TNP Enterprises, Inc.
                     Incentive Compensation Award Agreement


   This  Agreement is dated and effective as of January 1, 1996,  and is between
________________________ ("Participant") and TNP Enterprises, Inc. ("Company").

                                    RECITALS

     On March 6, 1995, a Committee appointed by and having full authority to act
on behalf of the Board of Directors of the Company adopted the TNP  Enterprises,
Inc.  Management  Short-Term  Incentive Plan (the "Management Plan") and the TNP
Enterprises, Inc. Equity Incentive Plan (the "Equity Plan"), and the Equity Plan
later was approved by the Company's shareholders.

     On February 27, 1996, the Committee established the performance goals to be
achieved to earn incentive compensation under the Management Plan and the Equity
Plan (collectively, the "Plans").

     The  Participant has been selected by the Committee to receive awards under
the Plans  subject to the terms of the Plans and the  Participant  signing  this
Agreement.

     In  consideration  of the Recitals and the mutual  covenants and agreements
below,  the  Participant  and the  Company  desire  to and by  their  respective
signatures do hereby agree as follows:

                                    AGREEMENT

                                Short-Term Awards

     Short-Term  Cash Award:  Participant is hereby awarded ____% of the control
point established for  Participant's  salary range as of February 27, 1996, as a
cash award subject to the 1996 goals for the  Management  Plan being met as such
goals are set forth on Exhibit A attached  hereto and made a part hereof for all
purposes.  Such award may be adjusted  between  50% and 150% on a straight  line
basis  depending upon where the  performance  related to each goal occurs within
the  range  established  for  each  goal.  No  award  payment  will be made  for
performance below the established  minimum for each goal set forth in Exhibit A.
The cash award will be paid no later than the end of the first quarter following
the end of the Management Plan year.

     No portion of the cash award is due or payable  regardless  of whether  any
Corporate Operational Goal is met unless the minimum Corporate Financial Goal is
met. Further,  the Committee reserves the right to make year-end  adjustments to
account for any unusual or unforeseen  events that impact the  attainability  of
any goal.

     Short-Term Stock Award:  Participant is hereby awarded ____% of the control
point established for  Participant's  salary range as of February 27, 1996, as a
stock  award  subject to the 1996  goals for the  Equity  Plan being met as such
goals are set forth on  Exhibit A. Such award may be  adjusted  between  50% and
150% on a straight line basis  depending upon where the  performance  related to
each goal occurs  within the range  established  for each goal. No award payment
will be made for  performance  below the  established  minimum for each goal set
forth in  Exhibit  A. The stock  award will be paid no later than the end of the
first quarter following the end of the Equity Plan year.

     No portion of the stock award is due or payable  regardless  of whether any
Corporate Operational Goal is met unless the minimum Corporate Financial Goal is
met. Further,  the Committee reserves the right to make year-end  adjustments to
account for any unusual or unforeseen  events that impact the  attainability  of
any goal.

     Restrictions  on Sale of Stock:  The  short-term  stock award is restricted
from being sold for a two-year period following the end of _______________  (the
"Restriction  Period"). Any stock issued as a short-term stock award will bear a
legend  stating any applicable  restrictions.  Such stock award is rendered null
and void and of no effect in the event that  Participant  attempts  to sell such
stock during the Restriction Period.

     Notwithstanding  the foregoing,  all  restrictions on the sale of the stock
lapse and said stock may be freely sold or transferred if during the Restriction
Period  one of the  following  should  occur:  a.  Participant's  employment  is
terminated  for any reason  other than cause.  b. A Change of Control  occurs as
that term is defined in the Equity  Plan.  (Participant  should be  cognizant of
Rule 16(b) to the extent it may apply.)

     Allocation of Awards:  Total  amounts of  short-term  cash and stock awards
will be allocated _____% to the Corporate Financial Goal, ____% to the Corporate
Operational  Goals,  and ____% to the Individual  Performance  Goal. The amounts
allocated  to each set of goals will be due and payable  only to the extent each
such  goal is met as set  forth  in  Exhibit  A.  The  amount  allocated  to the
Corporate  Operational Goal will be further allocated to each of the established
operational  goals in the manner set forth on Exhibit B which is attached hereto
and made a part hereof for all purposes.

     To the extent that any amount of the total short-term award is allocated to
the Individual Performance Goal, such amount will be due and payable only to the
extent the performance of the Participant,  as determined by the Chief Executive
Officer  in his sole  discretion  (or,  if  Participant  is the Chief  Executive
Officer,  then  as  determined  by  the  Compensation   Committee  in  its  sole
discretion),  falls within the  Performance  Rating range set forth in Exhibit C
which is attached hereto and made a part hereof for all purposes.

