SECOND RESTATED AND AMENDED

                      PUBLIC SERVICE COMPANY OF NEW MEXICO

                             EXECUTIVE MEDICAL PLAN


                                    RECITALS

         WHEREAS, the Amended and Restated Medical  Reimbursement Plan of Public
Service  Company  of New  Mexico  was  adopted  effective  January  1, 1980 (the
"Medical Reimbursement Plan").

         WHEREAS,  Public Service Company of New Mexico (the "Company") reserved
the right,  pursuant to Section 12 of the Medical  Reimbursement Plan, to amend,
modify or terminate the Medical Reimbursement Plan at anytime; and

         WHEREAS,  the Company desires to amend,  restate and rename the Medical
Reimbursement Plan as hereinafter set forth.

                                   I. PURPOSE

         The  Company  adopts the Second  Restated  and Amended  Public  Service
Company of New Mexico  Executive  Medical  Plan (the "Plan") to provide a select
group of executives of the Company with  additional  remuneration in the form of
additional  medical  benefits beyond such benefits  otherwise  available to such
executives pursuant to other Company provided health benefits.

                                    II. TERM

         The Plan, as restated and amended, shall commence on September 1, 1991,
and shall remain in effect  until such time as the same is modified,  amended or
terminated  by the Board of Directors  of the Company,  pursuant to Article VIII
hereof.

                                III. ELIGIBILITY

         The Plan shall apply only to an executive employee of the Company whose
position  with the Company is President of the Company or  designated as part of
the Management Committee (a "Participant"). Participation shall continue so long
as the  Participant  continues to satisfy the  eligibility  requirements  as set
forth in this Article III.


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                               IV. COVERED CHARGES

         Subject to the Annual Limitation, the Company shall reimburse or pay on
behalf of a Participant for all covered  charges  incurred while this Plan is in
effect.  Covered charges ("Covered Charges") shall include all expenses incurred
by the  Participant,  his or her  spouse or  Dependents,  for  medical  care (as
defined in Section 213(d) of the Internal  Revenue Code of 1986, as amended (the
"Code"),  which  are not  otherwise  paid for or  reimbursed  by a  health  plan
maintained by the Company or any other employer maintained health plan, covering
the  Participant  and his or her spouse or Dependents.  For purposes  hereof,  a
"health  plan" shall  include any employer  sponsored  health and medical  plan,
including,  but not limited to, insured or self-insured health,  medical, dental
or mental health plans,  health maintenance  organizations or preferred provider
organizations.  Notwithstanding the foregoing, Covered Charges shall not include
expenses for transportation pursuant to Code Section 213(d)(1)(B), for insurance
pursuant  to Code  Section  213(d)(1)(C)  and lodging  pursuant to Code  Section
213(d)(2). For purposes hereof,  Dependents shall mean anyone who qualifies as a
Dependent of the  Participant  pursuant to Code section 152. Any Covered Charges
reimbursable  hereunder shall be determined assuming the Participant elected the
option under the Benefit Trust having the smallest annual deductible amount.

                              V. ANNUAL LIMITATION

         The maximum annual amount of Covered Charges incurred during a calendar
year subject to  reimbursement  hereunder shall not exceed  twenty-five  hundred
dollars ($2,500) paid to or on limitation for the Participant, his or her spouse
and Dependents.  The Annual  Limitation shall be determined on a calendar basis,
based upon the date the  Covered  Charge is  incurred  (i.e.,  when the  medical
service is provided).

                               VI. ADMINISTRATION

         The Plan shall be  administered  by the  Company or its  designee  (the
"Plan  Administrator")  who shall be the "Named  Fiduciary"  for purposes of the
Employee  Retirement  Income  Security  Act of 1974  ("ERISA").  Subject  to the
provisions  of the Plan,  the Plan  Administrator  shall have sole and exclusive
power, discretion and authority to:

         (i)  conclusively  interpret the provisions of this Plan and decide all
questions of fact arising in its application,  including but not limited to, the
right to determine whether an individual satisfies the eligibility  requirements
hereunder and the right of a participant  to receive  benefits and the amount of
those benefits hereunder;

         (ii) adopt,  amend and rescind rules and  regulations  relating to this
Plan including the appointment or third party administrators to assist in claims
administration; and

         (iii) make any other determinations it deems necessary or advisable.



