NON-UNION SEVERANCE PAY Plan

Exhibit 10.31

PNM RESOURCES, INC.
NON-UNION SEVERANCE PAY Plan

INTRODUCTION

Effective January 1, 2002, Public Service Company of New Mexico ("PNM") adopted the Public Service Company of New Mexico Benefits My Way Plan (the "BMW Plan").  Effective November 27, 2002, sponsorship of the Plan was transferred from PNM to PNM Resources, Inc. ("PNM Resources") and the Plan was renamed the "PNM Resources, Inc. Benefits My Way Plan."  The BMW Plan consisted of a number of component programs including Program 12, Non-Union Severance Pay Program (the "Non-Union Severance Program"). 

Effective as of January 1, 2004, PNM Resources amended and restated the BMW Plan to divide it into a number of separate plans that replace the component programs in effect on December 31, 2003.  As part of the amendment and restatement, the PNM Resources, Inc. Non-Union Severance Pay Plan (the "Plan") was created as a successor plan to the Non-Union Severance Program.  Effective as of January 1, 2004 (the "Effective Date"), PNM Resources hereby amends and restates the Plan in the form of this document.

Article I
PURPOSE

1.1              General .   The purpose of the Plan is to provide severance benefits to eligible Participants.  The Plan provides three forms of severance benefits:  (a) Regular Severance Benefits; (b) Enhanced Severance Benefits; and (c) Senior Management Group Severance Benefits.

Article II
DEFINITIONS

2.1              Definitions.   When a word or phrase appears in the 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 Article II or in the Introduction.  The following words and phrases used 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 or the word or phrase is defined for a limited purpose elsewhere in the Plan document:

(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 PNM Resources 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 PNM Resources 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 PNM Resources as a member of the group; and any other entity required to be

Exhibit 10.31

(b)               aggregated with PNM Resources pursuant to regulations issued by the United States Treasury Department pursuant to Section 414(o) of the Code.

(c)                " Base Salary " means the annual rate of base earnings of a Participant immediately preceding his or her termination date:

(1)       exclusive of overtime pay, bonuses, commission, payments for accrued vacations or other special payments; and

(2)       before any deductions, including, but not limited to, any federal, state or other taxes, and salary reduction amounts contributed to benefit plans or programs.

(d)               " Benefits Department " means the organizational unit of PNM Resources with the responsibility of administering benefit programs.  Effective January 1, 2005 "Benefits Department' means the organizational unit of PNMR Services Company with responsibility of administering benefit programs sponsored by PNM Resources.

(e)               " Board " means the Board of Directors of PNM Resources.

(f)                " 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.

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.

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

(h)               " Committee " means PNM Resources' Benefits Governance Committee.

Exhibit 10.31

(i)               " Company " means PNM Resources or any Affiliate of PNM Resources

(j)                 that is authorized by the Board to adopt the Plan and which has adopted the Plan pursuant to Article IX (Adoption by Affiliates).

(k)              " Constructive Termination" or "Constructively Terminated " means a Participant who receives a Notice of Impaction and has his or her employment terminated by the Company if the Participant is offered a transfer to a location but declines the offer because the new location to which the Participant would be required to report is more than fifty (50) miles from the Participant's previous location.  An Employee who is asked to transfer but is not Impacted because his or her position is not eliminated, is not Constructively Terminated for purposes of the Plan.

(l)               " Effective Date " means January 1, 2004.

(m)             " Employee " means a common law employee who is a full-time employee of the Company scheduled to work at least thirty‑two (32) hours per week, or a regular part‑time or job share employee scheduled to work at least twenty (20) hours per week.  Examples of individuals who are not Employees of the Company include:  (1) consultants; (2) leased employees or workers; (3) individuals providing services to the Company pursuant to a contract with a third party; (4) temporary employees or workers; (5) independent contractors; (6) employees of independent contractors; (7) interns; and (8) co-op employees.

(n)               " Enhanced Severance Benefits " means the benefits described in Section 4.2 (Enhanced Severance Benefits).

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

(p)               " Health Plan " means the PNM Resources, Inc. Comprehensive Health Plan as it may be amended or restated from time to time or any successor plan or plans that provide the benefits currently provided under such plan.

(q)               " Impaction " means the elimination of a Participant's position by the Company as approved by the President of the Company or his or her authorized designee, followed by the Company giving a Notice of Impaction to the Participant and the Participant's subsequent termination of employment.

