Exhibit 10.51






                               PNM RESOURCES, INC.
                             OFFICER RETENTION PLAN

                          Effective as of July 14, 2003

                           (f.k.a. PNM Resources, Inc.
                           First Restated and Amended
                            Executive Retention Plan)




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                               PNM Resources, Inc.
                             OFFICER Retention Plan


                                  INTRODUCTION
                                  ------------

         Effective December 7, 1998, Public Service Company of New Mexico
established 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 "Company")
and the Plan was renamed the "PNM Resources, Inc. First Restated and Amended
Executive Retention Plan." By this instrument, the Company hereby amends and
restates the Plan in its entirety and changes the name of the Plan to the "PNM
Resources, Inc. Officer Retention Plan."

         The provisions of this Plan document shall be effective as of July 14,
2003 (the "Effective Date"). Except as provided in Section 3.2 (Reversion to
Prior Provisions of the Plan), on and after the Effective Date, this Plan shall
only apply to Officers. Those current employees who were covered by this Plan
prior to the Effective Date and who are not Officers are covered by the PNM
Resources, Inc. Employee Retention Plan on and after the Effective Date.

                                    ARTICLE I
                                    ---------
                                     PURPOSE
                                     -------

         1.1 General. The Company considers it essential to its best interests
and the best interests of its customers and stockholders to foster the
continuous employment of its key management employees. The Company also
recognizes that, as is the case with many publicly held corporations, the
possibility of a Change in Control may exist. The possibility of a Change in
Control, and the uncertainty and the questions which it may raise among
employees, may result in the departure or distraction of key management
employees to the detriment of the Company and its ability to continue to provide
efficient and reliable utility services to its customers.

         The Company has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of the Company's
key management to their assigned duties and to facilitate recruitment of future
employees without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control of the
Company. The Company also has concluded that one of the necessary steps is to
provide competitive and fair compensation and benefits to employees terminated
under these circumstances.

         The purpose of this Plan is to address these concerns for the Company's
Officers, who are the sole participants. A separate plan, the PNM Resources,
Inc. Employee Retention Plan, provides retention benefits for the remaining
members of management and other employees.


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                                   ARTICLE II
                                   ----------
                                   DEFINITIONS
                                   -----------

         2.1 General. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be a term defined in this Section 2.1 or in
the Introduction. The following words and phrases utilized in the Plan with the
initial letter capitalized shall have the meanings set forth below, unless a
clearly different meaning is required by the context in which the word or phrase
is used:


                  (a) "Affiliate" means any member a "controlled group of
corporations" (within the meaning of Section 414(b) of the Code as modified by
Section 415(h) of the Code) that includes the Company as a member of the group;
any member of an "affiliated service group" (within the meaning of Section
414(m)(2) of the Code) that includes the Company as a member of the group; any
member of a group of trades or businesses under common control (within the
meaning of Section 414(c) of the Code as modified by Section 415(h) of the Code)
that includes the Company as a member of the group; and any other entity
required to be aggregated with the Company pursuant to regulations issued by the
United States Treasury Department pursuant to Section 414(o) of the Code.


                  (b) "Base Compensation" means the sum of the (1) Participant's
highest annual salary from the Company in effect during the Protection Period,
(2) any cash award paid as a merit increase in lieu of an increase in base
salary received during the twelve (12) month period immediately preceding the
Participant's Termination Date and (3) the "target" Officer Incentive Plan
award. Unless otherwise stated in the Officer Incentive Plan, the "target" award
is fifty percent (50%) of the Participant's highest maximum award opportunity
under the Officer Incentive Plan during the Protection Period.


                  (c) "Base Salary" means the Participant's highest annual
salary from the Company in effect during the Protection Period.

                  (d) "Board" or "Board of Directors" means the Board of
Directors of the Company. The Board may delegate its responsibilities in
accordance with its standard practices and procedures.


                  (e) "Cause" means, for purposes of termination of a
Participant's employment:

                      (1) The willful and continued failure of a Participant to
substantially perform his or her duties with the Company after written demand
for substantial performance is delivered to the Participant which specifically
identifies the manner in which the Participant has not substantially performed
his or her duties;

                      (2) The willful failure to report to work for more than
thirty (30) days; or

                      (3) The willful engaging by the Participant in conduct
which is demonstrably and materially injurious to the Company, monetarily or
otherwise, including acts of fraud, misappropriation, violence or embezzlement
for personal gain at the expense of the Company, conviction of a felony, or
conviction of a misdemeanor involving immoral acts.

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                           Cause shall not be deemed to exist on the basis of
clauses (1) or (2) if the failure results from such
Participant's incapacity due to verifiable physical or Mental Illness
substantiated by appropriate medical evidence. An act, or failure to act, by a
Participant shall not be deemed "willful" for purposes of clause (1) or (2) if
it is an anticipated or actual failure that occurs after the issuance of a
Notice of Termination by the Participant due to Constructive Termination. An
act, or failure to act, by a Participant shall not be deemed "willful" if done
or omitted to be done by the Participant in good faith and with a reasonable
belief that his or her action was in the best interests of the Company.

