exh4-3_032709.htm


    
 

     

    
      EXECUTION
VERSION



    Exhibit
4.3

    


    ___________________________________________________________________________

    ___________________________________________________________________________

    


    TEXAS-NEW
MEXICO POWER COMPANY

    


    


    to

     

    


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

    as
Trustee

    


    _______________________________________

     

    


    SECOND
SUPPLEMENTAL INDENTURE

    dated
as of March 25, 2009

    


     

    Supplemental
to the First Mortgage Indenture

    dated
as of March 23, 2009

     

     

     

    Establishing
a series of Securities designated

    


    FIRST
MORTGAGE BONDS, DUE 2014, SERIES 2009B

     

    


    


    


    


    


    ___________________________________________________________________________

    ___________________________________________________________________________

    


    


    THIS
INSTRUMENT GRANTS A SECURITY INTEREST BY A UTILITY

    


    THIS
INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    SECOND SUPPLEMENTAL INDENTURE,
dated as of March 25, 2009, between TEXAS-NEW MEXICO POWER
COMPANY, a corporation organized and existing under the laws of the State
of Texas (hereinafter called the “Company”), and THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., a national banking association organized and existing
under the laws of the United States (hereinafter called the “Trustee”), as Trustee
under the Indenture hereinafter referred to.

    


    RECITALS
OF THE COMPANY

    


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

    


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

    


    WHEREAS, the Company has
entered into a Term Loan Credit Agreement dated as of March 25, 2009 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Credit
Agreement”) with the Lenders (as defined below) and Union Bank, N.A., as
administrative agent for the Lenders, providing for the making of certain
financial accommodations thereunder, and pursuant to such Credit Agreement the
Company has agreed to issue to the Administrative Agent (as defined below), as
collateral security for the Borrower Obligations (as defined below) and the
Related Hedging Obligations (as defined below), a new series of Securities under
the Indenture; and

    


    WHEREAS, for such purposes the
Company desires to issue a new series of Securities, to be designated First
Mortgage Bonds, due 2014, Series 2009B (the “Collateral Bonds”),
the Securities of which series are to be issued as registered bonds without
coupons and are to bear interest at the Interest Rate (as defined below) and are
to mature on the Maturity Date (as defined below); and

    


    WHEREAS, pursuant to Section
7.11 of the Credit Agreement, the Company shall enter into one or more Hedging
Agreements (as defined below) with one or more Hedge Providers (as defined
below); and

    


    WHEREAS, the Company, in the
exercise of the power and authority conferred upon and reserved to it under the
provisions of the Indenture and pursuant to appropriate resolutions of the Board
of Directors, has duly determined to make, execute and deliver to the Trustee
this Second Supplemental Indenture to the Indenture as permitted by Sections
2.01, 3.01 and 14.01 of the Original Indenture in order to establish the form
and terms of, and to provide for the creation 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    and
issuance of, the Collateral Bonds under the Indenture in an initial aggregate
principal amount of $50,000,000; and

    


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

    


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

    


    ARTICLE
ONE

    


    DEFINITIONS

     

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

     

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

     

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

     

    “Available Principal
Amount” means the difference between (i) $50,000,000 (or such lesser
amount that reflects reductions in the aggregate principal amount of the
Collateral Bonds pursuant to Section 2.02(c) or Section 2.03(b)) and (ii) the
sum of Credit Repurchase Amounts and Hedge Repurchase Amounts previously paid in
satisfaction of, respectively, Credit Repurchase Requirements and Hedge
Repurchase Requirements.

     

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

     

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

     

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

     

    “Commitments” has the
meaning given to it in the Credit Agreement.

     

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

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

     

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

     

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

    


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

    


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

    


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

    


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

    


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

    


    “Hedge Acceleration
Event” means the designation by a Hedge Provider of an “Early Termination
Date” (or similar term) under any Hedging Agreement that results in a Settlement
Amount being owed to such Hedge Provider (other than a Settlement Amount being
owed to such Hedge Provider due to a pre-payment under the Credit
Agreement).

