EXHIBIT 10.52







                               PNM RESOURCES, INC.
                         EXECUTIVE SPENDING ACCOUNT PLAN

                           Effective December 1, 2002







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                                TABLE OF CONTENTS

                                                                          Page


INTRODUCTION................................................................1

DEFINED TERMS...............................................................1

GENERAL INFORMATION ABOUT THE PLAN..........................................5

ELIGIBILITY AND PARTICIPATION REQUIREMENTS..................................6

SUMMARY OF PLAN BENEFITS....................................................8

HOW THE PLAN IS ADMINISTERED...............................................10

CLAIMS PROCEDURES..........................................................10

AMENDMENT OR TERMINATION OF THE PLAN.......................................14

NO CONTRACT OF EMPLOYMENT..................................................14


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                                    ARTICLE 1
                                  INTRODUCTION

Public Service Company of New Mexico ("PNM") adopted the "Amended and Restated
Medical Reimbursement Plan of Public Service Company of New Mexico" (the "MERP")
effective January 1, 1980. The MERP was amended and restated in its entirety
effective September 1, 1991 at which time it was renamed the "Second Restated
and Amended Public Service Company of New Mexico Executive Medical Plan."
Effective November 30, 2002, PNM transferred sponsorship of the MERP to PNM
Resources, Inc. ("PNMR"). Effective January 1, 2002, PNMR initiated an Executive
Spending Account (the "ESA").

From March 1, 2001 through April 30, 2002, the MERP was fully insured and the
benefits were provided by Connecticut General Life Insurance Company ("CIGNA").
Effective May 1, 2002, a decision was made that benefits under the MERP should
again be provided on a self-funded basis. The benefits provided under the ESA
are, and always have been, self-funded.

By this document, effective December 1, 2002, PNMR hereby merges the MERP with
and into the ESA and amends and restates both plans in the form of this combined
program, such program to be known as the "PNM Resources, Inc. Executive Spending
Account Plan" (the "Plan").

PNMR maintains the Plan to provide a select group of Company executives with
additional remuneration in the form of reimbursements for: (i) medical benefits
beyond the medical benefits available to the executives under any medical
insurance under which they are covered; and (2) other expenses such as income
tax preparation costs, costs for estate planning and financial counseling
services, and insurance premiums for health, accident, disability, life,
dependent life, long-term care, home, auto and personal umbrella insurance. The
benefits provided under the Plan are paid from the general assets of PNMR and
those of its affiliates that have adopted the Plan with each Company bearing the
costs and expenses of providing benefits accrued by its Employee-Participants
during periods while they are employed by that Company. Such costs and expenses
are allocated among the Companies in accordance with (i) agreements entered into
between PNMR and any participating affiliate, or (ii) in the absence of such an
agreement, procedures adopted by PNMR. Because benefits are paid from the
general assets of the Company, pursuant to Department of Labor regulation
Section 2520.104-24 the Plan is exempt from most of the reporting and disclosure
requirements of Part 1 of Title I of ERISA, including the requirement to provide
a summary plan description and the requirement to file a Form 5500 - Annual
Report.

                                    ARTICLE 2
                                  DEFINED TERMS

Capitalized terms used in the Plan have the following meanings:

Assumed Tax Rate:          The tax rate that the Plan  Administrator  will use
                           to gross-up  amounts  reimbursed under Tier A of the
                           Plan.  Participants  will be  notified  of  their
                           Assumed  Tax  Rate  each Paycheck Year.

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Code:                      The Internal Revenue Code of 1986, as amended.

Company:                   PNM Resources, Inc. ("PNMR") and any affiliate that
                           has adopted the Plan with the approval of PNMR. Any
                           affiliate that adopted the Plan prior to the
                           assumption of the sponsorship of the Plan by PNMR,
                           including Public Service Company of New Mexico, shall
                           continue to participate in the Plan.

Covered Expense:           Tier A Covered Expenses and Tier B Covered Expenses.