                      (f) "Change in Control" means any of the following:

                      (1) Any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 becoming directly or indirectly
the "beneficial owner" as defined in Rule 13d-3 under the Securities Exchange
Act, of securities of the Company representing twenty percent (20%) or more of
the combined voting power of the Company's then outstanding securities unless
such person is, or shall be, a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or a corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the same
proportion as their ownership of stock of the Company;

                      (2) During any period of two (2) consecutive years,
excluding any period prior to the Effective Date of this Plan, the following
individuals ceasing, for any reason, to constitute a majority of the Board of
Directors:

                          (i) directors who were directors at the beginning of
such period; and

                          (ii) any new directors whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds (2/3rds) of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election was previously so approved, such new directors being referred to as
"Approved New Directors."

                      For purposes of determining whether a Change in Control
has occurred pursuant to this clause (2), a director designated by a person who
has entered into an agreement with the Company to effect a transaction described
in clauses (1), (3) or (4) of this section (f) shall not be considered to be an
"Approved New Director."

                      (3) The shareholders of the Company approving a merger or
consolidation of the Company with another company, corporation or subsidiary
that is not affiliated with the Company immediately before the Change in Control
provided, however, that if the merger or consolidation would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent, either by remaining outstanding or by being converted
into voting securities of the surviving entity, at least sixty percent (60%) of


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the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, the
merger or consolidation will be disregarded; or

                      (4) The adoption of a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.

                      Notwithstanding the foregoing, a Change in Control will
not be deemed to have occurred until: (1) any required regulatory approval,
including any final non-appealable regulatory order, has been obtained and (2)
the transaction that would otherwise be considered a Change in Control closes.

                  (g) "Class I Officer" means all employees with the title Chief
Executive Officer (CEO), Executive Vice President (EVP), or Senior Vice
President (SVP).

                  (h) "Class II Officer" means all Officers with the title Vice
President (VP).

                  (i) "Code" means the Internal Revenue Code of 1986, as
amended.

                  (j) "Committee" means the Benefits Governance Committee
appointed by the Company.


                  (k) "Company" means PNM Resources, Inc. As used in this Plan,
"Company" also means any successor to its assets, as described in Sections
2.1(e)(3) and 2.1(f)(4) (Definitions - Change in Control) that assumes and
agrees to perform the Company's obligations hereunder, by operation of law or
otherwise. "Company" may also include any holding company owning the Company or
subsidiary of such holding company, depending on the context of the reference
under this Plan.

                  (l) "Constructive Termination" means, without a Participant's
express written consent, the occurrence after the commencement of the Protection
Period of any of the following circumstances, subject to the exceptions and
modifications below:

                      (1) A reduction in the Participant's Base Salary.

                      (2) A significant degradation in the Participant's
employment status, duties or responsibilities with the Company as compared to
the Participant's employment status, duties or responsibilities immediately
prior to the Protection Period, or a substantial adverse alteration in the
nature or status of his or her responsibilities from those in effect immediately
prior to the Protection Period;

                      (3) The relocation of the Participant's principal office
to a location more than fifty (50) miles from the location of such office during
the Protection Period;

                      (4) The failure of the Company to obtain a timely written
agreement from any successor to assume and agree to perform the Company's
obligations as required by Section 7.1 (Successors). In such case, the date as
of which any such succession becomes effective shall then be deemed the
Termination Date;

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                      (5) Any purported Termination of the Participant's
employment by the Company which is not effected by a Notice of Termination
satisfying the requirements of Section 2.1(p) (Notice of Termination) below; or

                      (6) The requirement, for continued employment with the
Company, that the Participant maintain a residence more than fifty (50) miles
from the location of his or her residence during the Protection Period.

                      A Participant's employment will not be deemed to be
Constructively Terminated if such circumstances are fully corrected prior to the
Termination Date specified in the Notice of Termination.

                      Any purported Termination as set forth in clause (5)
above, which is not effected by a Notice of Termination satisfying the
requirements of Section 2.1(p) (Notice of Termination) below, shall not be
effective.

                      A Participant's right to terminate his or her employment
due to Constructive Termination shall not be affected by his or her incapacity
due to a verifiable physical or Mental Illness substantiated by appropriate
medical evidence.

                      A Participant's continued employment, for a period
exceeding sixty (60) days following an event that constitutes Constructive
Termination shall constitute the Participant's consent to, or a waiver of rights
with respect to, such Constructive Termination event. Consent to or waiver of
any rights with respect to one Constructive Termination event shall not
constitute a waiver of the Participant's rights with respect to any other event
that constitutes Constructive Termination.

                  (m) "Disability" shall have the same meaning as provided in
the Company's long-term disability plan for the provision of long-term
disability benefits.

                  (n) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.

                  (o) "Mental Illness" means any disorder, other than a disorder
induced by alcohol or drug abuse, which impairs the behavior, emotional reaction
or thought process of a person.

                  (p) "Notice of Termination" means a notice from either the
Company or a Participant, as applicable. If the termination is for Cause or
based on Constructive Termination, the notice shall indicate the specific
termination provision in this Plan relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for Termination of
the Participant's employment. However, the Company retains its rights as an at
will employer to terminate any employee at any time and for any reason.

                  (q) "Officer" means any employee of the Company with the title
Chief Executive Officer (CEO), Executive Vice President (EVP), Senior Vice
President (SVP), or Vice President (VP).

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                  (r) "Officer Incentive Plan" means the incentive compensation
plan maintained by the Company for Officers.

                  (s) "Participant" means any Officer of the Company who has
satisfied the eligibility requirements of this Plan.