    


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

    


    “Hedge Provider” means
a counterparty (other than the Company) to a Hedging Agreement entered into by
the Company.

    


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

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

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

    


    “Hedge Repurchase
Event” means the occurrence of an “Automatic Early Termination” (or
similar term) under any Hedging Agreement that results in a Settlement Amount
being owed to a Hedge Provider.

    


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

    


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

    


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

    


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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Settlement Amount”
means the “Settlement Amount” (or similar term) under any Hedging Agreement, as
calculated under such Hedging Agreement, on a Hedge Repurchase
Date.

    


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

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    ARTICLE
TWO

    


    TITLE,
FORM AND TERMS OF THE COLLATERAL BONDS

     

    Section
2.01     Title of the Collateral
Bonds.  This Second Supplemental Indenture hereby creates a
series of Securities designated as the “First Mortgage Bonds, due 2014, Series
2009B” (which are referred to herein as the “Collateral Bonds”)
and the form thereof shall be substantially as set forth in Exhibit A
hereto.  Such Collateral Bonds shall be executed, authenticated and
delivered in accordance with the provisions of, and, except as hereinafter
provided, shall in all respects be subject to all of the terms, conditions and
covenants of the Indenture as supplemented by this Second Supplemental
Indenture. For purposes of the Indenture, the Collateral Bonds shall constitute
a single series of Securities and may be issued in an unlimited aggregate
principal amount (subject to the limitations set forth in Article IV of the
Indenture), although the initial issuance of the Collateral Bonds shall be in
the aggregate principal amount of $50,000,000.

     

     

    Section
2.02     Form and Terms of the
Collateral Bonds.

     

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

     

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

     

     

    (c) The
obligation of the Company to make payments with respect to the principal of the
Collateral Bonds shall be fully or partially, as the case may be, satisfied and
discharged to the extent that, at the time that any such payment shall be due,
the portion of the Borrower Obligations constituting then due principal under
the Credit Agreement shall have been fully or partially paid or pre-paid in
immediately available funds.  Satisfaction of any obligation to the
extent that payment or pre-payment is made with respect to the Borrower
Obligations means that if any payment or pre-payment is made on the principal of
the Borrower Obligations under the Credit Agreement, a corresponding payment
obligation with respect to the principal of the Collateral Bonds shall be deemed
discharged in the same amount as the payment or pre-payment with respect to the
Borrower Obligations discharges the outstanding obligation with respect to such
Borrower Obligations.  Such full or partial payment or pre-payment of
principal of the Borrower Obligations shall automatically reduce the aggregate
principal amount of the Collateral Bonds, provided that, if at
the time of such full or partial payment or pre-payment all amounts


     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    then due
in respect of the Related Hedging Obligations shall have not been paid in full
in immediately available funds, such automatic reduction of the aggregate
principal amount of the Collateral Bonds shall not be deemed to have occurred
until such time, if any, that the Company has paid or pre-paid all amounts then
due in respect of the Related Hedging Obligations.

     

    (d) The
obligation of the Company to make payments with respect to interest on the
Collateral Bonds shall be fully or partially, as the case may be, satisfied and
discharged to the extent that, at the time that any such payment shall be due,
the portion of the Borrower Obligations constituting then due interest and/or
fees under the Credit Agreement shall have been fully or partially
paid.  Satisfaction of any obligation to the extent that payment is
made with respect to the interest and/or fees under the Credit Agreement means
that if any payment is made on the interest and/or fees then comprising a
portion of the Borrower Obligations under the Credit Agreement, a corresponding
payment obligation with respect to the interest on the Collateral Bonds shall be
deemed discharged in the same amount as the payment with respect to the interest
and/or fees then comprising a portion of the Borrower Obligations under the
Credit Agreement discharges the outstanding obligation under the Credit
Agreement with respect to such interest and/or fees.