Dependent:                 A Participant's "Dependents" as defined by the
                           Medical Plan who are eligible to be enrolled in the
                           Medical Plan regardless of whether they are actually
                           enrolled in that plan.

Effective Date:            December 1, 2002.

Employee:                  A full-time employee of the Company scheduled to work
                           at least 32 hours per week, or a regular part-time or
                           job share employee scheduled to work at least 20
                           hours per week. Employee does not include: leased
                           employees or workers; independent contractors,
                           consultants or similar self-employed workers;
                           temporary employees or workers; seasonal employees or
                           workers, other contingent workers, or any employee of
                           any affiliate or related entity unless specifically
                           approved by the Company.

ERISA:                     The Employee Retirement Income Security Act of 1974,
                           as amended.

HIPAA:                     The Health Insurance Portability and Accountability
                           Act of 1996, as amended.

Medical Insurance:         Medical insurance coverage under any of the
                           following: (1) The Public Service Company of New
                           Mexico Benefits My Way Plan, Program 2, Medical Plan,
                           effective January 1, 2002, as amended from time to
                           time, or any successor plan; (2) any other employer
                           maintained medical plan covering the Participant and
                           his or her Dependants; and (3) any other medical
                           insurance covering the participant and/or his or her
                           Dependents.

NMHPA:                     The Newborns' and Mothers' Health Protection Act of
                           1996, as amended.

Participant:               An Employee who is eligible to participate in this
                           Plan pursuant to Article 4.

Paycheck Year:             The Paycheck Year commences on the third
                           Saturday before the final paycheck for a calendar
                           year is paid and ends on the third Friday before the
                           final paycheck for the next calendar year is paid.
                           For example, the final paycheck for the 2002 calendar
                           year will be issued on Friday, December 27, 2002.
                           This means that the 2003 Paycheck Year will commence
                           on December 7, 2002 and end on December 5, 2003.


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Plan:                      The PNM Resources, Inc. Executive Spending Account
                           Plan, as set forth in this document.

Plan Administrator:        PNMR.

Plan Sponsor:              PNMR.

PNMR:                      PNM Resources, Inc.

Qualifying Event:          A Participant's termination of employment, reduction
                           in hours, divorce, legal separation, death or
                           becoming eligible for Medicare, and a child ceasing
                           to meet the Plan's definition of Dependent.

Tier A:                    The portion of the Plan under which Tier A Covered
                           Expenses are reimbursed. With very few exceptions,
                           expenses that were formerly reimbursed under the MERP
                           are, as of the Effective Date, reimbursed under Tier
                           A.

Tier A Benefit Limit:      The maximum amount for which you and your Dependents,
                           together, may seek reimbursement each Paycheck Year
                           for Tier A Covered Expenses. As of the Effective
                           Date, the Tier A Benefit Limit is $3,000 per Paycheck
                           Year. Any portion of the Tier A Benefit Limit that
                           remains unused at the end of a Paycheck Year may not
                           be carried over to the following Paycheck Year. Any
                           amounts reimbursed by CIGNA under the MERP from
                           January 1, 2002 through April 30, 2002 (while the
                           MERP was fully-insured), will reduce the Tier A
                           Benefit Limit for the remainder of the 2002 Paycheck
                           Year by a corresponding amount.

Tier A Covered Expenses:   Expenses  incurred by a Participant or Dependent
                           during the current or preceding Paycheck Year, while
                           covered by the Plan, for medical care as defined in
                           Section 213(d) of the Code to the extent that no
                           benefits are payable for such medical care under the
                           Participant's Medical Insurance. By way of example,
                           and not limitation, medical care, dental care, vision
                           care, premiums for medical care and qualified
                           long-term care (whether paid on a pre-tax or
                           after-tax basis), transportation primarily for and
                           essential to medical care, and amounts paid for
                           lodging (not lavish or extraordinary under the
                           circumstances) while away from home primarily for and
                           essential to medical care would all be treated as
                           Tier A Covered Expenses.