                  (t) "Protection Period" means the period beginning with the
date on which a Change in Control occurs and ending twenty-four (24) months
after the Change in Control.

                  (u) "Termination Date" means if a Participant's employment is
terminated for any reason, the date specified in the Notice of Termination. In
the case of a termination for Cause, the Termination Date shall be immediately
upon receipt of the Notice of Termination. In the case of involuntary
termination of employment by the Company for any reason other than Cause, death
or Disability, the Termination Date shall not be less than fifteen (15) days
from the date the Notice of Termination is given. In the case of Constructive
Termination, the Termination Date shall be not less than fifteen (15) or more
than sixty (60) days from the date the Notice of Termination is given.

                  (v) "Year of Service" means a twelve (12) month period during
which a Participant performs services for the Company, counting each month as
one-twelfth (1/12th) of a year if the Participant was employed by the Company on
any day of that calendar month. If the Participant's employment with the Company
includes a break in employment, then only the Years of Service in the last
period of employment will be considered Years of Service.

         2.2 Other Defined Terms. In addition to the definitions included in
Section 2.1 (Definitions) and the Introduction, other terms may be defined in
the primary Plan provisions to which they are applicable.

                                  ARTICLE III
                                  -----------
                                  TERM OF PLAN
                                  ------------

         3.1 Term of Plan. The Plan is effective as of the Effective Date and
shall continue in effect until terminated by the Board, subject to the
limitations on termination set forth in Section 9.1 (Amendment and Termination).

         3.2 Reversion to Prior Provisions of the Plan. Pursuant to Section IX
(Amendment) of the Plan document in effect prior to the Effective Date, if a
Change in Control occurs within the twenty-four (24) month period following the
Effective Date, the provisions of the Plan as in effect prior to the Effective
Date will revive and will control with respect to determining retention benefits
with respect to such Change in Control if the benefits provided by the
provisions of the Plan in effect prior to the Effective Date are greater than
the benefits provided under this Plan document.


                                       6
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                                   ARTICLE IV
                                   ----------
                       ELIGIBILITY FOR RETENTION BENEFITS
                       ----------------------------------

         4.1 Eligibility to Participate.

         To be eligible for benefits under this Plan, an employee must be an
Officer of the Company at the beginning of the Protection Period. If a
Participant's employment with the Company terminates for any reason (whether
voluntary or involuntary) before the commencement of the Protection Period, he
or she shall not be eligible to receive the benefits provided by this Plan. In
addition, if a Participant voluntarily terminates his or her employment during
the Protection Period for reasons other than those that constitute Constructive
Termination, or if a Participant dies or becomes Disabled during the Protection
Period, the Participant will not be entitled to receive any benefits under this
Plan.

         4.2 Eligibility for Benefits.

         (a) General Rule. A Participant shall be entitled to the benefits
described in Article V if such Participant's employment is terminated during the
Protection Period by: (1) the Company for any reason other than Cause, death or
Disability; or (2) the Participant due to Constructive Termination following the
Participant's giving of a Notice of Termination to the Company. The requirement
that a Notice of Termination be given by the Participant shall be waived if such
Constructive Termination occurs due to the failure of the Company to obtain a
written agreement from any successor to assume and agree to perform the
Company's obligations under this Plan as required by Section 7.1 (Successors).

         (b) Exceptions. A Participant shall not be entitled to receive the
retention benefits offered by the Plan (with the possible exception of the
Officer Incentive Plan benefit referred to in Section 5.7 (Minimum Officer
Incentive Plan Payout) for Participants who are not terminated), even if the
Participant meets the requirements of paragraph (a), in the following
circumstances:

                      (1) If a Participant's employment is Terminated or
Constructively Terminated during the Protection Period, but such Participant is
immediately re-employed by the surviving entity or the party acquiring the
assets of Company in connection with the Change in Control, then such
Participant shall not be entitled to the benefits under this Plan, unless the
Company fails to obtain a written agreement from any successor to assume and
agree to perform the Company's obligations under the Plan as required by Section
7.1 (Successors).

                      (2) Any Participant who without express authority actively
participates in advancing a Change in Control, whether on their own behalf or on
behalf of someone else, shall not be eligible for the benefits provided by this
Plan. Participants who, by virtue of their position and duties with the Company,
are involved in facilitating an orderly transition to a successor company shall
remain eligible to receive benefits.

                      (3) If a Participant's employment is terminated or
Constructively Terminated as a result of the acquisition of the Company by a
holding company formed in connection with a corporate restructuring initiated by
the Company, and the Participant is immediately re-employed by the Company or an
affiliate of the Company, then the Participant shall not be entitled to benefits
under the Plan.

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                      (4) Transfers between and within the Company and
Affiliates shall not be considered to be a termination of employment or result
in the payment of benefits under this Plan unless the transfer results in a
Constructive Termination.

         4.3 Release Agreement.

             (a) General. In order to receive any retention benefits under this
Plan, the Participant must sign and deliver to the Company a Release Agreement
containing such terms and conditions as are satisfactory to the Company,
including, but not limited to, the release of any and all claims that the
Participant may then have, as of the signing of such release, against the
Company, its employees, officers and directors. The Participant shall generally
have up to forty-five (45) days following the date the Release Agreement is
given to the Participant to sign and return the Release Agreement to the
Company.

