time of the Units, acting through the Purchase Contract Agent as their
attorney-in-fact, irrevocably waive, to the fullest extent permitted by
applicable law, any objection that they may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.

     

    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, this Agreement) shall be given or made in writing (including, without
limitation, by telecopy) delivered to the intended recipient at the “Address for Notices”
specified below its name on the signature pages hereof or, as to any party, at
such other address as shall be designated by such party in a notice to the other
parties.  Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.

     

    Section
11.04 Successors and
Assigns.   This Agreement shall be binding upon and inure
to the benefit of the respective successors and assigns of the Company, the
Collateral Agent, the Custodial Agent, the Securities Intermediary and the
Purchase Contract Agent, and the Holders from time to time of the Units, by
their acceptance of the same, shall be deemed to have agreed to be bound by the
provisions hereof and to have ratified the agreements of, and the grant of the
Pledge hereunder by, the Purchase Contract Agent.

     

    Section
11.05 Counterparts.   This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such counterpart.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

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

     

    Section
11.07 Expenses,
Etc.   The Company agrees to reimburse the Collateral
Agent, the Custodial Agent and the Securities Intermediary for:

     

     

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

     

     

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

     

     

    (c)           all
transfer, stamp, documentary or other similar taxes, assessments or charges
levied by any governmental or revenue authority in respect of this Agreement or
any 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 contemplated
hereby;

     

     

    (d)           all
reasonable fees and expenses of any agent or advisor appointed by the Collateral
Agent and consented to by the Company under Section 9.11 of this
Agreement; and

     

     

    (e)           any
other out-of-pocket costs and expenses reasonably incurred by the Collateral
Agent, the Custodial Agent and the Securities Intermediary in connection with
the performance of their duties hereunder.

     

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

     

     

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

     

     

    (b)           any
change in the time, manner or place of payment of, or any other term of, or any
increase in the amount of, all or any of the obligations of Holders of the Units
under the related Purchase Contracts, or any other amendment or waiver of any
term of, or any consent to any departure from any requirement of, the Purchase
Contract Agreement or any Purchase Contract or any other agreement or instrument
relating thereto; or

     

     

    (c)           any
other circumstance which might otherwise constitute a defense available to, or
discharge of, a borrower, a guarantor or a pledgor.

     

     

    Section
11.09 Notice of
Special Event, Special Event Redemption and Termination
Event.   Upon the occurrence of a Special Event, a Special
Event Redemption or a Termination Event, the Company shall deliver written
notice to the Purchase Contract Agent, the Collateral Agent and the Securities
Intermediary.  Upon the written request of the Collateral Agent or the
Securities Intermediary, the Company shall inform such party whether or not a
Special Event, a Special Event Redemption or a Termination Event has
occurred.

     

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

     


    
      
         


      

      
        24 


        
          

        

      

      
         


      

    


    


     

    [SIGNATURE
PAGE TO AMENDED AND RESTATED PLEDGE AGREEMENT]

     

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement 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 and Treasurer

               

            	
               

              By:
      /s/Patrick J.
      Crowley

                     
      Patrick J. Crowley

                     
      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) 809-4993

              Attention: 
      Corporate Trust Administration

               

               

            
	
              U.S.
      BANK NATIONAL ASSOCIATION

              as
      Collateral Agent, Custodial Agent and Securities
    Intermediary

            	 
      
	
               
      

               

               

            	 
      
	
              By:
      /s/Patrick J.
      Crowley

                     
      Patrick J. Crowley

                     
      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) 809-4993

              Attention: 
      Corporate Trust Administration

            	 
      


    

     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


     

    EXHIBIT
A

     

     

    INSTRUCTION

    FROM
PURCHASE CONTRACT AGENT

    TO
COLLATERAL AGENT

    (Creation
of Treasury Units)

     

     

    U.S. Bank
National Association

      as
Purchase Contract Agent

    100 Wall
Street, Suite 1600

    New York,
New York 10005

     