                           A Tier A Covered Expense is "incurred" when the
                           underlying medical care is provided, regardless of
                           when you are billed or pay for such medical care,
                           unless the medical care for which you are seeking
                           reimbursement is for insurance premiums covering
                           medical care or qualified long-term care, in which
                           case such expense is "incurred" on the date on which
                           you are billed for the premium.

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Tier B:                    The portion of the Plan under which Tier B Covered
                           Expenses are reimbursed. With very few exceptions,
                           expenses that were formerly reimbursed under the ESA
                           are, as of the Effective Date, reimbursed under Tier
                           B.

Tier B Benefit Limit:      The maximum amount for which you and your Dependents,
                           together, may seek reimbursement each Paycheck Year
                           for Tier B Covered Expenses. Shortly before each
                           Paycheck Year, you will be notified of your Tier B
                           Benefit Limit for the Paycheck Year. Any portion of
                           the Tier B Benefit Limit that remains unused at the
                           end of a Paycheck Year may not be carried over to the
                           following Paycheck Year. Any amounts reimbursed by
                           the Company under the ESA from January 1, 2002
                           through April 30, 2002, will reduce the Tier B
                           Benefit Limit for the remainder of the 2002 Paycheck
                           Year by a corresponding amount.

Tier B Covered Expenses:   Expenses  incurred  by the  Participant  or a
                           Dependent during the current or preceding Paycheck
                           Year, while covered by the Plan, for any of the
                           following: (1) income tax preparation; (2) estate
                           planning (including preparation of wills and trusts);
                           (3) financial counseling, but excluding brokerage
                           fees or commissions; (4) financial management
                           services (this would include, for example, the
                           services provided by a management firm that manages
                           your real estate investments); (5) premiums covering
                           the Participant and his or her Dependents for
                           accident, disability, life, dependent life, long-term
                           care and or supplemental insurance (similar to
                           AFLAIC), whether paid for by the Participant as a
                           private party or deducted from the Participant's
                           salary under a PNM benefit program; (6) premiums for
                           home, auto or personal liability umbrella insurance;
                           or (7) expenses that would qualify as a Tier A
                           Covered Expense but for the fact that the Tier A
                           Benefit Limit has already been exceeded for the
                           Paycheck Year.

                           A Tier B Covered Expense is "incurred" as of the date
                           on which you are billed for the underlying expense;
                           provided, however, that if the expense qualifies as a
                           Tier A Covered Expense, but for the fact that the
                           Tier A Benefit Limit has already been exceeded for
                           the Paycheck Year, the expense is "incurred" when the
                           underlying medical care is provided, regardless of
                           when you are billed or pay for such medical care,
                           unless the medical care for which you are seeking
                           reimbursement is for insurance premiums covering
                           medical care or qualified long-term care, in which
                           case such expense is "incurred" on the date on which
                           you are billed for the premium.

WHCRA:                     The Women's Health and Cancer Rights Act of 1998,
                           as amended.

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                                    ARTICLE 3
                       GENERAL INFORMATION ABOUT THE PLAN


Plan Name:                 PNM Resources, Inc. Executive Spending Account Plan.

Plan Year:                 January 1 through December 31

Plan Number:               601

Original Effective Date:   The MERP was originally  effective  January 1, 1980.
                           The ESA was first effective January 1, 2002.

Funding Medium:            The Plan is  self-funded.  This means that the
                           Company pays benefits out of its general assets.
                           Participants are not required to pay a premium in
                           order to participate in the Plan.

Plan Sponsor:              PNM Resources, Inc.
                           Alvarado Square, Mail Stop 3101
                           Albuquerque, NM  87158
                           (505) 241-2700

Plan Sponsor's Employer    85-0468296
Identification Number:

Plan Administrator &       PNM Resources, Inc.
Named Fiduciary:           Alvarado Square, Mail Stop 3101
                           Albuquerque, NM  87158
                           (505) 241-2700
                           Attention: Manager-Employee Benefits Department

                           The Plan is administered by the Company or its
                           designee.