             (b) Revocation of the Release Agreement. Within seven (7) calendar
days after delivery of the Release Agreement to the Company by the Participant,
the Participant shall be entitled to revoke the Release Agreement by returning
the signed copy or counterpart original of the Release Agreement to the Company,
which includes the Participant's written signature in a space provided thereon,
indicating his or her decision to revoke the Release Agreement.

             (c) Impact of Revocation. The revocation of a previously signed and
delivered Release Agreement pursuant to the above shall be deemed to constitute
an irrevocable election by the Participant to have declined the election of
retention benefits.

         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 successor change in control severance benefit plans 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
or change in control plans or agreements sponsored by the Company or any
affiliate.

                                   ARTICLE V
                                   ---------
                               RETENTION BENEFITS
                               ------------------

         5.1 Retention Benefits. Participants satisfying the eligibility
requirements set forth in Section 4.2 (Eligibility for Benefits) who sign the
Release Agreement required by Section 4.3 (Release Agreement) shall be entitled
to the following retention benefits:

             (a) Severance Pay. The Company shall pay the Participant, as a
retention benefit, an amount as set forth below based upon the Participant's
highest position held with the Company during the Protection Period:

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        POSITION                             SEVERANCE PAY
        --------                             -------------
        Class I Officer                      3.0 times Base Compensation
        Class II Officer                     2.0 times Base Compensation

             (b) Officer Incentive Plan. Upon termination, a Participant shall
receive a pro-rata award of the Participant's highest target incentive under the
Officer Incentive Plan as in effect during the Protection Period. Unless
otherwise stated in the Officer Incentive Plan, the "target" award is 50% of the
maximum award.

             (c) Medical, Dental and Vision Coverage. The Company shall arrange
to provide medical, dental and vision coverages substantially similar to those
the Participant was receiving prior to the Notice of Termination for a period of
thirty (30) months for Class I Officers and a period of twenty-four (24) months
for Class II Officers. Participant contributions that were required for
participation in the Benefits My Way Plan Program 2 (Medical Program), Program 3
(Dental Program) and Program 14 (Vision Program) will continue to be required
during the continuation period.

             (d) Credit for Non-participation in Benefits My Way Plan, Program 2
(Medical Program). A Participant receiving a credit for not participating in
Program 2 (Medical Program) will continue to receive such credit for the
applicable continuation period.

             (e) Life and Accidental Death and Dismemberment Insurance Benefits.
The Company shall provide life and accidental death and dismemberment insurance
benefits substantially similar to those the Participant was receiving prior to
the Notice of Termination for a period of thirty (30) months for Class I
Officers and a period of twenty-four (24) months for Class II Officers.

             (f) Supplemental Retirement Benefits. As of the Termination Date,
Participants shall receive the following supplemental retirement benefits
payable in one lump sum:

                      (1) The cash equivalent of the present value of the
incremental benefit the Participant would receive under the PNM Resources, Inc.
Employees' Retirement Plan if his or her service and age were increased by the
number of years equal to the multiplier used to determine severance pay in
Section 5.1(a) (Retention Benefits - Severance Pay), above; plus

                      (2) The cash equivalent of the present value of the early
retirement reduction based on the number of years equal to the multiplier used
to determine severance pay in Section 5.1(a) (Retention Benefits - Severance
Pay), above; plus

                      (3) The cash equivalent of Company contributions to the
Participant's Retirement Savings Plan account in the amount of seven and a half
percent (7.5%) of eligible compensation times the period which corresponds to
the number of years equal to the multiplier used to determine severance pay in
Section 5.1(a) (Retention Benefits - Severance Pay), above.


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         5.2 Payment Form and Date. The payments provided for herein shall be
made in the form of a lump sum distribution not later than the fifth (5th) day
following the later of the Participant's Termination Date, or the date of
delivery by the Participant of an executed and unrevoked Release Agreement. If
the amount of such payment cannot be finally determined on or before such day,
the Company shall pay to the Participant on such day an estimate, as determined
in good faith by the Company, of the minimum amount of such payment and shall
pay the remainder of such payments, together with interest at a rate equal to
the applicable federal rate determined pursuant to Section 1274(b)(2)(B)
compounded semiannually (the "Semiannual AFR") as soon as the amount thereof can
be determined but in no event later than one (1) month after the Participant's
Termination Date. If the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a loan by
the Company to the Participant. This loan shall be payable on the tenth (10th)
day after demand by the Company, together with interest at a rate equal to the
Semiannual AFR.

         5.3 Full Funding of Certain Nonqualified Retirement Benefits. As a
condition to the closing of a Change in Control transaction, the Company shall
fully fund the Public Service Company of New Mexico and Paragon Resources, Inc.
Deferred Compensation Trust Agreement and the Trust Agreement between PNM
Resources, Inc. and Fiduciary International of Delaware (commonly known as the
"Rabbi Trusts"), which provide a funding mechanism for certain plans. Such plans
include, but are not limited to the following: the Executive Savings Plan, the
Accelerated Management Performance Plan, the Service Bonus Plan, the OBRA '93
Plan, the Section 415 Plan, and various individual supplemental employee
retirement agreements.

