THIRD AMENDMENT TO THE
                           THIRD RESTATED AND AMENDED
                      PUBLIC SERVICE COMPANY OF NEW MEXICO
                             PERFORMANCE STOCK PLAN


         THIS THIRD  AMENDMENT TO THE THIRD  RESTATED AND AMENDED PUBLIC SERVICE
COMPANY OF NEW MEXICO PERFORMANCE STOCK PLAN ("PSP" or the "Plan"),  made by the
Public Service  Company of New Mexico,  a New Mexico  corporation  ("PNM" or the
"Company"), is effective December 10, 2000.

         WHEREAS,  the Company adopted the Performance Stock Plan effective July
1, 1993;

         WHEREAS,  the Company  adopted the First  Restated  and Amended  Public
Service Company of New Mexico Performance Stock Plan effective January 1, 1996;

         WHEREAS,  the Company adopted the First Amendment to the First Restated
and  Amended  Public  Service  Company  of New  Mexico  Performance  Stock  Plan
effective December 31, 1996;

         WHEREAS,  the Company  adopted the Second  Restated and Amended  Public
Service Company of New Mexico Performance Stock Plan effective March 10, 1998;

         WHEREAS,  the Company  adopted the Third  Restated  and Amended  Public
Service Company of New Mexico  Performance  Stock Plan, also effective March 10,
1998;

         WHEREAS,  the Company adopted the First Amendment to the PSP to provide
greater  flexibility to the  Compensation  and Human Resources  Committee of the
Board of Directors  ("Committee") to grant Awards to Participants throughout the
year, to continue to include  transferred  employees as  Participants in the PSP
with respect to Awards (as defined in the PSP)  granted  prior to transfer so as
not to adversely affect the existing Awards granted to the transferred employees
prior to transfer,  and to conform the definition of  "Retirement" in the PSP to
the definition in the proposed Manzano  Corporation  Omnibus  Performance Equity
Plan to avoid any inequity between Participants in the two plans;

         WHEREAS, the Company adopted the Second Amendment to the PSP to clarify
what constitutes a "final" change in control event; and

         WHEREAS,  the  Company  desires to amend the PSP to modify the  vesting
requirements for awards granted in 2000.

         NOW THEREFORE, the Company hereby amends the PSP as follows:


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                  ITEM 1.  Section  8.2,  "Performance  Based  Awards"  shall be
         modified to read as follows:

                         8.2 Performance Based Awards. Subject to the exceptions
                set forth in Section 8.3, the Performance  Based Awards having a
                Grant Date of December 31, 1993,  1994,  and 1995 shall likewise
                vest  on  June  30,  1996,  if the  Participant  remains  in the
                continuous  employ of the  Company  from the Grant  Date of such
                Awards until June 30,  1996.  Subject to the  modifications  set
                forth in Section 8.3,  Performance  Based Awards  granted  after
                December 31, 1995 and before December 1, 2000,  shall vest three
                (3) years from the Grant Date of the Award,  if the  Participant
                remains in the  continuous  employ of the Company from the Grant
                Date to the third anniversary date of such Grant Date.  Provided
                the Participant  remains in the continuous employ of the Company
                from the Grant Date to the  anniversary  date  specified  below,
                Performance  Based Awards granted after December 1, 2000,  shall
                vest as follows:  (1) at the end of the first anniversary of the
                Grant Date, the Performance  Based Award shall vest thirty-three
                percent (33%);  (2) at the end of the second  anniversary of the
                Grant Date,  the  Performance  Based Award shall vest  sixty-six
                percent  (66%);  and (3) at the end of the third  anniversary of
                the Grant  Date,  the  Performance  Based  Award  shall vest 100
                percent.

                  ITEM 2. Except as amended  herein,  the Company  readopts  and
         redeclares each and every other provision of the PSP.

         IN WITNESS  WHEREOF,  Public Service  Company of New Mexico caused this
Third  Amendment to the Third Restated and Amended Public Service Company of New
Mexico  Performance  Stock  Plan  to be  executed  by its  authorized  officers,
effective as of the date and year first above written.


                                         PUBLIC SERVICE COMPANY OF NEW MEXICO


                                         By /s/ Arthur P. Armano
                                            ---------------------------------
                                            ARTHUR P. ARMANO
                                            Director, Personnel Services




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