Agent for Service of       Patrick Ortiz, General Counsel
Legal Process:             Public Service Company of New Mexico
                           Alvarado Square, Mail Stop 2822
                           Albuquerque, NM  87158
                           (505) 241-2700

Applicable Law:            The validity,  interpretation,  construction and
                           performance of the Plan shall be governed by the laws
                           of the State of New Mexico, unless preempted by
                           ERISA.


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                                    ARTICLE 4
                   ELIGIBILITY AND PARTICIPATION REQUIREMENTS

Eligibility:               You are  eligible to  participate  in the Plan if you
                           are an Employee of the Company and you are a
                           vice-president or higher-ranking officer of the
                           Company. Your spouse and "Dependents," as defined in
                           Article 2 are eligible to participate in the Plan if
                           you are.

Termination of             Your  participation  in the Plan  terminates  as of
Participation:             the  earliest  of:  (1) the date you terminate
                           employment with the Company; (2) the date you cease
                           to be a vice-president or higher ranking officer of
                           the Company; (3) the date your coverage under all
                           other Medical Insurance ceases; or (4) the date the
                           Plan is terminated.

                           Coverage for your Dependents (including your
                           spouse) stops when your coverage stops. Their
                           coverage will also stop if they cease being your
                           Dependent.

COBRA:                     If coverage for you or your Dependents (including
                           your spouse) ceases because of certain "Qualifying
                           Events," specified in a federal law called COBRA,
                           then you or your Dependents may have the right to
                           purchase continuing coverage under the Plan for a
                           limited period of time. As permitted by law, the
                           Company may impose an administrative fee (usually
                           2%) for this coverage. This right to continue
                           coverage only applies to the portions of the Plan
                           that reimburse medical care expenses.

Effect of Termination      If a Participant or Dependent's participation in the
of Participation on        Plan terminates, any Tier A or  Tier B Covered
Reimbursements:            Expenses incurred by the Participant or Dependent
                           before his or her participation terminated will be
                           eligible for reimbursement even though such
                           reimbursement is not requested or processed before
                           such termination date. Except as required by COBRA,
                           Tier A and Tier B Covered Expenses incurred after
                           such termination date will not be eligible for
                           reimbursement even though the Participant may not
                           have used all or some portion of his or her Tier A or
                           Tier B Benefit Limits. The following examples
                           illustrate how these rules operate:

                           Example 1: Assume that a Participant terminates
                           employment on June 30, and as of such date has been
                           reimbursed $2,500 under Tier A. Before terminating
                           employment, while still covered by the Plan, the
                           Participant incurred an additional $750 of Tier A
                           Covered Expenses. The Participant is entitled to
                           receive a Tier A reimbursement in the amount of
                           $500.

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                           Example 2: Assume that a Participant ceases to be a
                           vice president or higher-ranking officer on
                           September 30, and as of such date has been
                           reimbursed $500 under Tier A. After changing
                           employment status, while no longer covered by the
                           Plan, the Participant incurs an additional $1,750
                           of Tier A Covered Expenses. The Participant is not
                           entitled to receive a Tier A or Tier B
                           reimbursement for the amounts incurred after her
                           participation is terminated.