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                                   VII. NOTICE

         For the  purpose of this  Plan,  notices  and all other  communications
provided  for in the Plan shall be in  writing  and shall be deemed to have been
duly given when  delivered or mailed by United States  registered  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 Manager of the Employee Benefits  Department,  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.

                         VIII. AMENDMENT AND TERMINATION

         The  Company  expects  to  continue  the  benefits  provided  hereunder
indefinitely,  but reserves the right to amend or modify the Plan including, but
not limited to the right to decrease,  increase or discontinue the benefits, and
the Company  specifically  reserves the right to terminate the Plan at any time,
for any reason, and without prior notice.

                                XI. MISCELLANEOUS

         A.  Governing  Law.  The  validity,  interpretation,  construction  and
performance  of this  Plan  shall be  governed  by the laws of the  State of New
Mexico.

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

         C. No  Employment  Contract.  Notwithstanding  anything to the contrary
contained in the Plan, (1) the execution of the Plan shall not create an express
or implied  contract of employment for a specified term between the  Participant
and the Company and (2) unless otherwise  expressly provided in writing, by such
officer as may be  specifically  designated  by the  President,  the  employment
relationship  between  the a  Participant  and the  Company  shall be defined as
"employment  at will",  where either party,  without  notice,  may terminate the
relationship with or without cause.

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

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



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

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

         H.  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.

                            X. CONTINUATION COVERAGE

         A.  Continuation  Coverage after  Termination of Normal  Participation.
Each  person  who is a  Qualified  Beneficiary  shall have the right to elect to
continue coverage under this Plan upon the occurrence of a Qualifying Event that
would otherwise result in such person losing coverage  hereunder.  Such extended
coverage under the plan is known as "Continuation Coverage."

         B. Qualified Beneficiary.  A "Qualified Beneficiary" is any person who,
as of the day before a  Qualifying  event,  is (a) an  employee  of the  Company
covered  under  the  Plan as of such  day  (such  persons  are  Called  "Covered
Employees"),  (b) the spouse of the Covered  Employee,  or (c) a dependent  of a
Covered Employee. A Covered Employee can be a Qualified  Beneficiary only if the
Qualifying  Event consists of  termination  of employment  (for any reason other
than  gross   misconduct).   A  retiree  or  other  former   employee   actively
participating  in the Plan be reason of a previous  period of employment will be
treated as a "Qualified  Beneficiary."  A person is not a Qualified  Beneficiary
if, as of such day, either the individual is covered under the Plan by virtue of
the  election of  continuation  coverage by another  person and is not already a
Qualified  Beneficiary by reason of a prior Qualifying  Event, or is entitled to
Medicare coverage under Title XVIII of the Social Security Act. Furthermore,  an
individual who fails to elect  Continuation  Coverage within the election period
provided  in  Section  F,  below,  shall  not be  considered  to be a  Qualified
Beneficiary.

         C.  Qualifying  Event.  Any of the  following  shall be considered as a
"Qualifying Event":

             (i) death of a Covered Employee;

             (ii) termination  (other than by reason of gross misconduct) of the
Covered Employee's employment;

             (iii) divorce or legal  separation  of a Covered  Employee from the
employee's spouse;


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<PAGE>

             (iv) a Covered  Employee's  becoming  eligible to receive  Medicare
benefits under title XVIII of the Social Security Act; or

             (v)  a  dependent  child  of a  Covered  Employee  ceasing  to be a
dependent.

         In the case of any person treated as a Covered  Employee but who is not
a common-law  employee,  termination of  "employment"  means  termination of the
relationship  that  originally  gave rise to  eligibility  to participate in the
Plan.

         D. Available Benefit.  Each person who is eligible to elect to continue
coverage  under Article X shall have the right to continue the level of coverage
in effect for the Covered  Employee on the day before the Qualifying  Event or a
lesser  level of  coverage  than the  amount  set out in  Article V above.  If a
Qualified Beneficiary of another group health plan maintained by the Employer is
prevented  from  receiving a previous  level of  benefits  due to change in plan
benefits  or plan  termination,  such  individual  will be entitled to elect any
available level of coverage under this Plan.