     

    (e) The
Trustee may at any time and all times conclusively presume that (i) the
obligation of the Company to make payments with respect to the principal of and
interest on the Collateral Bonds, so far as such payments at the time have
become due, has been fully satisfied and discharged unless and until a
Responsible Officer of the Trustee shall have received at the Corporate Trust
Office a written notice from the Administrative Agent stating (A) that
timely payment of principal and interest on the Collateral Bonds has not been
made, (B) that the Company is in arrears as to the payments required to be
made by it to the Administrative Agent pursuant to the Credit Agreement and
(C) the amount of the arrearage; and (ii) no Credit Repurchase Requirement
or Hedge Repurchase Requirement shall exist in respect of any Credit Repurchase
Date or Hedge Repurchase Date, as the case may be, unless and until a
Responsible Officer of the Trustee shall have received at the Corporate Trust
Office a copy of a Credit Notice or a Credit Written Demand or a copy of a Hedge
Notice or a Hedge Written Demand in respect of such Credit Repurchase
Requirement or Hedge Purchase Requirement, as the case may be.  This
paragraph is solely for the benefit of the Trustee.

     

    Section
2.03     Redemption;
Repurchase.

     

    (a)    
The
Collateral Bonds are not redeemable at the option of the Company.

     

    (b)     
(i) On a
Credit Repurchase Date, the Company shall repurchase (the “Credit Repurchase
Requirement”) an aggregate principal amount of the Collateral Bonds equal
to the lesser of, as of the applicable Credit Repurchase Date, (A) the Borrower
Obligations and (B) the Available Principal Amount (the “Credit Repurchase
Amount”).  On the Credit Repurchase Date, the Company will
deposit with the Trustee immediately available funds in an amount equal to the
Credit Repurchase Amount and the Trustee shall pay such amount as soon as
practicable after receipt thereof to the Administrative Agent upon surrender by
the Administrative Agent to the Trustee at the Corporate Trust Office of the
Trustee of Collateral Bonds in an aggregate 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    principal
amount equal to the Credit Repurchase Amount, which surrender shall be a
condition to the Company’s Credit Repurchase Requirement.

     

    (ii)           Payment
of a Credit Repurchase Amount equal to the Borrower Obligations as of the
applicable Credit Repurchase Date shall be deemed to satisfy and discharge
principal of, and accrued and unpaid interest on, the Collateral Bonds in the
same amount as the amount of principal and accrued and unpaid interest,
respectively, comprising such Borrower Obligations.  Such satisfaction
and discharge shall automatically reduce the aggregate principal amount of the
Collateral Bonds by the aggregate amount of such Borrower Obligations comprising
principal.

     

    (iii)           Payment
of a Credit Repurchase Amount equal to the Available Principal Amount plus
accrued and unpaid interest on the Available Principal Amount, in each case, as
of the applicable Credit Repurchase Date shall be deemed to satisfy and
discharge all outstanding principal of and accrued and unpaid interest on the
Collateral Bonds as of such Credit Repurchase Date.

     

    (c)    
On a
Hedge Repurchase Date, the Company shall repurchase (the “Hedge Repurchase
Requirement”) an aggregate principal amount of the Collateral Bonds equal
to the lesser of, as of the applicable Hedge Repurchase Date, (A) the Settlement
Amount and (B) the Available Principal Amount (the “Hedge Repurchase
Amount”).  On the Hedge Repurchase Date, the Company will
deposit with the Trustee immediately available funds in an amount equal to the
Hedge Repurchase Amount and the Trustee shall pay such amount as soon as
practicable after receipt thereof to the Administrative Agent upon surrender by
the Administrative Agent to the Trustee at the Corporate Trust Office of the
Trustee of Collateral Bonds in an aggregate principal amount equal to the Hedge
Repurchase Amount, which surrender shall be a condition to the Company’s Hedge
Repurchase Requirement.