Effect of Promotion        If a Participant is promoted during a Paycheck Year
or Demotion on             and such promotion causes the  Participant to be
Reimbursements:            subject to a higher Tier B Benefit Limit, Tier B
                           Covered Expenses incurred before the increased limit
                           takes effect will be eligible for reimbursement as
                           long as they were incurred while the Participant was
                           covered by the Plan. If a Participant is demoted
                           during a Paycheck Year and such demotion causes the
                           Participant to be subject to a lower Tier B Benefit
                           Limit, Tier B Covered Expenses incurred before the
                           decreased limit takes effect will be subject to
                           reimbursement as long as they were incurred while the
                           Participant was covered by the Plan. The following
                           examples illustrate how these rules operate:

                           Example 1: Assume that a Participant is promoted
                           from vice president to senior vice president on
                           October 1st. Assume further that as vice president,
                           the Participant's Tier B Benefit Limit was $7,000
                           and as senior vice president, the Participant's
                           Tier B Benefit Limit is $12,000. Before being
                           promoted, and while covered by the Plan, the
                           Participant incurred $13,000 of Tier B Covered
                           Expenses but has only been reimbursed for $7,000.
                           As of October 1st, the Participant is entitled to
                           be reimbursed an additional $5,000 because of the
                           $12,000 Tier B Benefit Limit to which the
                           Participant is now subject.

                           Example 2: Assume that a Participant is demoted
                           from senior vice president to vice president on
                           July 1st. Assume further that as senior vice
                           president, the Participant's Tier B Benefit Limit
                           was $12,000 and as vice president, the
                           Participant's Tier B Benefit Limit is $7,000.
                           Before being demoted, and while covered by the
                           Plan, the Participant incurred $11,000 of Tier B
                           Covered Expenses but has only been reimbursed for
                           $9,000. As of October 1st, the Participant is
                           entitled to be reimbursed for the $2,000 of Tier B
                           Covered Expenses that were incurred before October
                           1st, even though the Participant is now subject to
                           a $7,000 Tier B Benefit Limit.

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                           Example 3: Assume that a Participant is demoted
                           from senior vice president to vice president on
                           November 1st. Assume further that as senior vice
                           president, the Participant's Tier B Benefit Limit
                           was $12,000 and as vice president, the
                           Participant's Tier B Benefit Limit is $7,000.
                           Before being demoted, and while covered by the
                           Plan, the Participant incurred $4,000 of Tier B
                           Covered Expenses and had been reimbursed for the
                           full $4,000. After being demoted, the Participant
                           incurs an additional $8,000 of Tier B Covered
                           Expenses. The Participant is entitled to receive a
                           Tier B reimbursement of $3,000 because as of
                           November 1st, the Participant is now subject to a
                           $7,000 Tier B Benefit Limit.


                                    ARTICLE 5
                            SUMMARY OF PLAN BENEFITS

Two Tier Benefit           The Plan has two tiers, Tier A and Tier B.
Structure:
                           If an expense qualifies as a Tier A Covered Expense,
                           the Company will reimburse you for 100% of the Tier A
                           Covered Expense under Tier A of the Plan up to the
                           Tier A Benefit Limit (i.e., $3,000 for you and your
                           Dependents, together, per Paycheck Year). Once you
                           and your Dependents, together, reach the $3,000 Tier
                           A Benefit Limit, no benefits will be paid to you
                           under Tier A for the remainder of the Paycheck Year.
                           Before you submit a claim for reimbursement under
                           Tier A, you must first submit it for payment under
                           your Medical Insurance.

                           If an expense qualifies as a Tier B Covered Expense,
                           the Company will pay you for 100% of the Tier B
                           Covered Expense under Tier B of the Plan up to the
                           Tier B Benefit Limit. Once you and your Dependents,
                           together, reach the Tier B Benefit Limit, no benefits
                           will be paid to you under Tier B for the remainder of
                           the Paycheck Year. If an expense qualifies as a Tier
                           A Covered Expense but for the fact that the Tier A
                           Benefit Limit has been exceeded, the Plan
                           Administrator will automatically process the expense
                           under Tier B, and reimbursement will be made under
                           Tier B, unless the Tier B Benefit Limit has been
                           exceeded.