                                Long -Term Award

     Long-Term  Stock Award:  Participant is hereby awarded ____% of the control
point established for  Participant's  salary range as of February 27, 1996, as a
stock award subject to the 1996 goals for long-term awards under the Equity Plan
being met as such goals are set forth on  Exhibit D  attached  hereto and made a
part hereof for all purposes. Such award may be adjusted between 50% and 150% on
a straight line basis depending upon where the performance  related to each goal
occurs within the range established for each goal. No award payment will be made
for performance below the established minimum for each goal set forth in Exhibit
D.  Any  stock  award  earned  will be paid no later  than the end of the  first
quarter  following the end of the 1996  long-term  award Equity Plan cycle.  The
1996  long-term  Equity  Plan  cycle will be a period of three  years  beginning
January 1, 1996.

     Allocation of Award:  The total amount of any  long-term  stock award under
the  Equity  Plan  will be  allocated  50% to the  goal  established  for  Total
Shareholder  Return in comparison to the S&P 500 and 50% to the goal established
for Total  Shareholder  Return in comparison to the S&P Electric  Utility Group.
The amount  allocated  to each goal will be due and  payable  only to the extent
each such goal is met as set forth in Exhibit D.

                                  General Terms

     Dividend  Equivalents:  Participant will have the right to receive,  at the
time any stock awards are paid,  cash or shares as determined in the Committee's
discretion  at the time the award is paid,  in an  amount  equal in value to the
dividends  declared  on each  share on each  record  date  occurring  during the
applicable period of performance established by the Equity Plan.

     Proration of Awards:  If a  Participant's  employment is terminated  due to
retirement,  death,  or  disability  during a plan year or the 1996  Equity Plan
long-term award cycle,  any award earned will be prorated based on the number of
months of  participation  within the plan year or long-term  cycle. The prorated
award will be based upon performance determined at year or cycle end and will be
paid at the same time as all other awards are paid under the Plans.

     If employment is terminated for any reason other than retirement, death, or
disability,  any award  opportunity  granted  under the Plans will be forfeited,
provided that the Committee may waive such  forfeiture  upon the Chief Executive
Officer's recommendation.

     Valuation of Shares:  Shares issued under the Equity Plan will be valued by
averaging  the high and low prices of the stock on the first  trading day of the
Equity Plan year or three-year cycle, as applicable. Shares issued as the result
of the Committee's  determination to pay dividends in stock will be valued as of
the ex-dividend date for each dividend declaration during the Equity Plan year.

     Tax Treatment:  Payments under the Plans are taxable to the  Participant in
the year of  receipt.  The  Company  will have the right to deduct any  federal,
state,  or local taxes  required by law to be  withheld.  In regard to any stock
award made hereunder, a Participant,  at Participant's option, may elect to have
the Company  withhold  sufficient  stock to pay the taxes then due on such stock
award.

     Employment Status: This Agreement does not affect  Participant's  status as
an employee at will and either party may terminate  Participant's  employment at
any time with or without cause.

     Provisions   Consistent  with  Plans:  This  Agreement  will  be  construed
consistent with the provisions of the Plans. If there is a conflict  between the
provisions  of this  Agreement  and either of the Plans,  the  provisions of the
applicable  plan  control.  The  Committee  reserves  the  right,  in  its  sole
discretion,  to  interpret  the  terms  and  conditions  of and to  resolve  any
disagreements or disputes  concerning any award, this Agreement,  and the Plans,
and its  decision is binding  upon all parties.  Unless  otherwise  noted to the
contrary, the definition of terms in the Plans also apply in this Agreement.

     Attorney  Fees:  If  either  party is  required  to bring a cause of action
against the other to enforce the terms of this  Agreement,  then such party,  to
the  extent  such  party is  successful  in such  action,  will be  entitled  to
reasonable attorney fees from the other party.

     Governing  Law: This Agreement will be governed by the laws of the State of
Texas. Venue for any cause of action will be
Tarrant County, Texas.


