Document:

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                           COMMON SECURITY CERTIFICATE

                  THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.

                  EXCEPT AS SET FORTH IN SECTION 8.1(b) OF THE DECLARATION (AS
DEFINED BELOW), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED.

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Certificate Number C-1                           Number of Common Securities 310

                    Certificate Evidencing Common Securities

                                       of

                        Texas Capital Statutory Trust II

                  Texas Capital Statutory Trust II, a statutory trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
Texas Capital Bancshares, Inc. (the "Holder") is the registered owner of 310
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust (liquidation amount $1,000 per Common Security)(the
"Common Securities"). The Common Securities represented hereby are issued
pursuant to, and the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Common Securities shall in all respects be
subject to, the provisions of the Amended and Restated Declaration of Trust of
the Trust, dated as of April 10, 2003, among Raleigh Hortenstine III and Joseph
M. Grant, as Administrators, Wilmington Trust Company, as Delaware Trustee,
Wilmington Trust Company, as Institutional Trustee, the Holder, as Sponsor, and
the holders from time to time of undivided beneficial interests in the assets of
the Trust, including the designation of the terms of the Common Securities as
set forth in Annex I to the Declaration, as the same may be amended from time to
time (the "Declaration"). Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Sponsor will provide a copy
of the Declaration and the Indenture to the Holder without charge upon written
request to the Sponsor at its principal place of business.

                  As set forth in the Declaration, when an Event of Default has
occurred and is continuing, the rights of Holders of Common Securities to
payment in respect of Distributions and payments upon Liquidation, redemption or
otherwise are subordinated to the rights of payment of Holders of the Capital
Securities.

                  By acceptance of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.

                  By acceptance of this Certificate, the Holder agrees to treat,
for United States federal income tax purposes, the Debentures as indebtedness
and the Common Securities as evidence of undivided beneficial ownership in the
Debentures.

                  This Common Security is governed by, and shall be construed in
accordance with, the laws of the State of Delaware, without regard to principles
of conflict of laws.

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                  IN WITNESS WHEREOF, the Trust has executed this certificate
this 10th day of April, 2003.

                                                Texas Capital Statutory Trust II

                                                By: /s/ RALEIGH HORTENSTINE III
                                                   -----------------------------
                                                   Name: Raleigh Hortenstine III
                                                   Title: Administrator

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                              [REVERSE OF SECURITY]

                  Distributions payable on each Common Security will be
identical in amount to the Distributions payable on each Capital Security, which
is at a variable per annum rate of interest, reset quarterly, equal to LIBOR (as
defined in the Declaration) plus 3.25% (the "Coupon Rate") of the stated
liquidation amount of $1,000 per Capital Security, such rate being the rate of
interest payable on the Debentures to be held by the Institutional Trustee.
Except as set forth below in respect of an Extension Period, Distributions in
arrears for more than one quarterly period will bear interest thereon compounded
quarterly at the applicable Coupon Rate for each such quarterly period (to the
extent permitted by applicable law). The term "Distributions" as used herein
includes cash distributions, any such compounded distributions and any
Additional Amounts payable on the Debentures unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Institutional Trustee and to the extent the
Institutional Trustee has funds legally available in the Property Account
therefor. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year and
the actual number of days elapsed in the relevant Distribution period.