Tax Treatment of           The  expenses  reimbursed  under Tiers A and B must
Benefits:                  be included  in the  Participant's  taxable income
                           for the calendar year in which the Participant
                           receives the reimbursement, rather than the calendar
                           year in which the underlying expense is incurred.
                           Reimbursements approved by the Plan Administrator
                           will be added to your regular paycheck unless the
                           reimbursement is for a Tier A Covered Expense, in
                           which case it is processed as a separate check
                           through payroll. Notwithstanding the foregoing,
                           effective January 1, 2003, all reimbursements
                           approved by the Plan Administrator will be processed
                           as a separate check through payroll rather than being
                           added to your regular paycheck. In all cases the
                           additional income will be reflected on your W-2 for
                           the calendar year in which the additional income is
                           paid to you. Prior to May 1, 2002, the benefits

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                           provided under the MERP were not includable in the
                           Participant's taxable income because the benefits
                           provided under the MERP were fully insured by CIGNA.
                           Accordingly, any reimbursements received from CIGNA
                           are not includable in the Participant's taxable
                           income and are not subject to the gross-up rule
                           described below.

Gross-Up of Tier A         Any expense that is  reimbursed  under Tier A of the
Covered Expenses:          Plan will be grossed-up  for taxes,  using the
                           Participant's Assumed Tax Rate. For example, if a
                           Participant receives the maximum reimbursement of
                           $3,000 under Tier A, and the Participant's Assumed
                           Tax Rate is 40%, the Participant will be reimbursed
                           in the amount of $5,000. After paying taxes on the
                           $5,000, the Participant will be left with $3,000
                           (i.e., $5,000 x (1-.40) = $3,000). Expenses
                           reimbursed under Tier B will not be grossed up even
                           though such amounts must be included in the
                           Participant's taxable income.

Compliance with            The Plan will provide benefits in accordance with the
Federal Laws:              applicable requirements of federal laws, such as
                           COBRA, HIPAA, NMHPA and the WHRCA. For example, did
                           you know that the Plan, as required by the WHCRA
                           provides benefits for mastectomy-related services
                           including reconstruction and surgery to achieve
                           symmetry between breasts, prostheses, and
                           complications from mastectomy (including lymphedema)?
                           Call the Plan Administrator for more information.

Qualified Medical          The Plan will also provide benefits to an Employee's
Child Support              non-custodial Dependent child as required by any
Orders:                    qualified medical child support order, or "QMCSO"
                           (as defined in ERISA Section 609(a)). The Plan has
                           detailed procedures for determining whether an order
                           qualifies as a QMCSO. Participants and beneficiaries
                           can obtain, without charge, a copy of such procedures
                           from the Plan Administrator.

Benefits for               The Plan will  provide  benefits to  Dependent
Adopted Children:          children placed with an Employee for adoption under
                           the same terms and conditions as apply in the case of
                           Dependent children who are natural children, in
                           accordance with ERISA Section 609(c).

Special Rights             The Plan may not, under Federal law, restrict
Upon Childbirth:           benefits for any hospital length of stay in
                           connection with childbirth for the mother or newborn
                           child to less than 48 hours following a normal
                           vaginal delivery, or less than 96 hours following a
                           cesarean section. However, Federal law generally does
                           not prohibit the mother's or newborn's attending
                           provider, after consulting with the mother, from
                           discharging the mother or her newborn earlier than
                           the above periods. In any case, the Plan may not,
                           under Federal law, require that a provider obtain
                           authorization from the Plan for prescribing a length
                           of stay not in excess of the above periods.

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                                    ARTICLE 6
                          HOW THE PLAN IS ADMINISTERED

Plan Administration:       The Plan is administered by the Plan  Administrator.
                           The Manager of the Employee Benefits Department of
                           the Company is the person who has been designated to
                           act on behalf of the Plan Administrator.