         5.4 Reimbursement of Legal Fees. The Company also shall pay to a
Participant who is entitled to receive benefits pursuant to Section 4.2
(Eligibility for Benefits) reasonable legal fees and expenses incurred as a
result of a termination or Constructive Termination under the terms of this Plan
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination or constructive termination or in seeking to
obtain or enforce any right or benefit provided by this Plan or in connection
with any tax audit or proceeding to the extent attributable to the application
of Section 4999 of the Code to any payment or benefit provided hereunder). Such
payments shall be made at the later of the: (a) applicable twenty-four (24)
month or thirty (30) month period specified above; or (b) within five (5) days
after a Participant's notice of request for payment accompanied with such
evidence of fees and expenses incurred as the Company reasonably may require.

         5.5 Offsetting Benefits. Benefits otherwise receivable by the
Participant pursuant to this Article 5 shall be reduced to the extent comparable
benefits are actually received by the Participant from another employer of the
Participant during the applicable twenty-four (24) or thirty (30) month period
following his or her Termination Date. Any such benefits actually received by
the Participant from another employer shall be reported by the Participant to
the Company.

         5.6 Tax Gross-Up.

                  (a) General Rule. If the "Total Payments" made to a
Participant under this Plan result in an excise tax being imposed pursuant to
Section 4999 of the Code, the Company will provide the Participant with a
"Gross-Up Payment," calculated in accordance with the provisions of this Section
5.6.

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                      (1) Total Payments. Total Payments as used in this Section
5.6, means any payments in the nature of compensation (as defined in Code
Section 280G and the regulations adopted thereunder), made pursuant to this Plan
or otherwise, to or for the Participant's benefit, the receipt of which is
contingent on a "change in the ownership or effective control" of the Company,
or a "change in the ownership of a substantial portion of the assets" of the
Company (as these phrases are defined in Code Section 280G and the regulations
adopted thereunder) and to which Code Section 280G applies.

                      (2) Gross-Up Payment. Except as otherwise noted below, the
Gross-Up Payment will consist of a single lump sum payment and will be in such
an amount that after the Participant has paid (1) the "total presumed federal
and state taxes" and (2) the excise taxes imposed by Code Section 4999 with
respect to the Gross-Up Payment (and any interest or penalties actually
imposed), the Participant retains an amount of the Gross-Up Payment equal to the
remaining excise taxes imposed by Code Section 4999 on the Participant's Total
Payments (calculated before the Gross-Up Payment). For purposes of calculating
the Gross-Up Payment, a Participant's actual federal and state income taxes will
not be used. Instead, the Company will use the Participant's "total presumed
federal and state taxes." For purposes of this Plan, a Participant's "total
presumed federal and state taxes" shall be conclusively calculated using a
combined tax rate equal to the sum of the maximum marginal federal and
applicable state income tax rates and the hospital insurance (or "HI") portion
of F.I.C.A. Based on the rates in effect for 2003 for a New Mexico resident, the
"total presumed federal and state tax rate" is 44.15% (35% federal income tax
rate plus 7.7% New Mexico state income tax rate plus 1.45% HI tax rate). The
state tax rate for the Participant's actual principal place of residence will be
used and no adjustments will be made for the deduction of state taxes on the
federal return, any deduction of federal taxes on a state return, the loss of
itemized deductions or exemptions, or for any other purpose.

                  (b) Calculations. The Company, at its sole expense, will
retain a "Consultant" to advise the Company with respect to the applicability of
any Code Section 4999 excise tax with respect to a Participant's Total Payments.
The Consultant shall be a law firm, a certified public accounting firm, and/or a
firm nationally recognized as providing executive compensation consulting
services. All determinations concerning whether a Gross-Up Payment is required
pursuant to Section 5.6(a) (Tax Gross-up - General Rule) and the amount of any
Gross-Up Payment (as well as any assumptions to be used in making such
determinations) shall be made by the Consultant selected pursuant to this
Section. The Consultant shall provide the Participant and the Company with a
written notice of the amount of the excise taxes that the Participant is
required to pay and the amount of the Gross-Up Payment. The notice from the
Consultant shall include any necessary calculations in support of its
conclusions. All fees and expenses of the Consultant shall be borne by the
Company. Any Gross-Up Payment shall be made by the Company within ten (10)
calendar days after the mailing of such notice.


                  (c) Determination Binding. As a general rule, the Consultant's
determination shall be binding on the Participant and the Company. The
application of the excise tax rules of Code Section 4999, however, is complex

                                       11
<PAGE>

and uncertain and, as a result, the Internal Revenue Service may disagree with
the Consultant concerning the amount, if any, of the excise taxes that are due.
If the Internal Revenue Service determines that excise taxes are due, or that
the amount of the excise taxes that are due is greater than the amount
determined by the Consultant, the Gross-Up Payment will be recalculated by the
Consultant to reflect the actual excise taxes that the Participant is required
to pay (and any related interest and penalties). Any deficiency will then be
paid to the Participant by the Company within fifteen (15) calendar days of the
receipt of the revised calculations from the Consultant. If the Internal Revenue
Service determines that the amount of excise taxes that the Participant paid
exceeds the amount due, the Participant shall return the excess to the Company
(along with any interest paid to the Participant on the overpayment) immediately
upon receipt from the Internal Revenue Service or other taxing authority.

