Document:

exh10-7_123108.htm

    Exhibit
10.7

    

    THIRD
AMENDMENT

    TO
THE

    PNM
RESOURCES, INC.

    EXECUTIVE
SPENDING ACCOUNT PLAN

     

    Effective
as of January 1, 1980, Public Service Company of New Mexico (“PNM”) adopted
the Amended and Restated Medical Reimbursement Plan of Public Service Company of
New Mexico (the “MERP”).  Sponsorship of the MERP was subsequently
transferred from PNM to PNM Resources, Inc. (the “Company”) on November 30,
2002.  Effective January 1, 2002, the Company established the
Executive Spending Account (the “ESA”).  Effective December 1,
2002, the Company merged the MERP with and into the ESA and named the combined
program the “PNM Resources, Inc. Executive Spending Account Plan” (the
“Plan”).  The Plan has been amended and restated on two occasions,
with the most recent restatement being effective, generally, as of
January 1, 2004.  The Plan was subsequently amended on two
occasions.  The purpose of this Third Amendment is to satisfy the
requirements of Section 409A of the Internal Revenue Code of 1986 (the
“Code”).  Section 409A of the Code became applicable to the Plan as of
January 1, 2005.  The Plan has been and shall continue to be
administered in good faith compliance with the requirements of Section 409A from
January 1, 2005 through December 31, 2008.

     

    1.  This
Third Amendment shall be effective as of January 1, 2009.

     

    2.  This
Third Amendment amends only the provisions of the Plan as set forth herein, and
those provisions not expressly amended by this Third Amendment shall continue in
full force and effect.

     

    3.  The
definition of “Paycheck Year” in Article 2 (Defined Terms) of the
Plan is hereby amended and restated in its entirety to read as
follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              Paycheck
      Year:

            	
              The
      Paycheck Year is the calendar year.

            

    

     

    4.  Article 4
(Eligibility and
Participation Requirements) of the Plan is hereby amended by the addition
of the following new section to the end thereof:

     

    
      	
               
      

            	
              Section
    409A

            	
              The
      Company believes that payments pursuant to
this

            

    

    
      	
               
      

            	
              Compliance:

            	
              Plan
      are subject to Section 409A of the Code and that payments made from this
      Plan are made on a specified date in compliance with Treas. Reg. Section
      1.409A-3(i)(1)(iv).

            

    

     

    To assure
compliance with the requirements of Section 409A and avoid adverse tax
consequences to the Participant, the amount of Covered Expenses reimbursed
during one taxable year may not affect the Covered Expenses eligible for
reimbursement in any other taxable year.  In addition, all
reimbursements of Covered Expenses shall be made on or before the last day of
the calendar year following the calendar year in which the expense was incurred
and the right to reimbursement for such Covered Expenses will not be subject to
liquidation or exchange for another benefit.

     

    Under no
circumstances may the time or schedule of any payment made or benefit provided
pursuant to this Plan be accelerated or subject to a further deferral except as
otherwise permitted or required pursuant to regulations and other guidance
issued pursuant to Section 409A of the Code.

     

    No
Participant has any right to make any election regarding the time or form of any
payment due under this Plan.

     

    This Plan
shall be operated in compliance with Section 409A and each provision of
this Plan shall be interpreted, to the extent possible, to comply with
Section 409A.

     

    5.  The
Section “Reimbursement Requests” of Article 7 (Claims Procedures) is
hereby amended and restated in its entirety to read as follows:

     

    
      	
               
      

            	
              Reimbursement

            	
              The
      Benefits Department is responsible for evaluating

               

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
      	
               
      

            	
              Requests:

            	
              all
      reimbursement requests under the Plan.  You must submit all
      reimbursement requests to the Benefits Department in accordance with its
      procedures; provided, however, that each December (or more frequently if
      you request), the Benefits Department will calculate the insurance
      deductions that have been taken from your pay during the Paycheck Year,
      and will submit these for reimbursement on your
  behalf.

            

    

     

    Reimbursement
requests should be submitted as soon as possible after the underlying expense is
“incurred,” although, for repetitive expenses, you may want to submit your
request when you have other expenses, or at some fixed interval, such as every
three or six months.  See the definition “Covered Expense” to
determine when an expense is incurred.  Please keep in mind that to be
reimbursed, an expense must be submitted for reimbursement no later than the end
of the Paycheck Year following the Paycheck Year in which the expense was
incurred.

     

    In order
to count against the Benefit Limit for a given Paycheck Year, a properly
documented reimbursement request must be sent to the Benefits Department on or
before the last day of such Paycheck Year.  Notwithstanding the
foregoing, if you terminate employment during a Paycheck Year, any Covered
Expenses that you incur before your participation in the Plan terminates will be
eligible for reimbursement provided the expense is submitted for reimbursement
no later than the end of the Paycheck Year following the Paycheck Year in which
the expense was incurred.  Such expenses will count against your
Benefit Limit for the year in which your participation in the Plan
terminated.  The expenses reimbursed under the Plan will be taxable
income to you for the calendar year in which you receive the reimbursement,
rather than the calendar year in which the underlying expense is
incurred.