                           The principal duty of the Plan Administrator is to
                           see that the Plan is carried out, in accordance with
                           its terms, for the exclusive benefit of persons
                           entitled to participate in the Plan without
                           discrimination among them. The administrative duties
                           of the Plan Administrator include, but are not
                           limited to, interpreting the Plan, and prescribing
                           applicable procedures. The Plan Administrator is also
                           responsible for determining eligibility for and the
                           amount of any benefits payable under the Plan and
                           prescribing claims procedures to be followed and the
                           claims forms to be used by employees for making
                           claims under the Plan. The Plan Administrator also
                           has the authority to require Employees to furnish it
                           with such information as it determines necessary for
                           the proper administration of the Plan.

                           The Plan Administrator may delegate any of these
                           administrative duties among one or more persons or
                           entities, provided that such delegation is in
                           writing, expressly identifies the delegate(s) and
                           expressly describes the nature and scope of the
                           delegated responsibility.

                           If you have any questions regarding the Plan, please
                           contact the Plan Administrator.

Discretionary              The  Plan   Administrator   shall  have  the
Authority to Act:          discretionary authority to perform its administrative
                           responsibilities described in this Plan as necessary
                           or appropriate to enable the Plan Administrator to
                           properly carry out such responsibilities. The
                           decisions of the Plan Administrator upon all matters
                           within the scope of the Plan Administrator's
                           respective authority shall be binding and conclusive
                           upon all persons.


                                    ARTICLE 7
                                Claims Procedures

Reimbursement             Requests: The Plan Administrator is responsible for
                          evaluating all reimbursement requests under the Plan.
                          You must submit all reimbursement requests to the Plan
                          Administrator 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 to the
                          Plan Administrator.

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                          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 definitions of "Tier A Covered
                          Expense" and "Tier B 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 Tier A or Tier B Benefit
                          Limit for a given Paycheck Year, a properly documented
                          reimbursement request must be sent to the Plan
                          Administrator on or before the last day of such
                          Paycheck Year. Any properly submitted reimbursement
                          requests submitted to the Plan Administrator during a
                          Paycheck Year will be taxable income to the
                          Participant for the calendar year that commences
                          during the Paycheck Year. For example, the 2003
                          Paycheck Year will commence on December 7, 2002 and
                          end on December 5, 2003. Thus any requests submitted
                          from December 7, 2002 through December 5, 2003 will be
                          taxable income to the Participant for the 2003
                          calendar year.

                          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.

                          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 Plan
                          Administrator 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.

Dissatisfaction with      If  a  you  are  dissatisfied  with  the
Decision:                 determination of your benefits, eligibility,
                          participation or any other right or interest under
                          this Plan, you may file a written statement setting
                          forth the basis of the claim with the Plan
                          Administrator in a manner prescribed by the Plan
                          Administrator. In connection with the determination
                          of a claim, or in connection with the review of a
                          denied claim, you may examine this Plan and any other
                          pertinent documents generally available to
                          Participants relating to the claim and you may submit
                          written comments, documents, records and other
                          information relating to the claim for benefits.

                                       11
<PAGE>


Notice of Decision:       A written notice of the disposition of any such claim
                          will be furnished to you within 90 days after the
                          claim is filed with the Plan Administrator, provided
                          that the Plan Administrator may have an additional
                          period of up to 90 days to decide the claim if it
                          determines that special circumstances require an
                          extension of time to decide the claim and it advises
                          you in writing of the need for an extension
                          (including an explanation of the special
                          circumstances requiring the extension) and the date
                          on which it expects to decide the claim.

Content of Notice:        The notice of disposition of a claim shall set forth:

                          o    the specific reasons for denial of the claim;

                          o    reference to the specific Plan provisions upon
                               which the determination is based;

                          o    a  description  of any  additional  material or
                               information  necessary for you to perfect  the
                               claim and an  explanation  of why such  material
                               or  information  is necessary; and

                          o    an explanation of the Plan's appeal procedure
                               and an explanation of the time limits
                               applicable to the Plan's appeal procedures,
                               including a statement of your right to bring
                               a civil action under Section 502(a) of ERISA,
                               following an adverse benefit determination on
                               review.