                  Except as otherwise described below, Distributions on the
Common Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears on January 24, April 24, July
24 and October 24 of each year, commencing on July 24, 2003 (each, a
"Distribution Payment Date"). The Debenture Issuer has the right under the
Indenture to defer payments of interest on the Debentures by extending the
interest payment period for up to 20 consecutive quarterly periods (each, an
"Extension Period") at any time and from time to time on the Debentures, subject
to the conditions described below, during which Extension Period no interest
shall be due and payable. During any Extension Period, interest will continue to
accrue on the Debentures, and interest on such accrued interest (such accrued
interest and interest thereon referred to herein as "Deferred Interest") will
accrue at an annual rate equal to the Coupon Rate in effect for each such
Extension Period, compounded quarterly from the date such Deferred Interest
would have been payable were it not for the Extension Period, to the extent
permitted by law. No Extension Period may end on a date other than a
Distribution Payment Date. At the end of any such Extension Period, the
Debenture Issuer shall pay all Deferred Interest then accrued and unpaid on the
Debentures; provided, however, that no Extension Period may extend beyond the
Maturity Date, Redemption Date or Special Redemption Date. Prior to the
termination of any Extension Period, the Debenture Issuer may further extend
such period, provided, that such period together with all such previous and
further consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all Deferred Interest, the Debenture
Issuer may commence a new Extension Period, subject to the foregoing
requirements. No interest or Deferred Interest shall be due and payable during
an Extension Period, except at the end thereof, but Deferred Interest shall
accrue upon each installment of interest that would otherwise have been due and
payable during such Extension Period until such installment is paid. The
deferral of the payment of interest during and Extension Period shall not defer
the payment of any Additional Amounts that may be due. If Distributions are
deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities

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must be paid on the dates payable (after giving effect to any Extension Period)
to the extent that the Trust has funds legally available for the payment of such
distributions in the Property Account of the Trust. The Trust's funds legally
available for Distribution to the Holders of the Securities will be limited to
payments received from the Debenture Issuer. The payment of Distributions out of
moneys held by the Trust is guaranteed by the Guarantor pursuant to the
Guarantee.

                  The Common Securities shall be redeemable as provided in the
Declaration.

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                                   ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned assigns and transfers this
Common Security Certificate to:

(Insert assignee's social security or tax identification number)

(Insert address and zip code of assignee),

and irrevocably appoints ______as agent to transfer this Common Security
Certificate on the books of the Trust. The agent may substitute another to act
for him or her.

                  Date:

                  Signature:

                  (Sign exactly as your name appears on the other side of this
Common Security Certificate)

                  Signature Guarantee:(2)

----------------------
(2)      Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit union,
meeting the requirements of the Security registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Security registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.

                                        6<PAGE>

                                                                 EXHIBIT NO. 4.3

                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT, dated as of June 11, 2003 (the
"Agreement"), is made by and between PNM RESOURCES, INC., a New Mexico
corporation, having an office at Alvarado Square, Albuquerque, New Mexico 87158
(the "Company"), and U.S. TRUST COMPANY, NATIONAL ASSOCIATION, solely in its
capacity as duly appointed and acting investment manager (the "Manager") of a
segregated account held in the PNM RESOURCES, INC. EMPLOYEES' RETIREMENT PLAN
TRUST (the "Trust") created under the PNM RESOURCES, INC. EMPLOYEES' RETIREMENT
PLAN (the "Plan").

                                    RECITALS

         WHEREAS, the Company has agreed to contribute an aggregate of 1,121,495
shares of its common stock, no par value (the "Registrable Shares"), to the
Trust (the "Contribution"); and

         WHEREAS, the Registrable Shares immediately following such Contribution
will be held in a single segregated account in the Trust (the "Segregated
Account"); and

         WHEREAS, pursuant to the Investment Management Agreement, dated as of
June 11, 2003, among the Manager, the Corporate Investment Committee of the
Company and the Company (the "Investment Management Agreement"), the Manager has
been appointed as a "fiduciary" of the Trust, as defined in Section 3(21) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), with the
authority to act on behalf of the Trust with respect to all assets held in the
Segregated Account; and

         WHEREAS, the Company has agreed to grant certain registration rights
with respect to the Registrable Shares held in the Segregated Account, on the
terms and subject to the conditions set forth in this Agreement; and

         WHEREAS, pursuant to the Investment Management Agreement, the Manager
has full power and authority to execute and deliver this Agreement for the
benefit of the Trust and to take any actions required or permitted to be taken
in connection with this Agreement;

         NOW, THEREFORE, in consideration of the premises and mutual promises
set forth herein, the parties hereto hereby agree as follows:

         1.       Registration; Compliance With The Securities Act.

                  1.1      Registration Procedures and Expenses. The Company
hereby agrees that it shall:

                           (a)      use its reasonable commercial efforts to
prepare and file with the Securities and Exchange Commission (the "SEC"), as
soon as reasonably practicable after the date of the Contribution, a
registration statement on Form S-3 covering the Registrable Shares (the
"Registration Statement"), to enable the Manager to sell the Registrable Shares
from time to time in the manner contemplated by the plan of distribution set
forth in the Registration Statement, and use its reasonable

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commercial efforts to cause such Registration Statement to be declared effective
as reasonably promptly as possible after filing and to remain continuously
effective until the earlier of (i) the date on which all Registrable Shares are
sold, and (ii) the second anniversary of the date of the Contribution (the
"Registration Period");

                           (b)      prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement and the prospectus filed with the SEC pursuant to Rule
424(b) under the Securities Act of 1933, as amended (the "Securities Act"), or
if no such filing is required, as included in the Registration Statement (the
"Prospectus"), as may be necessary to keep the Registration Statement effective
at all times until the end of the Registration Period;

                           (c)      furnish the Manager with such reasonable
number of copies of the Prospectus in conformity with the requirements of the
Securities Act, and such other documents as the Manager may reasonably request,
in order to facilitate the public sale or other disposition of all or any of the
Registrable Shares by the Manager;

                           (d)      use its reasonable commercial efforts to
file documents required of the Company for normal blue sky clearance in such
states as the Manager shall reasonably designate in writing; provided, however,
that the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented;

                           (e)      use its reasonable commercial efforts to
cause the Registrable Shares to be listed on the New York Stock Exchange (the
"NYSE") in connection with the filing of the Registration Statement under
Section 1.1(a); and

                           (f)      bear all expenses in connection with the
actions contemplated by paragraphs (a) through (e) of this Section 1.1 and the
registration of the Registrable Shares pursuant to the Registration Statement,
including fees and expenses of legal counsel to the Manager incurred in
connection with the registration and sale of the Registrable Shares in an
aggregate amount not to exceed $12,000, but excluding underwriting discounts,
brokerage fees and commissions incurred by the Manager, the Trust or the Plan,
if any.

         It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Section 1.1 that the Manager shall provide such
reasonable assistance to the Company and furnish, or cause to be furnished, to
the Company in writing such information regarding the Manager, the Registrable
Shares to be sold, and the intended method or methods of disposition of the
Registrable Shares, as shall be required to effect the registration of the
Registrable Shares and as may be required from time to time under the Securities
Act and the rules and regulations thereunder.

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                  1.2      Transfer of Registrable Shares After Registration;
Suspension.

                           (a)      The Manager agrees that it will not offer to
sell or make any sale, assignment, pledge, hypothecation or other transfer with
respect to the Registrable Shares that would constitute a sale within the
meaning of the Securities Act except pursuant to either (i) the Registration
Statement referred to in Section 1.1, or (ii) Rule 144 under the Securities Act
or any successor rule thereto (as such rule may be amended from time to time,
"Rule 144"), and that it will promptly notify the Company of any changes in the
information set forth in the Registration Statement after it is first filed with
the SEC regarding the Manager or the intended plan of distribution of the
Registrable Shares to the extent required by applicable securities laws.

                           (b)      In addition to any suspension rights under
paragraph (c) below, the Company may, upon the happening of any event that, in
the judgment of the Company's legal counsel, renders advisable the suspension of
the disposition of Registrable Shares covered by the Registration Statement or
use of the Prospectus due to pending corporate developments, public filings with
the SEC or similar events, suspend the disposition of Registrable Shares covered
by the Registration Statement or use of the Prospectus for a period of not more
than one hundred twenty (120) days on written notice to the Manager (which
notice will not disclose the content of any material non-public information and
will indicate the date of the beginning and end of the intended suspension, if
known), in which case the Manager, upon receipt of such written notice, shall
discontinue (or cause the Trust to discontinue) disposition of Registrable
Shares covered by the Registration Statement or use of the Prospectus until
copies of a supplemented or amended Prospectus are distributed to the Manager or
until the Manager is advised in writing by the Company that the disposition of
Registrable Shares covered by the Registration Statement or use of the
applicable Prospectus may be resumed; provided, that such right to suspend the
disposition of Registrable Shares covered by the Registration Statement or use
of the Prospectus shall not be exercised by the Company for more than one
hundred fifty (150) days in any twelve-month period. The suspension and notice
thereof described in this Section 1.2(b) shall be held in confidence and not
disclosed by the Manager, except as required by law.

