PERFORMANCE SHARE AWARD AGREEMENT PNM RESOURCES, INC. OMNIBUS PERFORMANCE EQUITY PLAN

PNM Resources, Inc., a New Mexico corporation, (“PNMR” or the “Company”) hereby awards to __________, (the “Grantee”), a Participant in the PNM Resources, Inc. Omnibus Performance Equity Plan (the “Plan”), as it may be amended, a Performance Share Award (the “Award”) for the number of shares of Common Stock of Company (“Stock”) specified in Section 2 below. The grant is made effective as of the __th day of February, 2007.

Capitalized terms used in this Performance Share Award Agreement (the “Agreement”) and not otherwise defined herein shall have the meanings given to such terms in the Plan.

1.    Target Award . Pursuant to the provisions of the Plan, the Human Resources and Compensation Committee (the “Committee”) of Company’s Board of Directors adopted the Long-Term Performance Share Program (the “Program”), which established the general guidelines pursuant to which Performance Shares would be granted by the Committee. The Committee amended the Program effective as of January 1, 2004 and Grantee previously received a copy of the amended Program document. In accordance with the provisions of the amended Program, the Committee established a “Target Award” of ______ shares for Grantee. The Target Award was subject to adjustment in accordance with the provisions of the Program, as described in Section 2.

2.    Performance Goals . Pursuant to the Program, Grantee is entitled to an award of Performance Shares only if Company’s “Total Shareholder Return” (“TSR”), as that term is defined in the Program document, is at the 40 ^th percentile or higher of companies in the S & P Midcap 400 Utility Index (the “Index”) for the relevant “Performance Period”. The “Performance Period” covered by this Award Agreement is the period beginning on January 1, 2004 and ending on December 31, 2006. Under the Program, Participants may earn from 0% to 200% of the Target Award, depending on Company’s TSR.

For the Performance Period, Company’s TSR was ___, placing it in the __ percentile of companies included in the Index. As a result, Grantee is entitled to an award of Performance Shares equal to ___% of the Target Award. Grantee, accordingly, is hereby awarded ____ Performance Shares for the Performance Period.

3.    Form and Timing of Delivery of Certificate . Within an administratively reasonable period of time following the date of this Award Agreement, and after satisfaction of all applicable withholding requirements, Grantee shall receive a Stock certificate evidencing Grantee’s ownership of the number of Performance Shares specified in Section 2.

Section 409A of the Code imposes a number of requirements on “non-qualified deferred compensation plans and arrangements.” Based on regulations proposed by the Internal Revenue Service, the Company has concluded that this Performance Share Award Agreement is subject to Section 409A. The Company also has concluded, however, that since the Stock Certificate evidencing the Performance Shares granted hereunder will be issued within an administratively reasonable period after the date on which the Performance Period ends and Grantee obtains a vested right to the Performance Shares, the award of Performance Shares qualifies for the short-term deferral exception to Section 409A. In order to ensure compliance with the short-term deferral exception, the Company shall issue the Stock Certificate as soon as possible after the date of the Agreement and in any event by March 15, 2007. If for some unforeseen reason it is administratively impracticable to issue the Stock Certificate by March 15, 2007, the Stock Certificate shall be issued as soon as reasonably practicable following March 15, 2007 and in no event later than December 31, 2007. Under no circumstances may the time or schedule of receipt of the Stock Certificate hereunder 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. Grantee does not have any right to make any election regarding the time or form of any payment. This Agreement and the Plan shall be operated in compliance with Section 409A and each provision of this Agreement and the Plan shall be interpreted, to the extent possible, to comply with Section 409A.

4.    Withholding and Deductions . The Company shall have the right to deduct from any payments made by the Company to the Grantee, any federal, state or local taxes of any kind as are required by law to be withheld with respect to the Performance Shares granted hereunder. The Company also shall have the right to take such other actions as may be necessary in the opinion of the Company to satisfy all obligations for withholding and payment of such taxes, including, in its sole discretion, and subject to the provisions of applicable law and to any conditions the Committee may determine to be necessary in order to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act, to permit the Grantee, at the Grantee’s election, to satisfy, in whole or in part, any tax withholding obligation which may arise in connection with the Performance Shares by requesting that the Company withhold shares of Stock having a Fair Market Value of the Stock equal to the amount of the income tax withholding. Any shares of Stock deliverable to the Grantee under the terms of this Agreement also are subject to offset by the Company, and the Grantee hereby authorizes such offset, to liquidate and reduce any outstanding debt or unpaid sums owed by the Grantee to the Company or its successor.

5.    Dividend Equivalents . Grantee is not entitled to receive a dividend equivalent with respect to the Performance Shares awarded pursuant to the Program and this Agreement.

6.    Compliance with Exchange Act . If Grantee is subject to Section 16 of the Exchange Act, Performance Shares granted pursuant to this Award are intended to comply with all applicable conditions of