                  (d) Right to Challenge Reserved. The Company reserves the
right to challenge any excise tax determinations made by the Internal Revenue
Service. If the Company agrees to indemnify the Participant from any taxes,
interest and penalties that may be imposed upon the Participant (including any
taxes, interest and penalties on the amounts paid pursuant to the Company's
indemnification agreement), the Participant must cooperate fully with the
Company in connection with any such challenge. The Company shall bear all costs
associated with the challenge of any determination made by the Internal Revenue
Service and the Company shall control all such challenges. The additional
Gross-Up Payments called for by Section 5.6(c) (Tax Gross-Up Determination
Binding) shall not be made until the Company has either exhausted its (or
Participant's) rights to challenge the determination or indicated that it
intends to concede or settle the excise tax determination.

                  (e) Notification. The Participant shall notify the Company in
writing of any claim or determination by the Internal Revenue Service that, if
upheld, would result in the payment of excise taxes in amounts different from
the amount initially specified by the Consultant. Such notice shall be given as
soon as possible but in no event later than fifteen (15) calendar days following
your receipt of notice of the Internal Revenue Service's position.

                  (f) Effect of Repeal or Inapplicability. If the provisions of
Code Sections 280G and 4999 are repealed without succession, then this Section
5.6 shall be of no further force or effect. Moreover, if the provisions of Code
Sections 280G and 4999 do not apply to impose the excise tax on payments made
under this Plan, then the provisions of this Section 5.6 shall not apply.

         5.7 Minimum Officer Incentive Plan Payout. Notwithstanding anything in
this Plan to the contrary, for purposes of the retention benefits provided by
this Plan, a Participant who is not terminated shall receive an annualized award
equal to the Participant's target incentive under the Officer Incentive Plan at
the end of the year in which a Change in Control occurs.

         5.8 Additional Benefits Under Other Plans. Additional benefits may be
provided to Participants upon a Change in Control through other programs
sponsored by the Company.


                                       12
<PAGE>

                                   ARTICLE VI
                                   ----------
                               PLAN ADMINISTRATION
                               -------------------

         6.1 Plan Administration. The Committee shall administer the Plan. The
Committee shall be the "Named Fiduciary" for purposes of ERISA and shall have
the authority to control, interpret and construe the Plan and manage the
operations thereof. Any such interpretation and construction of any provisions
of this Plan by the Committee shall be final. The Committee shall, in addition
to the foregoing, exercise such other powers and perform such other duties as it
may deem advisable in the administration of the Plan. The Committee may delegate
some (or all) of its authority hereunder to the Benefits Department. The
Committee also may engage agents and obtain other assistance from the Company,
including Company counsel. The Committee shall not be responsible for any action
taken or not taken on the advice of legal counsel. The Committee is given
specific authority to allocate and revoke responsibilities among its members or
designees. When the Committee has allocated authority pursuant to the foregoing,
the Committee shall not be liable for the acts or omissions of the party to whom
such responsibility has been allocated, except to the extent provided by law.

         6.2 Claims Procedures.

             (a) Initial Claim. A claim for benefits under this Plan must be
submitted to the senior human resources office of the Company (the "Human
Resources officer"). If the claimant is the Human Resources Officer, a claim for
benefits under this Plan must b submitted to President o the Company and the
term "Human Resources Officer" as used in paragraph (1) below shall be replaced
with the term "President."

                 (1) Notice of Decision. Written notice of the disposition of
the claim shall be furnished to the claimant within a reasonable period of time,
but not later than ninety (90) days after receipt of the claim by the Human
Resources Officer, unless the Human Resources Officer determines that special
circumstances require an extension of time for processing the claim. If the
Human Resources Officer determines that an extension is required, written notice
(including an explanation of the special circumstances requiring an extension
and the date by which the Human Resources Officer expects to render the benefits
determination) shall be furnished to the claimant prior to the termination of
the original ninety (90) day period. In no event shall such extension exceed a
period of ninety (90) days from the end of the initial ninety (90) day period.
If the claim is denied, the notice required pursuant to this Section shall set
forth the following:

                      (i) The specific reason or reasons for the adverse
determination;

                      (ii) Special reference to the specific Plan provisions
upon which the determination is based;

                      (iii) A description of any additional material or
information necessary for the claimant to perfect the claim and an explanation
of why such material or information is necessary; and


                                       13
<PAGE>

                      (iv) An explanation of the Plan's appeal procedure and the
time limits applicable to an appeal, including a statement of the claimant's
right to bring a civil action under Section 502(a) of ERISA.

             (b) Appeal Procedures. Every claimant shall have the right to
appeal an adverse benefits determination to the Committee (including, but not
limited to, whether the Participant's termination was for Cause). Such appeal
may be accomplished by a written notice of appeal filed with the Committee
within sixty (60) days after receipt by the claimant of written notification of
the adverse benefits determination. Claimants shall have the opportunity to
submit written comments, documents, records, and other information relating to
the claim for benefits. Claimants will be provided, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant to the claimant's claim for benefits, such relevance to be
determined in accordance with Section 6.2(c) (Claims Procedures - Definition of
Relevant). The appeal shall take into account all comments, documents, records,
and other information submitted by claimant relating to the claim, without
regard to whether such information was submitted or considered in the initial
benefit determination.