                           (c)      Subject to paragraph (d) below, in the event
of: (i) any request by the SEC or any other federal or state governmental
authority during the period of effectiveness of the Registration Statement for
amendments or supplements to a Registration Statement or related Prospectus or
for additional information; (ii) the issuance by the SEC or any other federal or
state governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose;
(iii) the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Shares for sale in any jurisdiction or the initiation of any
proceeding for such purpose; or (iv) any event or circumstance that necessitates
the making of any changes in the Registration Statement or Prospectus, or any
document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, then the Company shall deliver a
certificate in writing to the Manager (the "Suspension Notice") to the effect of
the foregoing (which notice will not disclose the content of any material
non-public information and will indicate the date of the beginning and end of
the intended suspension, if known), and, upon receipt of such Suspension Notice,
the Manager will refrain (or cause the Trust to refrain) from selling any
Registrable Shares pursuant to the Registration Statement (a "Suspension") until
the Manager's receipt of copies of a supplemented or amended Prospectus prepared
and filed by the Company, or until it is advised in writing by the Company that
the current Prospectus may be used, and has received copies of any additional or
supplemental filings that are

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incorporated or deemed incorporated by reference in any such Prospectus. In the
event of any Suspension, the Company will use its reasonable commercial efforts
to cause the use of the Prospectus so suspended to be resumed as soon as
possible after delivery of a Suspension Notice to the Manager. The Suspension
and Suspension Notice described in this Section 1.2(c) shall be held in
confidence and not disclosed by the Manager, except as required by law.

                           (d)      The Manager may sell Registrable Shares
under the Registration Statement provided that neither a Suspension nor a
suspended disposition under Section 1.2(b) hereof is then in effect, the Manager
sells in accordance with the plan of distribution in the Prospectus, and the
Manager arranges for delivery of a current Prospectus to any transferee
receiving such Registrable Shares in compliance with the prospectus delivery
requirements of the Securities Act.

                  1.3      Indemnification. For the purpose of this Section 1.3,
the term "Registration Statement" shall include any preliminary or final
prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in Section 1.1.

                           (a)      Indemnification by the Company. The Company
agrees to indemnify and hold harmless the Manager (including, for purposes of
this Section 1.3, the officers, directors, employees and agents of the Manager),
and each person, if any, who controls the Manager within the meaning of either
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), from and against any and all losses,
claims, damages, liabilities or expenses, joint or several, to which the Manager
or such controlling person may become subject under the Securities Act, the
Exchange Act, or any other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company, which consent
shall not be unreasonably withheld or delayed), only to the extent such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, as amended as of the time the Registration Statement was declared
effective by the SEC, the Prospectus, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state in any
of them a material fact required to be stated therein or necessary to make the
statements in any of them, in light of the circumstances under which they were
made, not misleading, and will reimburse the Manager and each such controlling
person for any legal and other expenses as such expenses are reasonably incurred
by the Manager or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon (i) an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, the Prospectus or any amendment or supplement of the
Registration Statement or Prospectus in reliance upon and in conformity with
information furnished in writing to the Company by the Manager, (ii) any untrue
statement or omission of a material fact required to make such statement not
misleading in any Prospectus that is corrected in any subsequent Prospectus that
was delivered to the Manager before the pertinent sale or sales by the Manager,
or (iii) any untrue statement or alleged untrue statement or omission or alleged
omission in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, when used or distributed by the Manager during a period in
which the disposition of Registrable Shares is properly suspended under Section
1.2(b) or a Suspension is properly in effect under Section 1.2(c).