     

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

     

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

     

    (f)    
A Credit
Written Demand, a Hedge Written Demand, a Credit Notice or a Hedge Notice, if
being made concurrently, may, but need not, be consolidated and form one
instrument.

     

    (g)    
Any
Collateral Bonds surrendered to the Trustee in connection with a Credit
Repurchase Requirement or Hedge Repurchase Requirement shall promptly be
cancelled in accordance with Section 3.09 of the Indenture.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

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

     

    Section
2.04     [Reserved].

    


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

    


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

     

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

    


    


    ARTICLE
THREE

    


    ISSUANCE
OF THE COLLATERAL BONDS

    


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

     

    Section
3.02     Authentication.  The
Collateral Bonds for the aggregate principal amount of $50,000,000 may forthwith
be executed by the Company and delivered to the Trustee and shall be
authenticated by the Trustee and delivered (either before or after the filing or
recording hereof) pursuant to or in accordance with a Company Order, upon
compliance by the Company with the appropriate provisions and requirements of
Articles III and IV of the Indenture.

     

    


    ARTICLE
FOUR

    


    MISCELLANEOUS
PROVISIONS

    


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

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

     

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

    


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

    


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

    


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

     

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

     

    [signature
page follows]

     

    


     


    
      
         


      

      
        9

        
          

        

      

      
         


      

    


    IN WITNESS WHEREOF, said
TEXAS-NEW MEXICO POWER COMPANY has caused this Second Supplemental Indenture to
be executed on its behalf, and said THE BANK OF NEW YORK MELLON TRUST COMPANY,
N.A., as Trustee as aforesaid, in evidence of its acceptance of the trust hereby
created, has caused this Second Supplemental Indenture to be executed on its
behalf, all on the 23rd day of
March, 2009, to be effective as of the 25th day of
March, 2009.

    


    
      	 
      	
              TEXAS-NEW
      MEXICO POWER COMPANY

               

               

            
	 
      	
              By:

            	
              /s/
      Terry R.
      Horn                                          
      

            
	 
      	
              Name:

            	
              Terry
      R. Horn

            
	 
      	
              Title:

            	
              Vice
      President and Treasurer

            


    

    


    


    ACKNOWLEDGMENT:

    


    STATE OF
NEW
MEXICO                                          §

    


    §

    


    COUNTY OF
BERNALILLO                                       §

    


    


    This
instrument was acknowledged before me on this 23rd day of
March, 2009, by Terry R. Horn, Vice President and Treasurer of TEXAS-NEW MEXICO
POWER COMPANY, a Texas corporation, on behalf of said corporation.

    


    


    


         /s/
Sandra L.
Sanchez                               


    Notary
Public in and for the State of

    New
Mexico

    



    
      
        
          S-1

          


          [Signature Page to Second
Supplemental Indenture, dated as of March 25, 2009, to

          First
Mortgage Indenture of Texas-New Mexico Power Company]

        

         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	 
      	
              THE
      BANK OF NEW YORK MELLON

                    TRUST
      COMPANY, N.A., as Trustee

               

               

            
	 
      	
              By:

            	
              /s/
      Raymond
      Torres                                      
      

            
	 
      	 
      	
              Name:
      Raymond Torres

            
	 
      	 
      	
              Title:
      Assistant Vice President

            


    

    


    


    ACKNOWLEDGMENT:

    


    


    STATE OF
CALIFORNIA                                           §

    


    §

    


    COUNTY OF
LOS
ANGELES                                      §

    


    This instrument was acknowledged before
me on this 23rd day of
March, 2009, by Raymond Torres, Vice President of THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., a national banking association, on behalf of said
association.

