EXECUTIVE TRANSITION AGREEMENT

This Executive Transition Agreement (the “Agreement”) is entered into on this 28th day of July, 2009, by and between PNMR Services Company (the “Company”), PNM Resources, Inc. (“PNM Resources”) and Patrick T. Ortiz (the “Executive”).

A.           Executive currently is employed by Company and serves as the Senior Vice President, General Counsel and Secretary of PNM Resources, Company’s parent organization, and its wholly owned affiliates.

B.           Executive has announced his intention to retire and to resign from his active employment with Company and his position as an officer of PNM Resources, effective as of the close of business on December 31, 2009 (the “Resignation Date”), or other such date as may be agreed to by the parties.

C.           In order to provide for the smooth transition of Executive’s duties and responsibilities to a successor, and to secure Executive’s future services in the capacity described below, Company, PNM Resources and Executive are entering into this Executive Transition Agreement as of the date first set forth above.

NOW, THEREFORE, Company, PNM Resources and Executive agree as follows:

1.        Continued Employment .  Executive shall continue to serve Company and PNM Resources as the Senior Vice President, General Counsel and Secretary of PNM Resources until the earlier of (a) the close of business on December 31, 2009 or (b) the employment effective date of Executive’s successor.  If Executive’s successor commences employment prior to December 31, 2009, it is anticipated that Executive’s title will become Senior Vice President and Chief Legal Officer; provided, however, that upon request of the Company if necessary to facilitate the hiring of a suitable successor, Executive shall become the Senior Vice President, Chief Regulatory Counsel of PNM Resources, and suitable office arrangements shall be made.  Executive’s total compensation shall not be reduced as a result of a change in title or job responsibilities.  If Executive’s successor is appointed prior to December 31, 2009, Executive, in his new role, will work with his successor in order to accomplish a smooth transition of his duties and responsibilities.

2.        Resignation .  Effective as of the close of business on December 31, 2009, Executive hereby resigns as an officer of PNM Resources and from his employment with Company.  Executive’s resignation applies and extends to any and all positions he may hold with any subsidiary or division of Company or PNM Resources and any related boards as well as from any other positions Executive may hold by virtue of Executive’s employment with Company or his position as an officer of PNM Resources.  Company and PNM Resources accept Executive’s resignation.

3.        Retainer Agreement .  Effective as of January 1, 2010, Executive and Company will enter into a “Retainer Agreement” pursuant to which Executive will agree to provide legal services to Company during calendar year 2010.  The Retainer Agreement may be extended from year to year upon the mutual agreement of Company and Executive.  As provided in Section 6, the Retainer Agreement will become void if Executive fails to sign the Release Agreement attached hereto as Exhibit A within the time periods described in Exhibit A.

4.         SERP .  Executive and Company have entered into a Supplemental Employee Retirement Agreement (the “SERP”), which was amended and restated effective as of January 1, 2009 by a document executed on October 20, 2008.  As provided in Section 9, the SERP shall continue in full force and effect following the execution of this Agreement.  Executive does acknowledge, however, that since he is voluntarily resigning from his employment in connection with his retirement, and since the new role described in Section 1, above, is solely for the purpose of his transition into retirement and the Company’s transition to his successor (and therefore not a Constructive Termination), he is not entitled to receive any payments pursuant to Sections 6 or 7 of the SERP.  Executive also acknowledges that since he will continue to provide services to Company as an independent attorney pursuant to the Retainer Agreement, he will not be considered to have incurred a “Separation from Service” within the meaning of Section 9(g)(2) of the SERP.  Since Executive will not be deemed to have incurred a Separation from Service, he will not be entitled to begin receiving a supplemental retirement benefit pursuant to Section 9 of the SERP until he is considered to have incurred a Separation from Service.  Executive also acknowledges that his payments may be further delayed in accordance with Section 9 of the SERP if Executive is a “Specified Employee” (as defined in the SERP) at the time of his Separation from Service.

5.        Notice of Executive’s Rights .  Various state and federal laws prohibit employment discrimination based on age, sex, race, color, national origin, religion, ancestry, sexual orientation, gender identification, physical or mental handicap and disability, mental condition or veteran status.  These laws are enforced through state, federal and local agencies, including the Equal Employment Opportunity Commission (EEOC) and the Department of Labor.  Pursuant to Section 6, Executive will be required to release any claims Executive may have under these laws as well as any other claims Executive may have by executing the Release Agreement attached hereto as Exhibit A.  Executive should carefully consider the Release Agreement and thoroughly understand its effect before signing this Agreement or the Release Agreement.  Executive is strongly encouraged to consult with his attorney before signing this Agreement or the Release Agreement.  Executive understands that the decision to consult with an attorney is solely the decision of Executive.

6.        Release .  In consideration of the Retainer Agreement referred to in Section 3, Executive agrees to execute the Release Agreement attached hereto as Exhibit A.  The Release Agreement shall be executed by Executive between January 1 and February 15, 2010.  Executive will have the opportunity to continue to review and consider the execution of the Release Agreement between the date of this Agreement and February 15, 2010.  Executive may not sign the Release Agreement prior to January 1, 2010.  Executive will be allowed to revoke the Release Agreement within seven (7) days after signing it.  Revocation may be made by returning a copy of the Release Agreement along with the Employee Revocation Form attached to the Release Agreement as Exhibit 1.  For any revocation to be effective, the Release Agreement and

the Employee Revocation Form must be received no later than the close of business on the seventh (7th) day after Executive signs the Release Agreement.  If Executive fails to sign the Release Agreement by February 15, 2010, or if Executive revokes the Release Agreement after signing it, the Retainer Agreement referred to in Section 3 shall be void.

7.         Non-Disclosure, Confidentiality And Non-Compete .

(a)     Confidential Information and Company Materials .

                                          (1)     As an officer of PNM Resources and an executive level employee of Company, Executive has had access to certain “Confidential and Proprietary Information” regarding products, services, marketing, customers, business ideas and strategies and research.  Executive understands and expressly acknowledges that Company possesses and will continue to possess Confidential and Proprietary Information which is important to its business.  For purposes of this Agreement, “Confidential and Proprietary Information” is information that was or will be developed, created, or discovered by or on behalf of Company, or which became or will become known by, or was, is or will be conveyed to Company, which has commercial value in Company’s business.  The term “Confidential and Proprietary Information” includes, but is not limited to, any information or materials that Executive is required to keep confidential pursuant to the  New Mexico Rules of Professional Conduct applicable to Executive as General Counsel of PNM Resources as well as any other information about trade secrets, products, services, computer programs, designs, customers, technology, ideas, marketing and marketing efforts, know how, processes, compositions, data, techniques, improvements, inventions (whether patentable or not), works of authorship, business and product development plans, administration of programs and products, the salaries and terms of compensation of other employees, customers and other information concerning Company’s actual or anticipated business, pricing, studies, information and analyses, Company contracts and fee arrangements, research or development, and/or any information which is generated or received in confidence by or for Company from any other person.

                                          (2)     Executive acknowledges that the Confidential and Proprietary Information belongs solely to Company, and that use of the Confidential and Proprietary Information by any person or entity other than Company would be damaging to Company.

                                          (3)      Executive understands and expressly acknowledges that Company possesses and will continue to possess “Company Materials” which are important to its business. For purposes of this Agreement, “Company Materials” include documents or other media or tangible items that contain or embody Confidential and Proprietary Information or any other information concerning the business, operations or future/strategic plans of Company, whether such documents have been prepared by Executive or by others, including but not limited to portions of Company’s customer and client lists which ha