                  (1) Notice of Decision. Notice of a decision on appeal shall
be furnished to the claimant within a reasonable period of time, but not later
than sixty (60) days after receipt of the appeal by the Committee unless the
Committee determines that special circumstances (such as the need to hold a
hearing if the Committee determines that a hearing is required) require an
extension of time for processing the claim. If the Committee determines that an
extension is required, written notice (including an explanation of the special
circumstances requiring an extension and the date by which the Committee expects
to render the benefits determination) shall be furnished to the claimant prior
to the termination of the original sixty (60) day period. In no event shall such
extension exceed a period of sixty (60) days from the end of the initial sixty
(60) day period. The notice required by the first sentence of this Section shall
be in writing, shall be set forth in a manner calculated to be understood by the
claimant and, in the case of an adverse benefit determination, shall set forth
the following:

                      (i) The specific reason or reasons for the adverse
determination;

                      (ii) Reference to the specific Plan provisions upon which
the determination is based;

                      (iii) A statement that the claimant is entitled to
receive, upon request and free of charge, reasonable access to, and copies of,
all documents, records, and other information relevant to the claimant's claim
for benefits, such relevance to be determined in accordance with Section 6.2(c)
(Claims Procedures - Definition of Relevant), below; and

                      (iv) An explanation of the claimant's right to bring a
civil action under Section 502(a) of ERISA following an adverse benefit
determination on appeal.

             (c) Definition of Relevant. For purposes of this Section, a
document, or other information shall be considered "relevant" to the claimant's
claim if such document, record or other information:


                                       14
<PAGE>

                 (1) Was relied upon in making the benefit determination;

                 (2) Was submitted, considered or generated in the course of
making the benefit determination, without regard to whether such document,
record or other information was relied upon in making the benefit determination;
or

                 (3) Demonstrates compliance with the administrative processes
and safeguards required pursuant to this Section 6.2 on making the benefit
determination.

             (d) Decisions Final; Procedures Mandatory. To the extent permitted
by law, a decision on review or appeal shall be binding and conclusive upon all
persons whomsoever. To the extent permitted by law, completion of the claims
procedures described in this Section shall be a mandatory precondition that must
be complied with prior to commencement of a legal or equitable action in
connection with the Plan by a person claiming rights under the Plan. The
Committee may, in its sole discretion, waive these procedures as a mandatory
precondition to such an action.

             (e) Time For Filing Legal Or Equitable Action. Any legal or
equitable action filed in connection with the Plan by a person claiming rights
under the Plan must be commenced not later than the earlier of: (1) the shortest
applicable statute of limitations provided by law; or (2) two (2) years from the
date the written copy of the Committee's decision on review is delivered to the
claimant in accordance with Section 6.2(b)(1)(i) (Claims Procedures - Appeal
Procedures - Notice of Decision).

                                  ARTICLE VII
                                  -----------
                          SUCCESSORS, BINDING AGREEMENT
                          -----------------------------

         7.1 Successors. The Company will negotiate to require any independent
successor to all or substantially all of the assets of the Company to provide
written confirmation, within thirty (30) days of the effective date of the
Change in Control, of its agreement to assume and perform the Company's
obligations pursuant to this Plan.

         7.2 Binding Agreement. Subject to the right of the Company to amend or
terminate this Plan, and the Committee's right to interpret this Plan, this Plan
shall be for the benefit of and be enforceable by, a Participant's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.

                                  ARTICLE VIII
                                  ------------
                                     NOTICE
                                     ------

         8.1 General. For the purpose of this Plan, and except as specifically
set forth herein, notices and all other communications provided for in the Plan
shall be in writing and shall be deemed to have been duly given when
hand-delivered or mailed by United States certified mail, return receipt
requested, postage prepaid, addressed to the Participant at his or her last
known address, and to the Company at Alvarado Square, Albuquerque, New Mexico,
87158, provided that all notices to the Company shall be directed to the
attention of the Secretary of the Company; or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.

                                       15
<PAGE>

                                   ARTICLE IX
                                   ----------
                            AMENDMENT AND TERMINATION
                            -------------------------

         9.1 Amendment and Termination. The Plan may be amended, in whole or in
part, or terminated at any time, subject to the following exceptions:

             (a) No amendment or termination of this Plan shall impair or
abridge the obligations of the Company already incurred.

             (b) No amendment or termination of this Plan shall affect the
rights of a Participant who terminated employment before the effective date of
such amendment or termination and who subsequently satisfied the eligibility
provisions of this Plan.

             (c) If a Change in Control occurs within twenty-four (24) months
following the later of the adoption or effective date of the amendment or
termination of the Plan, or during the Protection Period triggered by that
Change in Control, the amendment or termination shall be disregarded and this
Plan will revive and continue for the Protection Period to the extent that such
amendment or termination impairs or abridges the rights or benefits of an
employee of the Company who was a Participant upon the effective date of such
Plan amendment or termination.

             (d) If the Protection Period has begun, the Plan shall continue and
may not be terminated during the Protection Period.

             (e) Notwithstanding the foregoing, the Plan may be amended at will
at any time and from time to time by the Company to reflect changes necessary
due to revisions to, or interpretations of: (1) ERISA, as amended; (2) Code
Sections 280G or 4999; or (3) any other provision of applicable state or federal
law.

                                   ARTICLE X
                                   ---------
                                  MISCELLANEOUS
                                  -------------

             10.1 Governing Law. The laws of the State of New Mexico shall
govern the validity, interpretation, construction and performance of this Plan,
except to the extent preempted by federal law.

             10.2 Withholding. Any payments provided for hereunder shall be paid
subject to any applicable withholding required under federal, state or local
law.