    Telephone
No.: (212) 361-2505

    Telecopier
No.:  (212) 809-4993

    Attention: 
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 pledgee of U.S. Bank
National Association, as the Purchase Contract Agent on behalf of and as
attorney-in-fact for the Holders” (the “Collateral
Account”)

     

     

    Please
refer to the Amended and Restated Pledge Agreement, dated as of August 4,
2008 (the “Pledge
Agreement”), among the Company, you, as Collateral Agent, as Securities
Intermediary and as Custodial Agent and the undersigned, as Purchase Contract
Agent and as attorney-in-fact for the holders of Corporate Units from time to
time.  Capitalized terms used herein but not defined shall have the meaning
set forth in the Pledge Agreement.

     

     

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

     


    
      
        
          A-1

          


        

         


      

      
         


        
          

        

      

      
         


      

    


     

    We hereby
request that you instruct the Securities Intermediary, upon confirmation that
such Treasury Securities or security entitlements thereto have been credited to
the Collateral Account, to release to the undersigned an equal Value of Pledged
Senior Notes in accordance with Section 5.02 of the Pledge
Agreement.

     

     

    Date:
                                                  

     

    
      	
               
      

            	
              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:                                                                  

    Name:

    Title:

     

     

    Please
print name and address of Holder electing to substitute Treasury Securities or
security entitlements with respect thereto for the Pledged Senior
Notes:

     

     

    ___________________________                 
                                                                       

                           
Name                                               
Social Security or other Taxpayer

                                                                                       
Identification Number, if any

     

     

    ___________________________

            
Address

     

     

    ___________________________

     

     

    ___________________________

     

     

    


     


    
      
        
          A-2

          


        

         


      

      
         


        
          

        

      

      
         


      

    


    


     

    EXHIBIT
B

     

     

    INSTRUCTION

    FROM
COLLATERAL AGENT

    TO
SECURITIES INTERMEDIARY

    (Creation
of Treasury Units)

     

     

    U.S. Bank
National Association

      as
Securities Intermediary

    100 Wall
Street, Suite 1600

    New York,
New York 10005

     

    Telephone
No.: (212) 361-2505

    Telecopier
No.:  (212) 809-4993

    Attention: 
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 pledgee of U.S. Bank
National Association, as the Purchase Contract Agent on behalf of and as
attorney-in-fact for the Holders” (the “Collateral
Account”)

     

     

    Please
refer to the Amended and Restated Pledge Agreement, dated as of August 4,
2008 (the “Pledge
Agreement”), among the Company, you, as Collateral Agent, as Securities
Intermediary and as Custodial Agent and the undersigned, as Purchase Contract
Agent and as attorney-in-fact for the holders of Corporate Units from time to
time.  Capitalized terms used herein but not defined shall have the
meanings set forth in the Pledge Agreement.

     

     

    When you
have confirmed that $                   
Value of Treasury Securities or security entitlements thereto has been credited
to the Collateral Account by or for the benefit of _________, as Holder of
Corporate Units (the “Holder”), you are hereby
instructed to release from the Collateral Account an equal Value of Pledged
Senior Notes or security entitlements with respect thereto relating to Corporate
Units of the Holder by Transfer to the Purchase Contract Agent.

     

     

    Dated:______________________

     

    U.S. Bank
National Association,

    as
Collateral Agent

     

     

    By:                                                                  

    Name:

    Title:

     

     

    


     

     

    
      
        B-1

      

      
        
        

        
          

        

      

      
        
        

      

    

    


     

     

    Please
print name and address of Holder:

     

     

    ___________________________                 
                                                                       

                           
Name                                               
Social Security or other Taxpayer

                                                                                       
Identification Number, if any

     

     

    ___________________________

                        
Address

     

     

    ___________________________

     

     

    ___________________________

     


    
      
        
          B-2


        

         


      

      
         


        
          

        

      

      
         


      

    


    


     

    EXHIBIT
C

     

     

