FIRST AMENDMENT TO THE SUPPLEMENTAL EMPLOYEE RETIREMENT AGREEMENT THIS FIRST AMENDMENT TO THE SUPPLEMENTAL EMPLOYEE RETIREMENT AGREEMENT is effective the 7th day of December, 1998, by and between Public Service Company of New Mexico, a New Mexico...

                             FIRST AMENDMENT TO THE
                   SUPPLEMENTAL EMPLOYEE RETIREMENT AGREEMENT


         THIS FIRST AMENDMENT TO THE SUPPLEMENTAL  EMPLOYEE RETIREMENT AGREEMENT
is  effective  the 7th day of  December,  1998,  by and between  Public  Service
Company of New Mexico,  a New Mexico  corporation  ("PNM" or the  "Company") and
Xxxx X. Xxxxxxxx ("Xxxxxxxx").

         WHEREAS,  PNM  and  Xxxxxxxx  entered  into  a  Supplemental   Employee
Retirement Agreement ("SERP") effective August 4, 1989;

         WHEREAS,  paragraph  9 of the SERP  permits  it to be amended by mutual
consent.

         WHEREAS,  on December 7, 1998,  the  Compensation  and Human  Resources
Committee of the PNM Board of Directors  approved certain benefits upon a Change
in Control (as defined in the First  Restated  and Amended  Executive  Retention
Plan) and authorized certain amendments to affected plans,  including this SERP;
and

         WHEREAS,  the  Company  desires to amend this SERP to  incorporate  the
approved  Change in Control  benefits to provide full and sufficient  funding of
the Public Service Company of New Mexico and Paragon  Resources,  Inc.  Deferred
Compensation Trust Agreement (the "Rabbi Trust") for any obligations or benefits
accrued as of the date of the occurrence of a Change in Control.

         NOW, THEREFORE, PNM and Xxxxxxxx do hereby amend the SERP by this First
Amendment as follows:

         ITEM 1.  Paragraph  7, No Trust,  is hereby  amended  to add a new last
paragraph, as follows:

         Notwithstanding  the above,  upon a Change in Control as defined in the
         First Restated and Amended Executive  Retention Plan effective December
         7, 1998,  and  incorporated  herein by  reference,  the  Company  shall
         sufficiently  fund the Public Service Company of New Mexico and Paragon
         Resources,  Inc.  Deferred  Compensation  Trust  Agreement  (the "Rabbi
         Trust")  to  provide  in  full  for any  benefits  accrued  under  this
         Agreement as of the date of the occurrence of the Change in Control.

         ITEM 2. Except as herein above amended, PNM and Xxxxxxxx hereby readopt
and redeclare each and every provision of the SERP.


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         IN  WITNESS  WHEREOF,  the  parties  hereto,  personally  or  by  their
authorized  representatives,  have  signed  this  First  Amendment  to the  SERP
effective as of the date  specified  herein and by  execution of this  amendment
hereby  declare that this  amendment  fully and  accurately  represents  all the
supplemental retirement benefits agreed upon by PNM and Xxxxxxxx.


                                    PUBLIC SERVICE COMPANY OF NEW MEXICO


Date:_________________              By_________________________________________
                                                 XXXXXXXX X. XXXXXXX
                                       President and Chief Executive Officer


Date:_________________              _________________________________________
                                       Xxxx X. Xxxxxxxx






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