     

    To
facilitate recordkeeping and reimbursements, expenses submitted at least 3 days
before pay period end will be processed and reimbursed during that same payroll
period.  Expenses submitted after such deadline will be processed and
paid during the following payroll period.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    If a
reimbursement request is for medical care, you must first submit the claim for
payment to your Medical Insurance, and submit a copy of the resulting
explanation of benefits (“EOB”) to the Benefits Department as documentation of
the expense.  On all reimbursement requests, be sure to include the
name of the provider, the nature of the service rendered, and your name on the
receipt or invoice.  If the claim is in the category of health (other
than for prescription drugs), the ICD-9 code assigned by the provider will
suffice in place of the nature of the service rendered.  Cancelled checks and credit card
receipts cannot be used as the sole documentation of an expense submitted for
reimbursement.

     

    IN
WITNESS WHEREOF, the Company has caused this Third Amendment to be executed as
of this 21st
day of November,
2008.

     

    PNM
RESOURCES, INC.

     

     

    By: /s/ Alice A.
Cobb             

                       Its:
SVP, Chief
Administrative Officer

    
      
        
           

        

         

      

      
        4exh10-8_123108.htm

    Exhibit
10.8

    

    FIRST
AMENDMENT

    TO
THE

    PNM
RESOURCES, INC.

    OFFICER
RETENTION PLAN

     

    Effective
December 7, 1998, Public Service Company of New Mexico adopted the Public
Service Company of New Mexico First Restated and Amended Executive Retention
Plan (the “Plan”).  By an amendment dated November 27, 2002,
sponsorship of the Plan was transferred to PNM Resources, Inc. (the “PNM
Resources”) and the Plan was renamed the “PNM Resources, Inc. First Restated and
Amended Executive Retention Plan.”  Effective as of July 13,
2003, PNM Resources amended and restated the Plan in its entirety and changed
the name of the Plan to the “PNM Resources, Inc. Officer Retention
Plan.”  The Plan was completely amended and restated on
September 2, 2008 to satisfy the requirements of Section 409A of the
Internal Revenue Code of 1986 (the “Code”).  By execution of this
instrument, PNM Resources now desires to amend the Plan as set forth
below.

     

    1.       
Except as
otherwise provided, this First Amendment shall be effective as of
January 1, 2009.

     

    2.       
Section
4.4 (No Duplication of
Benefits) of the Plan is hereby amended and restated in its entirety to
read as follows:

     

    4.4           No
Duplication of Benefits.  The right to receive any benefits
under this Plan by any Participant is specifically conditioned upon such
Participant either waiving or being ineligible for any and all benefits under
the PNM Resources, Inc. Employee Retention Plan, including any amendments
thereto, or any benefits due to a Change in Control or similar event under any
successor or other change in control, severance, retention or other plans or
agreements otherwise available to the Participant.  The Company does
not intend to provide any Participant with benefits under both this Plan and
benefits under any other severance, retention, change in control or other plans
or agreements sponsored 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    by the
Company or any Affiliate.  This Section 4.4 shall not apply to any
individual agreement that provides a Participant with a special payment in order
to induce the Participant to remain employed by the Company unless the agreement
specifically states otherwise.  The Company also may override this
provision by expressly stating in the other change in control, severance,
retention or other plan or agreement that some or all of the benefits provided
by the other change in control, severance, retention or other plan or agreement
are intended to supplement the benefits provided by this Plan.

     

    3.       
Section
5.5(a)(2) (Tax
Gross-Up – General Rule – Gross-Up Payment) of the Plan is hereby amended
and restated in its entirety to read as follows:

     

    (2)           Gross-Up
Payment.  Except as otherwise noted below, the Gross-Up Payment
will consist of a single lump sum payment equal to the sum of: (i) the excise
tax liability of the Participant on the Total Payments and (ii) all the total
excise, income, and payroll tax liability of the Participant on the amount due
pursuant to clause (i), further increased by all the additional excise, income
and payroll tax liability on the amount due pursuant to clause (ii), applied to
the total amount due to the Participant.  The purpose and effect of
the Gross-Up Payment is to cause the Participant to have the same net
compensation after income, excise and payroll taxes that the Participant would
have if there was no tax under Section 4999.  In order to enable the
Company to calculate the amount of the Gross-Up Payment, the Participant shall
provide the Company with a letter from an attorney or accountant (collectively a
“Tax Professional”) acceptable to the Company providing the Company with all of
the information necessary to calculate the Gross-Up Payment.  If the
Tax Professional selected by the Participant is unacceptable to the Company, the
Participant shall provide the necessary information to a Tax Professional
selected by the Company, with the information to be held in confidence by such
Tax Professional.  The Tax Professional will then provide the Company,
at the Company’s expense, with a letter containing the information necessary to
enable the Company to calculate the Gross-Up Payment.  The Gross-up
Payment shall be made not later than December 31 of the tax year next
following the tax year in which the Participant remits such taxes.

     

    4.       
This
First Amendment amends only the provisions of the Plan as noted above and those
provisions not expressly amended shall be considered in full force and
effect.  

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    Notwithstanding
the foregoing, this First Amendment shall supersede the provisions of the Plan
to the extent those provisions are inconsistent with the provisions and intent
of this First Amendment.

     

    IN
WITNESS WHEREOF, PNM Resources has caused this First Amendment to be executed as
of this 20th
day of November,
2008.

     

    PNM
RESOURCES, INC.

     

     

     

    By: /s/ Alice A.
Cobb                                                                     

          Its: SVP, Chief Administrative
Officer

    
      
        
           

        

         

      

      
        3

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