    INSTRUCTION

    FROM
PURCHASE CONTRACT AGENT

    TO
COLLATERAL AGENT

    (Recreation
of Corporate Units)

     

     

    U.S. Bank
National Association

      as
Purchase Contract Agent

    100 Wall
Street, Suite 1600

    New York,
New York 10005

     

    Telephone
No.: (212) 361-2505

    Telecopier
No.:  (212) 809-4993

    Attention: 
Corporate Trust Administration

     

     

    Re:
__________ Treasury Units of PNM Resources, Inc. (the “Company”)

     

     

    Please
refer to the Amended and Restated Pledge Agreement, dated as of August 4,
2008 (the “Pledge
Agreement”), among the Company, you, as Collateral Agent, as Securities
Intermediary, as Custodial Agent and the undersigned, as Purchase Contract Agent
and as attorney-in-fact for the holders of Treasury Units from time to
time.  Capitalized terms used herein but not defined shall have the meaning
set forth in the Pledge Agreement.

     

     

    We hereby
notify you in accordance with Section 5.03 of the Pledge Agreement that the
holder of securities named below (the “Holder”) has elected to
substitute $__________ Value of Senior Notes or security entitlements with
respect thereto in exchange for $__________ an equal Value of Pledged Treasury
Securities with respect to _______ Treasury Units and has delivered to the
undersigned a notice stating that the holder has Transferred such Senior Notes
or security entitlements with respect thereto to the Securities Intermediary,
for credit to the Collateral Account.

     

     

    


     

    
      
        
          C-1


        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    We hereby
request that you instruct the Securities Intermediary, upon confirmation that
such Senior Notes or security entitlements with respect thereto have been
credited to the Collateral Account, to release to the undersigned $__________ an
equal Value of Treasury Securities in accordance with 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 to substitute Senior Notes or security
entitlements with respect thereto for Pledged Treasury Securities:

     

     

    ___________________________                 
                                                                       

                           
Name                                               
Social Security or other Taxpayer

                                                                                       
Identification Number, if any

     

    ___________________________

                        
Address

     

    ___________________________

     

     

    ___________________________

     


    
      
        
          C-2

          


        

         


      

      
         


        
          

        

      

      
         


      

    


    


     

    EXHIBIT
D

     

     

    INSTRUCTION

    FROM
COLLATERAL AGENT

    TO
SECURITIES INTERMEDIARY

    (Recreation
of Corporate Units)

     

     

    U.S. Bank
National Association

      as
Securities Intermediary

    100 Wall
Street, Suite 1600

    New York,
New York 10005

     

    Telephone
No.: (212) 361-2505

    Telecopier
No.:  (212) 809-4993

    Attention: 
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 pledgee of U.S. Bank
National Association, as the Purchase Contract Agent on behalf of and as
attorney-in-fact for the Holders” (the “Collateral
Account”)

     

     

    Please
refer to the Amended and Restated Pledge Agreement, dated as of August 4,
2008 (the “Pledge
Agreement”), among the Company, you, as Securities Intermediary,
Custodial Agent and Collateral Agent and U.S. Bank National Association, as
Purchase Contract Agent and as attorney-in-fact for the holders of Corporate
Units from time to time.  Capitalized terms used herein but not defined
shall have the meanings set forth in the Pledge Agreement.

     

     

    


     

     

    


    
      
        
          
            D-1

            


          

           


        

        
           


          
            

          

        

        
           


        

      

    

     

    When you
have confirmed that $___________ Value of Senior Notes or security entitlements
with respect thereto has been credited to the Collateral Account by or for the
benefit of _______________, as Holder of Treasury Units (the “Holder”), you are hereby
instructed to release from the Collateral Account an equal Value of Treasury
Securities or security entitlements with respect thereto relating to ____
treasury Units of the Holder by 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                                                        
Social Security or other Taxpayer

                                                                                          
Identification Number, if any

     

    ___________________________

                  
Address

     

    ___________________________

     

    ___________________________

     


    
      
        
          D-2

          


        

         


      

      
         