    


    


          /s/ Karen Yu                              
  

    Notary
Public in and for the State of California


    
      
        
          S-2

          


          [Signature Page to Second
Supplemental Indenture, dated as of March 25, 2009, to

          First
Mortgage Indenture of Texas-New Mexico Power Company]

        

         


      

      
         


        
          

        

      

      
         


      

    


    Exhibit
A

     

    [FORM
OF FIRST MORTGAGE BOND, DUE 2014, SERIES 2009B]

    


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

    


     

    TEXAS-NEW
MEXICO POWER COMPANY

    


    (Incorporated
under the laws of the State of Texas)

    


    


    First
Mortgage Bond, due 2014, Series 2009B

    


    


    No.                                                                                                                                          $          

    


    


    TEXAS-NEW
MEXICO POWER COMPANY, a corporation organized and existing under the laws of the
State of Texas (the “Company”, which term
shall include any Successor Corporation under the Indenture (as defined on the
reverse hereof)), for value received, hereby promises to pay to
                               ,
as administrative agent (in such capacity, the “Administrative
Agent”) for the Lenders under and as defined in the Term Loan Credit
Agreement, dated as of March 25, 2009, among the Company, the Lenders named
therein and from time to time a party thereto and the Administrative Agent (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), the
principal sum of $50,000,000 or such lesser principal amount as may result from
reductions in the principal amount hereof pursuant to Section 2.02(c) or Section
2.03(b)) of the Second Supplemental Indenture (as defined on the reverse
hereof), but not in excess, however, of said $50,000,000 principal sum, in any
coin or currency of the United States of America which at the time of payment is
legal tender for public and private debts, and to pay interest thereon at the
Interest Rate in like coin or currency from March 25, 2009, or from the
most recent Interest Payment Date to which interest is paid or provided for,
payable on each Interest Payment Date until the principal hereof is paid or duly
made available for payment on the Maturity Date, or, in the event of default in
the payment of the principal hereof, until the Company’s obligations with
respect to the payment of such principal shall be discharged as provided in the
Indenture.

    


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

    


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

    


    
      
        
          A-1

        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    


    [signature
page follows]


    
      
        
          A-2

          


        

         


      

      
         


        
          

        

      

      
         


      

    


    


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

    


    Dated:
_____________________

    
      	 
      	
               

               

               

              By:

            	
              TEXAS-NEW
      MEXICO POWER COMPANY

               

               

              ____________________________

            
	 
      	 
      	
              Name:  Terry
      R. Horn

            
	 
      	 
      	
              Title:   Vice
      President and Treasurer

            


    

    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    CERTIFICATE
OF AUTHENTICATION

     

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

    


    
      	 
      	
               

               

              By:

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

               

              ____________________________

            
	 
      	 
      	
              Authorized
      Officer

            


    

    


    


    


    


    


    


    


    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    [FORM OF REVERSE OF FIRST
MORTGAGE BOND, DUE 2014, SERIES 2009B]

     