             10.3 No Right of Assignment. Neither a Participant nor any person
taking on behalf of a Participant may anticipate, assign or alienate (either by
law or equity) any benefit provided under the Plan and the Company shall not
recognize any such anticipation, assignment or alienation. Furthermore, to the
extent permitted by law, a benefit under the Plan is not subject to attachment,
garnishment, levy, execution or other legal or equitable process.

             10.4 Survival of Rights. In addition to the limitations on
termination of this Plan set forth in Section 9.1 (Amendment and Termination),
any obligations of the Company to make payments that have been due to
Participants who have, at the time of expiration of the Plan, satisfied the
eligibility requirements pursuant to Articles 4 and 5 above during the term
hereof, shall survive the termination of this Plan.

                                       16
<PAGE>


             10.5 No Employment Contract. Notwithstanding anything to the
contrary contained in this Plan, by the execution of this Plan the Company does
not intend to change the employment-at-will relationship with any of its
employees. Instead, the Company retains its absolute right to terminate any
employee at any time.

             10.6 Mitigation of Benefits. A Participant shall not be required to
mitigate the amount of payment provided for in Article 5 by seeking other
employment or otherwise, nor, except as specifically provided in Article 5,
shall the amount of any payment or benefit provided for in Article 5 be reduced
by: (a) any compensation earned by the Participant as the result of employment
by another employer; (b) by retirement benefits; or (c) offsets against any
amount claimed to be owed by the Participant to the Company.

             10.7 Service of Process. The Secretary of the Company shall be the
agent for service of process in matters relating to this Plan.

             10.8 Headings. The headings and subheadings in this Plan are
inserted for convenience and reference only and are not to be used in construing
this Plan or any provision hereof.

             10.9 Gender and Number. Where the context so requires, words in the
masculine gender shall include the feminine and neutral genders, the plural
shall include the singular, and the singular shall include the plural.

             10.10 ERISA Plan. This Plan shall be interpreted as, and is
intended to qualify as, a severance pay plan under ERISA, and therefore does not
constitute an employee pension benefit plan pursuant to Section 3(2) of ERISA.

             10.11 Validity. The invalidity or unenforceability of any provision
of this Plan shall not affect the validity or enforceability of any other
provision of this Plan, which shall remain in full force and effect.

         IN WITNESS WHEREOF, the Company has caused this Plan document to be
executed by its duly authorized representative on this _21st__ day of
_October__, 2003.

                                  PNM RESOURCES, INC.


                                  By: ___/s/  Alice A. Cobb_____________________

                                  Its:___Senior Vice President,_________________

                                      ___People Services & Development__________



                                       17
<PAGE>



                                TABLE OF CONTENTS


                                    ARTICLE I
                                     PURPOSE

1.1      GENERAL...........................................................1

                                   ARTICLE II
                                   DEFINITIONS

2.1      GENERAL...........................................................2

2.2      OTHER DEFINED TERMS...............................................6

                                   ARTICLE III
                                  TERM OF PLAN

3.1      TERM OF PLAN......................................................6

3.2      REVERSION TO PRIOR PROVISIONS OF THE PLAN.........................6

                                   ARTICLE IV
                       ELIGIBILITY FOR RETENTION BENEFITS

4.1      ELIGIBILITY TO PARTICIPATE........................................7

4.2      ELIGIBILITY FOR BENEFITS..........................................7

4.3      RELEASE AGREEMENT.................................................8

4.4      NO DUPLICATION OF BENEFITS........................................8

                                    ARTICLE V
                               RETENTION BENEFITS

5.1      RETENTION BENEFITS................................................8

5.2      PAYMENT FORM AND DATE............................................10

5.3      FULL FUNDING OF CERTAIN NONQUALIFIED RETIREMENT BENEFITS.........10

5.4      REIMBURSEMENT OF LEGAL FEES......................................10

5.5      OFFSETTING BENEFITS..............................................10

5.6      TAX GROSS-UP.....................................................10

5.7      MINIMUM OFFICER INCENTIVE PLAN PAYOUT............................12

5.8      ADDITIONAL BENEFITS UNDER OTHER PLANS............................12

                                   ARTICLE VI
                               PLAN ADMINISTRATION

6.1      PLAN ADMINISTRATION..............................................13

6.2      CLAIMS PROCEDURES................................................13


                                       i
<PAGE>

                                   ARTICLE VII
                          SUCCESSORS, BINDING AGREEMENT

                                   (continued)


7.1      SUCCESSORS.......................................................15

7.2      BINDING AGREEMENT................................................15

                                  ARTICLE VIII
                                     NOTICE

8.1      GENERAL..........................................................15

                                   ARTICLE IX
                            AMENDMENT AND TERMINATION

9.1      AMENDMENT AND TERMINATION........................................16

                                    ARTICLE X
                                  MISCELLANEOUS

10.1     GOVERNING LAW....................................................16

10.2     WITHHOLDING......................................................16

10.3     NO RIGHT OF ASSIGNMENT...........................................16

10.4     SURVIVAL OF RIGHTS...............................................16

10.5     NO EMPLOYMENT CONTRACT...........................................17

10.6     MITIGATION OF BENEFITS...........................................17

10.7     SERVICE OF PROCESS...............................................17

10.8     HEADINGS.........................................................17

10.9     GENDER AND NUMBER................................................17

10.10    ERISA PLAN.......................................................17

10.11    VALIDITY.........................................................17



                                       ii