TNP Enterprises, Inc.                       Participant:

By:______________________                   __________________________




<PAGE>


                                                                    EXHIBIT A


                     GOALS FOR MANAGEMENT PLAN & EQUITY PLAN
                                SHORT-TERM AWARDS


                                    Minimum          Target            Maximum

         CORPORATE FINANCIAL:
         1. Earnings Per Share


         CORPORATE OPERATIONAL:
         2. Customer Satisfaction

         3. O&M Costs/KWH Sales
              (cents/KWH)

         4. Equivalent Forced
            Outage Rate

         5.  Injury Frequency
             Ratio

         6. System Reliability

            a. Minutes of Outage/
                Customers Served

            b. Number of Customers
                Interrupted/
                Customers Served



<PAGE>


                                                                  EXHIBIT B

                       Allocation of Short-Term Awards for
                          Management Plan & Equity Plan



         CORPORATE OPERATIONAL:

         1.    Customer Satisfaction

         2.    O&M Costs/KWH Sales
               (cents/KWH)

         3.    Equivalent Forced
               Outage Rate

         4.    Injury Frequency
               Ratio

         5.     System Reliability
               a.  Minutes of Outage/
                      Customers Served
                 b. Number of Customers
                     Interrupted/
                     Customers Served



1.   Columns  should  total  to__%  and __%,  respectively.

2.   Note:  only the  appropriate  % column  will appear in the Exhibit for each
     individual.



<PAGE>



                                                           EXHIBIT C

                          INDIVIDUAL PERFORMANCE GOALS

<TABLE>
<CAPTION>

------- -------------------------------------------------------------- ----------------------------------------------
        PERFORMANCE RATING                                                INDIVIDUAL PERFORMANCE AS A % OF TARGET
                                                                                          AWARDS
------- -------------------------------------------------------------- ----------------------------------------------
------- -------------------------------------------------------------- ----------------------------------------------
<S>     <C>                                                                                <C>                        
4 -     Leading Edge - Performance  is the very best we can expect of
        an  employee  in  a  given   position.   The   employee   has
        consistently   performed  far  beyond  expectations  and  has                      150%
        demonstrated  outstanding skill,  knowledge and initiative in
        the   job.   This   rating   recognizes   truly   outstanding
        contribution  to  the  organization,   within  and  sometimes
        outside  the  scope of the  position.  The  individual's  job
        accomplishments  have made significant  impact on the mission
        of the department and company.
------- -------------------------------------------------------------- ----------------------------------------------
------- -------------------------------------------------------------- ----------------------------------------------
3 -     Out  in  Front  -  The  employee  consistently   demonstrates
        --------------
        performance  at levels  which exceed  position  requirements.
        The  employee  can be  counted  on to  achieve  high  quality
        results on even the most  difficult  and complex parts of the                      125%
        job. The employee  does advanced  planning,  anticipates  problems,  and
        takes  appropriate  action.  Each work  assignment  or  project  is done
        thoroughly and completely.
------- -------------------------------------------------------------- ----------------------------------------------
------- -------------------------------------------------------------- ----------------------------------------------
2 -     With  the  Pack  -  Performance   is  full,   complete,   and
        satisfactory.  It is what is  expected  of a fully  qualified
        and  experienced  person  in  the  assigned  position.   This
        rating  indicates no serious  deficiency in any major element                      100%
        of  the  job.   The   employee   works   with  a  minimum  of
        supervision.  This  is a  good  rating;  it  does  not  imply
        mediocrity.
------- -------------------------------------------------------------- ----------------------------------------------
------- -------------------------------------------------------------- ----------------------------------------------
1 -     Needs to Improve -  Performance  is  generally  satisfactory,
        but sometimes  falls below an acceptable  performance  level.
        Close  supervision and coaching are required  particularly in
        areas   where   results   have   been   insufficient.    Some                       50%
        improvement is necessary to meet job requirements.
------- -------------------------------------------------------------- ----------------------------------------------
------- -------------------------------------------------------------- ----------------------------------------------
0 -     Doesn't  Get  It  -   Performance   clearly   fails  to  meet
        requirements  and serious  performance  deficiencies  exists.
        Immediate  corrective  action  must be taken by the  employee
        and supervisor to improve the  performance  level. An overall                       0%
                                                              -------
        rating at this level  indicates  that further  employment  is
        contingent  upon immediate and significant  improvement.  The
        employee should consult with his/her supervisor to discuss  alternatives
        and actions required.
------- -------------------------------------------------------------- ----------------------------------------------

</TABLE>



<PAGE>


                                                                     EXHIBIT D

                           Long-Term Stock Award Goals

                        TNPE vs. S&P 500 (__% weighting)












               TNPE vs. S&P Electric Utility Index (__% weighting)














<PAGE>



                           SCHEDULE TO EXHIBIT 10(SS)

      Executives with 1995 and 1996 Incentive Compensation Award Agreements


Employee Name

Kevern Joyce Jack Chambers  Manjit Cheema Douglas Hobbs Allan Davis Larry Dillon
Ralph  Johnson  Dennis Cash Mike  Blanchard  John  Montgomery  Randy Ownby Larry
Gunderson Kristi Cheema Mark Wilson Gary Spooner Pat Bridges Melissa Davis