    This
Security is one of a duly authorized issue of First Mortgage Bonds of the
Company (herein called the “First Mortgage
Bonds”), unlimited in aggregate principal amount, of the series
hereinafter specified, all issued and to be issued under and equally secured by
an indenture, dated as of March 23, 2009, executed by the Company and
delivered to The Bank of New York Mellon Trust Company, N.A. (herein called the
“Trustee”)
(said indenture being herein called the “Indenture”), to which
Indenture and all indentures supplemental thereto (including the Second
Supplemental Indenture hereinafter referred to) reference is hereby made for a
description of the properties mortgaged and pledged, the nature and extent of
the security, the rights of the registered owners of the First Mortgage Bonds
and of the Trustee in respect thereto, and the terms and conditions upon which
the First Mortgage Bonds are, and are to be, secured, and for a statement of the
respective rights, duties and immunities thereunder of the Company, the Trustee
and the Holders of the First Mortgage Bonds and of the terms upon which the
First Mortgage Bonds are, and are to be, authenticated and
delivered.  To the extent permitted by, and as provided in, the
Indenture, modifications or alterations of the Indenture, or of any indenture
supplemental thereto, and of the rights and obligations of the Company and of
the Holders of the First Mortgage Bonds may be made, in certain cases without
the consent of the Holders, as set forth in Section 14.01 of the Indenture, and
otherwise with the consent of the Company by an affirmative vote of not less
than a majority in amount of the First Mortgage Bonds entitled to vote then
outstanding, at a meeting of Holders called and held as provided in the
Indenture, and by an affirmative vote of not less than a majority in amount of
the First Mortgage Bonds of any series entitled to vote then outstanding and
affected by such modifications or alterations, in case one or more but less than
all of the series of First Mortgage Bonds then outstanding under the Indenture
are so affected; provided,
however, that no such modifications or alterations shall be made which
will affect the terms of payment of the principal of, or interest on, this First
Mortgage Bond, which are unconditional. The First Mortgage Bonds may be issued
in series, for various principal sums, may mature at different times, may bear
interest at different rates and may otherwise vary as provided in the Indenture.
This First Mortgage Bond is one of a series designated as “First Mortgage Bonds,
due 2014, Series 2009B” (herein called the “Collateral Bonds”) of
the Company, issued under and secured by the Indenture and described in an
indenture supplemental thereto (herein called the “Second Supplemental
Indenture”), dated as of March 25, 2009, executed by the Company and
delivered to the Trustee.

     

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

     

    The
obligation of the Company to make payments with respect to the principal of the
Collateral Bonds shall be fully or partially, as the case may be, satisfied and
discharged to the extent that, at the time that any such payment shall be due,
the portion of the Borrower Obligations constituting then due principal under
the Credit Agreement shall have been fully or partially paid or pre-paid in
immediately available funds.  Satisfaction of any obligation to the
extent that payment or pre-payment is made with respect to the Borrower
Obligations means that if any payment or pre-payment is made on the principal of
the Borrower Obligations under the Credit Agreement, a corresponding payment
obligation with respect to the principal of the 

     

    
      
        
          A-4

        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Collateral
Bonds shall be deemed discharged in the same amount as the payment or
pre-payment with respect to the Borrower Obligations discharges the outstanding
obligation with respect to such Borrower Obligations.  Such full or
partial payment or pre-payment of principal of the Borrower Obligations shall
automatically reduce the aggregate principal amount of the Collateral Bonds,
provided that,
if at the time of such full or partial payment or pre-payment all amounts then
due in respect of the Related Hedging Obligations shall have not been paid in
full in immediately available funds, such automatic reduction of the aggregate
principal amount of the Collateral Bonds shall not be deemed to have occurred
until such time, if any, that the Company has paid or pre-paid all amounts then
due in respect of the Related Hedging Obligations.

     

    The
obligation of the Company to make payments with respect to interest on the
Collateral Bonds shall be fully or partially, as the case may be, satisfied and
discharged to the extent that, at the time that any such payment shall be due,
the portion of the Borrower Obligations constituting then due interest and/or
fees under the Credit Agreement shall have been fully or partially
paid.  Satisfaction of any obligation to the extent that payment is
made with respect to the interest and/or fees under the Credit Agreement means
that if any payment is made on the interest and/or fees then comprising a
portion of the Borrower Obligations under the Credit Agreement, a corresponding
payment obligation with respect to the interest on the Collateral Bonds shall be
deemed discharged in the same amount as the payment with respect to the interest
and/or fees then comprising a portion of the Borrower Obligations under the
Credit Agreement discharges the outstanding obligation under the Credit
Agreement with respect to such interest and/or fees.