        
          

        

      

      
         


      

    


    


     

    EXHIBIT
E

     

     

    NOTICE
OF CASH SETTLEMENT

    FROM
COLLATERAL AGENT

    TO
PURCHASE CONTRACT AGENT

    (Cash
Settlement Amounts)

     

     

    U.S. Bank
National Association

      as
Purchase Contract Agent

    100 Wall
Street, Suite 1600

    New York,
New York 10005

     

    Telephone
No.: (212) 361-2505

    Telecopier
No.:  (212) 509-809-4993

    Attention: 
Corporate Trust Administration

     

     

    Re:      
__________ Corporate Units of PNM Resources, Inc. (the “Company”)

     

               
__________ Treasury Units of the Company

     

     

    Please
refer to the Amended and Restated Pledge Agreement, dated as of August 4,
2008 (the “Pledge
Agreement”), by and among you, the Company, and U.S. Bank National
Association, as Collateral Agent, Custodial Agent and Securities
Intermediary.  Unless otherwise defined herein, terms defined in the Pledge
Agreement are used herein as defined therein.

     

     

    In
accordance with Section 5.05(c) of the Pledge Agreement, we hereby notify you
that as of 11:00 a.m. (New York City time) on the sixth Business Day immediately
preceding November 16, 2008 (the “Purchase Contract Settlement
Date”), we have received (i) $___________ in immediately available funds
paid in an aggregate amount equal to the Purchase Price due to the Company on
the Purchase Contract Settlement Date with respect to ___________ Corporate
Units, and (ii) based on the funds received set forth in clause (i) above, an
aggregate principal amount of $___________ of Pledged Senior Notes are to be
tendered for remarketing in the Remarketing.

     

     

    
      	
              Dated:
                                                                  

            	
              U.S.
      Bank National Association,

            
	 	as
      Collateral Agent


    

            

     

     

    By:                                                                  

    Name:

    Title:

     


    
      
        
          E-1

           

        

         


      

      
         


        
          

        

      

      
         


      

    


    


     

    EXHIBIT
F

     

     

    INSTRUCTION
TO CUSTODIAL AGENT

    REGARDING
REMARKETING

     

     

    U.S. Bank
National Association

      as
Custodial Agent

    100 Wall
Street, Suite 1600

    New York,
New York 10005

     

    Telephone
No.: (212) 361-2505

    Telecopier
No.:  (212) 809-4993

    Attention: 
Corporate Trust Administration

     

     

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

     

     

    The
undersigned hereby notifies you in accordance with Section 5.07(c) of the
Amended and Restated Pledge Agreement, dated as of August 4, 2008 (the
“Pledge Agreement”),
among the Company, you, as Collateral Agent, Custodial Agent and Securities
Intermediary and U.S. Bank National Association, as the Purchase Contract Agent
and as attorney-in-fact for the holders of Corporate Units from time to time,
that the undersigned elects to deliver $__________ aggregate principal amount of
Separate Senior Notes for delivery to the Remarketing Agent on or prior to 5:00
p.m. (New York City time) on the seventh Business Day immediately preceding the
Initial Remarketing Date for remarketing pursuant to Section 5.07(c) of the
Pledge Agreement.  The undersigned will, upon request of the Remarketing
Agent, execute and deliver any additional documents deemed by the Remarketing
Agent or by the Company to be necessary or desirable to complete the sale,
assignment and transfer of the Separate Senior Notes tendered hereby. 
Capitalized terms used herein but not defined shall have the meaning set forth
in the Pledge Agreement.

     

     

    The
undersigned hereby instructs you, upon receipt of the Proceeds of such
remarketing from the Remarketing Agent, to deliver such Proceeds to the
undersigned in accordance with the instructions indicated herein under “A. 
Payment Instructions.”  The undersigned hereby instructs you, in the event
of a Failed Final Remarketing, upon receipt of the Separate Senior Notes
tendered herewith from the Remarketing Agent, to deliver such Separate Senior
Notes to the person(s) and the address(es) indicated herein under “B. 
Delivery Instructions.”