         E. Notice Requirements.

             (i) When a Participant  becomes  covered under this Plan,  the Plan
Administrator must inform the Participant (and spouse, if any) in writing of the
rights to continued coverage, as described in Article VII.

             (ii) The Company shall give the Plan  Administrator  written notice
of a Qualifying Event within thirty (30) days of the occurrence thereof.

             (iii) Within fourteen (14) days of receipt of the Company's notice,
the Plan  Administrator  shall furnish each Qualifying  Beneficiary with written
notification  of the  termination of regular  coverage under the Plan, as well a
recital of the rights of any such Beneficiary to elect Continuation Coverage, as
required by Code Section  4980B and ERISA  Section 601, in  accordance  with the
terms of this Plan.

             (iv) In the case of a Qualifying Event described in Section C.(iii)
or (v) above, a Covered  Employee or a Qualified  Beneficiary who is a spouse or
dependent of such  Participant must notify the Plan  Administrator  within sixty
(60) days of the occurrence  thereof.  The Plan Administrator shall give written
notification of Continuation Coverage rights to any Qualified Beneficiary within
fourteen (14) days of receipt of the notice described in this Section E. (iv).

         Each Qualified Beneficiary who is determined,  under Title II or XVI of
the Social Security Act, to have been disabled at the time of a Qualifying event
described  in  Section  C.  (ii)  must  notify  the Plan  Administrator  of such
determination  within 60 days after the date of the  determination and within 30
days after the date of any final  determination  under such title or titles that
the Qualified Beneficiary is no longer disabled.


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<PAGE>

         Notwithstanding  any  of the  foregoing,  notification  to a  Qualified
Beneficiary who is a spouse of a Covered  Employee is treated as notification to
all  other  Qualified  Beneficiaries  residing  with  that  person  at the  time
notification is made.

         F. Election Period. Any Qualified  Beneficiary entitled to Continuation
Coverage shall have 45 days from the date of the Notice  required by Section E.,
in the case of  occurrence  of a Qualifying  Event,  in which to return a signed
election to the Plan  Administrator  indicating the choice to continue  benefits
under the Plan.

         G. Duration of Continuation Coverage

             (i)  Continuation  Coverage  shall extend for a period of 18 months
after the date that regular  coverage  ceased due to  occurrence of a Qualifying
Event.

             (ii) If a Qualifying  Event  occurs  during the 18 months after the
date of a Qualifying  Event described in Section C. (ii) above, the Continuation
Coverage  shall  extend  to the date  which is 36  months  after the date of the
qualifying event described in Section C. (ii).

             (iii) In the case of an event  described  in  Section C. (iv) above
(without  regard to whether  such  event is a  Qualifying  Event),  Continuation
Coverage for Qualified  Beneficiaries  other than the Covered  Employee for such
event or any subsequent Qualifying Event shall not terminate before the close of
the 36-month period  beginning on the date the Covered Employee becomes entitled
to benefits under Title XCIII of the Social Security Act.

             (iv) In the case of an individual who is determined, under Title II
or XVI of the Social  Security  Act,  to have been  disabled  at the time of the
Qualifying  Event  described in Section C. (ii) above,  any references in (i) or
(ii) of this Section G to 18 months with respect to such event shall be deemed a
reference  to 29 months,  but only if the  Qualified  Beneficiary  has  provided
notice of such determination in accordance with Section E. (iv) above before the
end of such 18 months.

             (v) In no event,  however,  shall Continuation Coverage extend more
than 36 months beyond the date of the original Qualifying Event.