    


    The
Trustee may at any time and all times conclusively presume that (i) the
obligation of the Company to make payments with respect to the principal of and
interest on the Collateral Bonds, so far as such payments at the time have
become due, has been fully satisfied and discharged unless and until a
Responsible Officer of the Trustee shall have received at the Corporate Trust
Office a written notice from the Administrative Agent stating (A) that
timely payment of principal and interest on the Collateral Bonds has not been
made, (B) that the Company is in arrears as to the payments required to be
made by it to the Administrative Agent pursuant to the Credit Agreement and
(C) the amount of the arrearage; and (ii) no Credit Repurchase Requirement
or Hedge Repurchase Requirement shall exist in respect of any Credit Repurchase
Date or Hedge Repurchase Date, as the case may be, unless and until a
Responsible Officer of the Trustee shall have received at the Corporate Trust
Office a copy of a Credit Notice or a Credit Written Demand or a copy of a Hedge
Notice or a Hedge Written Demand in respect of such Credit Repurchase
Requirement or Hedge Purchase Requirement, as the case may be.  This
paragraph is solely for the benefit of the Trustee.

    


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

     

    On a
Credit Repurchase Date, the Company shall repurchase (the “Credit Repurchase
Requirement”) an aggregate principal amount of the Collateral Bonds equal
to the lesser of, as of the applicable Credit Repurchase Date, (A) the Borrower
Obligations and (B) the Available Principal Amount (the “Credit Repurchase
Amount”).  On the Credit Repurchase Date, the Company will
deposit with the Trustee immediately available funds in an amount equal to the
Credit Repurchase Amount and the Trustee shall pay such amount as soon as
practicable after receipt thereof to the Administrative Agent upon surrender by
the Administrative Agent to the 

     

    
      
        
          A-5

        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Trustee
at the Corporate Trust Office of the Trustee of Collateral Bonds in an aggregate
principal amount equal to the Credit Repurchase Amount, which surrender shall be
a condition to the Company’s Credit Repurchase Requirement.

     

    Payment
of a Credit Repurchase Amount equal to the Borrower Obligations as of the
applicable Credit Repurchase Date shall be deemed to satisfy and discharge
principal of, and accrued and unpaid interest on, the Collateral Bonds in the
same amount as the amount of principal and accrued and unpaid interest,
respectively, comprising such Borrower Obligations.  Such satisfaction
and discharge shall automatically reduce the aggregate principal amount of the
Collateral Bonds by the aggregate amount of such Borrower Obligations comprising
principal.

     

    Payment
of a Credit Repurchase Amount equal to the Available Principal Amount plus
accrued and unpaid interest on the Available Principal Amount, in each case, as
of the applicable Credit Repurchase Date shall be deemed to satisfy and
discharge all outstanding principal of and accrued and unpaid interest on the
Collateral Bonds as of such Credit Repurchase Date.

     

    On a
Hedge Repurchase Date, the Company shall repurchase (the “Hedge Repurchase
Requirement”) an aggregate principal amount of the Collateral Bonds equal
to the lesser of, as of the applicable Hedge Repurchase Date, (A) the Settlement
Amount and (B) the Available Principal Amount (the “Hedge Repurchase
Amount”).  On the Hedge Repurchase Date, the Company will
deposit with the Trustee immediately available funds in an amount equal to the
Hedge Repurchase Amount and the Trustee shall pay such amount as soon as
practicable after receipt thereof to the Administrative Agent upon surrender by
the Administrative Agent to the Trustee at the Corporate Trust Office of the
Trustee of Collateral Bonds in an aggregate principal amount equal to the Hedge
Repurchase Amount, which surrender shall be a condition to the Company’s Hedge
Repurchase Requirement.

     

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

     

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

     

    In case
an Event of Default shall occur, the principal of all the Collateral Bonds at
any such time outstanding under the Indenture may be declared or may become due
and payable, 

     

    
      
        
          A-6

        

      

      
        
        

        
          

        

      

      
        
        

      

    

    upon the
conditions and in the manner and with the effect provided in the Indenture. The
Indenture provides that such declaration may in certain events be waived by the
Holders of a majority in principal amount of the Collateral Bonds
outstanding.

    


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

    


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

    


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

    


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

    


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


    
      
        
          A-7

        

         


      

      
         


        
          

        

      

      
         


      

    


    



    
      
        
          A-8