Appeal of Denied Claim:   Within 60 days after receiving the written notice of
                          the Plan Administrator's disposition of the claim,
                          your, or your duly authorized representative, may
                          request in writing that the Plan Administrator review
                          the denied claim. You may submit a written statement
                          of your claim (including any written comments,
                          documents, records and other information relating to
                          the claim) and the reasons for granting the claim.
                          The Plan Administrator shall have the right to
                          request of and receive from a claimant such
                          additional information, documents or other evidence
                          as the Plan Administrator may reasonably require. If
                          you do not request a review of the denied claim
                          within 60 days after receiving written notice of the
                          Plan Administrator's disposition of the claim, you
                          will be deemed to have accepted the Plan
                          Administrator's written disposition, unless you have
                          been physically or mentally incapacitated so as to be
                          unable to request review within the 60-day period.

                          Upon request and free of charge, you will be provided
                          reasonable access to, and copies of, all documents,
                          records, and other information relevant to your claim
                          for benefits, with such relevance to be determined as
                          set forth below under "Relevance of Documents."

                          The review shall take into account all comments,
                          documents, records and other information submitted by
                          you relating to the claim, without regard to whether
                          such documents, records or other information were
                          submitted or considered in the initial benefit
                          determination.

                                       12
<PAGE>

Decision on Appeal:       A decision on appeal shall be rendered, in writing,
                          by the Plan Administrator ordinarily not later than
                          60 days after you request review of a denied claim,
                          and a written copy of such decision shall be
                          delivered to you. If special circumstances require an
                          extension of the ordinary period, the Plan
                          Administrator will notify you of the extension with
                          such notice containing an explanation of the special
                          circumstances requiring the extension and the date by
                          which the Plan Administrator expects to render a
                          decision. Any such extension will not extend beyond
                          60 days after the end of the ordinary period.

                          The denial notice shall set forth:

                          o   the specific reasons for denial of the claim;

                          o   reference to the specific Plan provisions upon
                              which the denial is based;

                          o   a statement that you are 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 your claim for benefits; and

                          o   a statement of your right to bring a civil action
                              under Section 502(a) of ERISA.

Relevance of              For purpose of this Article 7, documents, records,
Documents:                or other information shall be considered "relevant"
                          to your claim for benefits if such documents, records
                          or other information:

                          o   were relied upon in making the benefit
                              determination;

                          o   were submitted, considered, or generated in
                              the course of making the benefit determination,
                              without regard to whether such documents, records
                              or other information were relied upon in making
                              the benefit determination; or

                          o   demonstrate compliance with the administrative
                              processes and safeguards required by this
                              Article 7 regarding the making of the benefit
                              determination.

Decisions Final and       To the extent  permitted  by law, a decision on review
Procedures Mandatory:     by the Plan Administrator shall be binding and
                          conclusive upon all persons whomsoever. To the extent
                          permitted by law, completion of the claims procedures
                          described in this Article 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 or by another person claiming rights
                          through such a person. The Plan Administrator may, in
                          its sole discretion, waive these procedures as a
                          mandatory precondition to such an action.

                                       13
<PAGE>

                                    ARTICLE 8
                      AMENDMENT OR TERMINATION OF THE PLAN

PNMR, as Plan Sponsor, has the right to amend or terminate the Plan at any time.
The Plan may be amended or terminated by a written instrument duly adopted by
PNMR or any of its delegates.

                                    ARTICLE 9
                            NO CONTRACT OF EMPLOYMENT

The Plan is not intended to be, and may not be construed as constituting, a
contract or other arrangement between you and the Company to the effect that you
will be employed for any specific period of time.

         IN WITNESS WHEREOF, PNM Resources, Inc. has caused this Plan to be
executed as of this 27 day of November, 2002.


                                            PNM RESOURCES, INC.


                                            By:      /s/ Alice A. Cobb
                                            Its: Senior Vice President

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