         H.  Automatic  Termination  of  Continuation   Coverage.   Continuation
Coverage  shall  automatically  cease if (i) the Company no longer  offers group
health  coverage  to  any  of its  employees,  (ii)  the  required  premium  for
continuation  coverage  is not paid  within  30 days of the date  due,  (iii) an
electing  Beneficiary  becomes  covered under another group health plan, (iv) an
electing Beneficiary becomes eligible to receive benefits under Medicare, or (v)
in the  case  of a  Qualified  Beneficiary  who is  disabled  at the  time  of a
Qualifying  Event  described in Section C. (ii), the month that begins more than
30 days after the date of the final  determination  under Title II or XVI of the
Social Security Act that the Qualified Beneficiary is no longer disabled.


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         I.  Premium Requirements

             (i) A Qualified  Beneficiary who has elected Continuation  Coverage
under This  Article X must pay a premium of 102% of the  applicable  premium for
the period of  coverage.  In the case of an  individual  described in Section B.
(iv) above, the required premium shall be 105% of the applicable premium for any
month after the 18th month of Continuation  Coverage described in Section G. (i)
or (ii). The applicable  premium shall be determined by the Plan  Administrator,
pursuant to applicable law.

             (ii) The required  premium for  Continuation  Coverage  may, at the
Qualified Beneficiary's election, be paid in monthly installments.

             (iii)  Premiums for  Continuation  Coverage  become payable 45 days
after the date on which the Qualified beneficiary makes the initial election for
Continuation Coverage.

                              XI. CLAIMS PROCEDURES

         The  Plan   Administrator   shall  make  all  determinations  as  to  a
Participant's  right to a benefit pursuant to the Plan. The Plan  Administrator,
within ninety (90) days after receipt of notice of objection to benefits payable
or claim for benefits,  shall render a written  decision on the objection to the
benefits payable or the claim for benefits. If the objection to benefits payable
or the claim for  benefits is denied,  either in whole or in part,  the decision
shall include:

             (i) The specific reason or reasons for the denial;

             (ii) An  indication  of the specific  Plan  provisions on which the
denial is based;

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

             (iv) An explanation of the Plan's appeal procedure, indicating that
the appeal of the adverse determination must be in writing addressed to the Plan
Administrator,  and  received  within  sixty (60) days after the  receipt by the
claimant of the Plan  Administrator's  written  denial of  benefits.  Failure to
perfect an appeal within the 60-day period shall make the decision conclusive.

         If the claimant should appeal to the Plan Administrator,  he or she, or
his or her duly authorized representative, must do so in writing and may submit,
in  writing,  whatever  issues  and  comments  he or  she,  or his  or her  duly
authorized representative,  feel are pertinent. The claimant, or his or her duly
authorized  representative,  may  review  pertinent  Plan  documents.  The  Plan
Administrator  shall  render a written  decision on the question of the benefits
payable or the claim for benefit,  setting  forth the  specific  reasons for its
decision  including a reference to the plan's  provision  within sixty (60) days
after receipt of the request for review, unless special circumstances (such as a
hearing) would make the rendering of a decision  within the sixty (60) day limit
unfeasible,  but in no event  shall  the Plan  Administrator  render a  decision
respecting a denial for a claim for benefits later than one hundred twenty (120)
days after its receipt of a request for a review.


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<PAGE>

         Any  denial  by the Plan  Administrator  of a  Participant's  claim for
benefits  under the Plan shall be stated in  writing  and such  notice  shall be
written in a manner that may be understood without legal or actuarial counsel.

                    XII. RIGHTS OF PERSONS ADVERSELY AFFECTED

         The right any PNM employee  adversely affected who has incurred charges
for medical expenses  between  September 1, 1991 and April 30, 1992, which would
have  been  paid or  reimbursed  hereunder,  but for this  Second  and  Restated
Amendment,  shall not have  such  medical  expenses  reduced  or unpaid  and the
Company shall pay any  obligation  that would have been paid but for this Second
Restated and Amended Plan  document.  Effective as of May 1, 1992,  no employee,
spouse of such  employee or dependent of such  employee  shall have any right to
any medical expense paid or reimbursed pursuant to this Plan unless provided for
in this Second Restated and Amended Plan document.


Date:    28 Dec 1995
       ---------------------


                                  PUBLIC SERVICE COMPANY
                                  OF NEW MEXICO


                                  By    /s/ Benjamin F. Montoya
                                       ----------------------------
                                          Chief Executive Officer

65226


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