                           (b)      Indemnification by the Manager. To the
extent permitted by applicable law, the Manager will indemnify and hold harmless
the Company, the Corporate Investment Committee of the Company, each of the
Company's directors, each of the Company's officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of either

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Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages, liabilities or expenses to which
the Company, each of its directors, each of its officers who signed the
Registration Statement or controlling person may become subject under the
Securities Act, the Exchange Act, or any other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Manager, which consent shall not be unreasonably withheld or delayed) only to
the extent such losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of or are based upon (i) any
failure on the part of the Manager to comply with the covenants and agreements
contained in this Agreement respecting the sale of the Registrable Shares, or
(ii) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, as amended as of the time the
Registration Statement was declared effective by the SEC, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in any of them not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, the Prospectus, or any amendment or supplement
thereto, in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of the Manager, and the Manager will
reimburse the Company, each of its directors, each of its officers who signed
the Registration Statement or controlling person for any legal and other
expenses as such expenses are reasonably incurred by the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the Manager shall not be liable for any such
untrue statement or alleged untrue statement or omission or alleged omission
with respect to which the Manager has delivered to the Company in writing a
correction before the occurrence of the transaction from which such loss was
incurred. In no event shall the liability of the Manager under this Section 1.3
be greater than the aggregate fees received by the Manager pursuant to the
Investment Management Agreement.

                           (c)      Indemnification Procedure.

                                    (i)      Promptly after receipt by an
indemnified party under this Section 1.3 of written notice of the threat or
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 1.3,
promptly notify the indemnifying party in writing of the claim; provided,
however, that the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party under the
indemnity agreement contained in this Section 1.3 or otherwise, to the extent it
is not prejudiced as a result of such failure.

                                    (ii)     In case any such action is brought
against any indemnified party and such indemnified party seeks or intends to
seek indemnity from an indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be a conflict between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such action or
that there may be legal defenses available to it or other indemnified parties
that are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of

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counsel, the indemnifying party will not be liable to such indemnified party
under this Section 1.3 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless:

                                             (1)      the indemnified party
shall have employed such counsel in connection with the assumption of legal
defenses in accordance with the proviso to the preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel (other than local counsel), approved
by such indemnifying party representing all of the indemnified parties who are
parties to such action); or

                                             (2)      the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified party
to represent the indemnified party within a reasonable time after notice of
commencement of action.

In each of such case, the reasonable fees and expenses of counsel shall be at
the expense of the indemnifying party.

                           (d)      Contribution. If the indemnification
provided for in this Section 1.3 is held by a court of competent jurisdiction to
be unavailable to an indemnified party with respect to any loss, claim, damage,
liability or expense referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage, liability or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other hand in connection with the statements or omissions that
resulted in such loss, claim, damage, liability or expense, as well as any other
relevant equitable considerations. The relative fault of the indemnifying party
and of the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 1.3(c) hereof, any legal or other fees or expenses reasonably incurred
by such party in connection with any investigation or proceeding.

         The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 1.3(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 1.3(d), in no event shall the
Manager be required to contribute any amount in excess of the aggregate fees
received by the Manager pursuant to the Investment Management Agreement. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
or entity who was not guilty of such fraudulent misrepresentation.

                           (e)      Surviving Obligations. The obligations of
the Company and the Manager under this Section 1.3 shall survive the completion
of the disposition of the Registrable Shares under this Section 1, and
otherwise.

                  1.4      Rule 144 Information. For such period as the Trust or
the Plan holds any Registrable Shares received pursuant to the Contribution, the
Company shall use its reasonable best efforts to file all reports required to be
filed by it under the Securities Act, the Exchange Act and the rules

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and regulations thereunder and shall use its reasonable best efforts to take
such further action to the extent required to enable the Manager to sell the
Registrable Shares pursuant to Rule 144.

                  1.5      Rights of the Trust. All of the rights and benefits
conferred on the Manager pursuant to this Agreement (other than the right to
indemnification provided in Section 1.3) are intended to inure to the benefit of
the Trust.

         2.       Miscellaneous.

                  2.1      Governing Law. This Agreement shall be governed by
and construed and interpreted in accordance with the laws of the State of New
York, irrespective of the choice of laws principles of the State of New York, as
to all matters, including matters of validity, construction, effect,
enforceability, performance and remedies.