     

     

    


     

     

    
      
        
          
            F-1

             

          

           


        

        
           


          
            

          

        

        
           


        

      

    

     

    With this
notice, the undersigned hereby (i) represents and warrants that the undersigned
has full power and authority to tender, sell, assign and transfer the Separate
Senior Notes tendered hereby and that the undersigned is the record owner of any
Senior Notes tendered herewith in physical form, (ii) agrees to be bound by the
terms and conditions of Section 5.07(c) of the Pledge Agreement and (iii)
acknowledges and agrees that after 5:00 p.m. (New York City time) on the seventh
Business Day immediately preceding the Remarketing Date, such election shall
become an irrevocable election to have such Separate Senior Notes remarketed in
the Remarketing.  In the case of a Failed Remarketing, such Separate Senior
Notes shall be returned to the undersigned.

     

     

    Dated:
                                                            
By:                                                                  

    Name:

     

    Title:

     

     

    Signature
Guarantee:                                        

     

     

    ___________________________                 
                                                                       

                        
Name                                                     
Social Security or other Taxpayer

                                                                                          
Identification Number, if any

     

    ___________________________

                     
Address

     

    ___________________________

     

     

    ___________________________

     

     

    


     

     

    


     

    
      
        
          
            F-2

             

          

           


        

        
           


          
            

          

        

        
           


        

      

    

     

    A. 
PAYMENT INSTRUCTIONS

     

     

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

     

     

    Name(s)

     

     

    (Please
Print)

     

     

    Address

     

     

    (Please
Print)

     

     

    (Zip
Code)

     

     

    (Taxpayer
Identification or Social Security Number)

     

     

    B. 
DELIVERY INSTRUCTIONS

     

     

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

     

     

    Name(s)

     

     

    (Please
Print)

     

     

    Address

     

     

    (Please
Print)

     

     

    (Zip
Code)

     

     

    (Tax
Identification or Social Security Number)

     


    
      
        
          F-3

          


        

         


      

      
         


        
          

        

      

      
         


      

    


    


     

    EXHIBIT
G

     

     

    INSTRUCTION
TO CUSTODIAL AGENT

    REGARDING
WITHDRAWAL FROM REMARKETING

     

     

    U.S. Bank
National Association

      as
Custodial Agent

    100 Wall
Street, Suite 1600

    New York,
New York 10005

     

    Telephone
No.: (212) 361-2505

    Telecopier
No.:  (212) 809-4993

    Attention: 
Corporate Trust Administration

     

     

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

     

     

    The
undersigned hereby notifies you in accordance with Section 5.07(c) of the
Amended and Restated Pledge Agreement, dated as of August 4, 2008 (the “Pledge Agreement”), among the
Company and you, as Collateral Agent, Custodial Agent and Securities
Intermediary, and U.S. Bank National Association, as Purchase Contract Agent and
as attorney-in-fact for the holders of Corporate Units from time to time, that
the undersigned elects to withdraw the $__________ aggregate principal amount of
Separate Senior Notes delivered to the Collateral Agent on __________, 2010 for
remarketing pursuant to Section 5.07(c) of the Pledge Agreement.  The
undersigned hereby instructs you to return such Senior Notes to the undersigned
in accordance with the undersigned’s instructions.  With this notice, the
undersigned hereby agrees to be bound by the terms and conditions of Section
5.07(c) of the Pledge Agreement.  Capitalized terms used herein but not
defined shall have the meaning set forth in the Pledge Agreement.

     

     

    Dated:
                                                            
By:                                                                  

    Name:

     

    Title:

     

     

    Signature
Guarantee:                                        

     

     

    ___________________________                 
                                                                       

                        
Name                                                        
Social Security or other Taxpayer

                                                                                             
Identification Number, if any

     

     

    ___________________________

                     
Address

     

    ___________________________

     

    ___________________________

     

    1748330.6


    
      
        
          G-1