                  2.2      Force Majeure. Neither party will have any liability
for damages or delay due to fire, explosion, lightning, pest damage, power
failure or surges, strikes or labor disputes, water or flood, acts of God, the
elements, war, civil disturbances, acts of civil or military authorities or the
public enemy, acts or omissions of communications or other carriers, or any
other cause beyond a party's reasonable control (other than that which arises
from the gross negligence or willful misconduct of such party), whether or not
similar to the foregoing, that prevent such party from materially performing its
obligations hereunder.

                  2.3      Entire Agreement; Modification; Waivers. This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and shall supersede all previous negotiation,
commitments and writings with respect to the matters discussed herein. This
Agreement may not be altered, modified or amended except by a written instrument
signed by all parties. The failure of any party to require the performance or
satisfaction of any term or obligation of this Agreement, or the waiver by any
party of any breach of this Agreement, shall not prevent subsequent enforcement
of such term or obligation or be deemed a waiver of any subsequent breach.

                  2.4      Severability. The provisions of this Agreement are
severable, and in the event that any one or more provisions are deemed illegal
or unenforceable the remaining provisions shall remain in full force and effect
unless the deletion of such provision shall cause this Agreement to become
materially adverse to either party, in which event the parties shall use
reasonable commercial efforts to arrive at an accommodation that best preserves
for the parties the benefits and obligations of the offending provision.

                  2.5      Notices. Except as otherwise expressly provided, any
notice, request, demand or other communication permitted or required to be given
under this Agreement shall be in writing, shall be sent by one of the following
means to the Company or the Manager at the addresses set forth below (or to such
other address as shall be designated hereunder by notice to the other parties
and persons receiving copies, effective upon actual receipt), and shall be
deemed conclusively to have been given: (a) on the first business day following
the day timely deposited with Federal Express (or other equivalent national
overnight courier) or United States Express Mail, with the cost of delivery
prepaid or for the account of the sender; (b) on the fifth business day
following the day duly sent by certified or registered United States mail,
postage prepaid and return receipt requested; or (c) when otherwise actually
received by the addressee on a business day (or on the next business day if
received after the close of normal business hours or on any non-business day).

                                        7

<PAGE>

If to the Company:

                  PNM Resources, Inc.
                  Alvarado Square
                  Albuquerque, New Mexico 87158
                  Fax: (505) 241-2369
                  Attn: Terry R. Horn

                  With a copy to:

                  Charles L. Moore, Esq.
                  Keleher & McLeod, PA
                  P.O. Drawer AA
                  Albuquerque, New Mexico 87103
                  Fax: (505) 346-1345

If to the Manager:

                  U.S. Trust Company, National Association
                  600 Fourteenth Street, N.W.
                  Suite 400
                  Washington, DC 20005-3314
                  Fax: (202) 783-7054
                  Attn: Norman P. Goldberg

With a copy to:

                  James F. Carey, Esq.
                  Jones Day
                  2727 North Harwood Street
                  Dallas, Texas 75201
                  Fax: (214) 969-5100

                  2.6      Title and Headings. Titles and headings to sections
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.

                  2.7      Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

                  2.8      Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties to this Agreement and their
respective executors, administrators, legal representatives, heirs, successors
and assigns, whether expressed or not.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                        8

<PAGE>

IN WITNESS WHEREOF, each of the Company and the Manager has caused this
Agreement to be duly executed on its behalf by its duly authorized officer as of
the date first written above.

                                    PNM RESOURCES, INC.

                                    By:    /s/ Terry R. Horn
                                       ----------------------------------------
                                    Name:  Terry R. Horn
                                    Title: Vice President and Treasurer

                                    U.S. TRUST COMPANY, NATIONAL ASSOCIATION, as
                                    Investment Manager of a Segregated Account
                                    in the PNM Resources, Inc. Employees'
                                    Retirement Plan Trust

                                    By:    /s/ Norman P. Goldberg
                                       -----------------------------------------
                                    Name:  Norman P. Goldberg
                                    Title: Managing Director

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