(r)                " Management Group " means any Participant who is salary grade P15 or higher. 

(s)                " 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.

Exhibit 10.31

(t)                " Notice of Impaction " means the written notice issued by the Company to the Participant stating that his or her position with the Company has been selected for Impaction.

(u)               " Notice of Termination " means a notice from either the Company or a Participant, as applicable.  In the event the Termination is for Cause or based on Constructive Termination, the notice shall indicate the specific termination provision in the 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.  The Company retains its rights as an at will employer to terminate any Employee at any time and for any reason.

(v)               " Participant " means any Employee who has satisfied the eligibility requirements for participation in the Plan.

(w)              " Plan " means the PNM Resources, Inc. Non-Union Severance Pay Plan.

(x)              " Plan Year " means a twelve (12) month period commencing on each January 1 and ending on each following December 31.

(y)              " PNM Resources " means PNM Resources, Inc.  As used in the Plan, "PNM Resources" also means any successor in interest to PNM Resources resulting from merger, consolidation, or transfer of substantially all of PNM Resources' assets.

(z)               " Regular Severance Benefits " means the benefits described in Section 4.1 ( Regular Severance Benefits ).

(aa)           " Release Agreement " means the Employment Termination and Release Agreement to be executed by a Participant in order to be eligible for and receive Enhanced Severance Benefits pursuant to Section 4.2 ( Enhanced Severance Benefits ) or Senior Management Group Severance Benefits pursuant to Section 4.3 ( Senior Management Group Severance Benefits ).  The Release Agreement shall be prepared only by the Company.

(bb)           " Senior Management Group " means the Employees who are designated as such by the President of the Company from time to time.

(cc)            " Senior Management Group Severance Benefits " means the benefits described in Section 4.3 ( Senior Management Group Severance Benefits ).

(dd)           " 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              Construction .  The masculine gender, when appearing in the Plan, shall include the feminine gender (and vice versa), and the singular shall include the plural, unless the Plan clearly states to the contrary.  Headings and subheadings are for the purpose of reference only

Exhibit 10.31

and are not to be considered in the construction of the Plan.  If any provision of the Plan is determined to be for any reason invalid or unenforceable, the remaining provisions shall continue in full force and effect.  All of the provisions of the Plan shall be construed and enforced according to the laws of the State of New Mexico and shall be administered according to the laws of such state, except as otherwise required by ERISA, the Code, or other applicable Federal law.

Article III
ELIGIBILITY

3.1              Eligibility for Regular Severance Benefits .  To be eligible for Regular Severance Benefits hereunder, a Participant must:  (1) have his or her employment terminated by the Company, or be Constructively Terminated, due to the elimination of his or her job position; (2) receive a Notice of Impaction; and (3) not be ineligible to receive benefits under Section 3.5 ( Certain Employees Ineligible For Benefits ).

3.2              Eligibility for Enhanced Severance Benefits .  In order to be eligible for Enhanced Severance Benefits hereunder, a Participant must:  (1) have his or her employment terminated by the Company, or be Constructively Terminated, due to the elimination of his or her job position; (2) receive a Notice of Impaction; (3) not be ineligible to receive benefits under Section 3.5 ( Certain Employees Ineligible For Benefits ); and (4) sign and deliver a Release Agreement pursuant to Section 3.4 ( Release Agreement ) below.  If a Participant elects to receive Enhanced Severance Benefits by signing and delivering a Release Agreement, Participant may not bring any claim in any forum whatsoever.

3.3              Eligibility for Senior Management Group Severance Benefits .  In order to be eligible for Senior Management Group Severance Benefits, a Participant must: (1) have his or her employment terminated by the Company, or be Constructively Terminated, due to the elimination of his or her job position; (2) be a member of the Senior Management Group; (3) not be ineligible to receive benefits under Section 3.5 ( Certain Employees Ineligible for Benefits ); and (4) sign and deliver a Release Agreement pursuant to Section 3.4 ( Release Agreement ) below.  A Participant who is eligible for Senior Management Group Severance Benefits is not required to receive a Notice of Impaction.  If a Participant elects to receive Senior Management Group Severance Benefits by signing and delivering a Release Agreement, Participant may not bring any claim in any forum whatsoever.

3.4              Release Agreement .  The Release Agreement required by Section 3.2 ( Enhanced Severance Benefits ) and 3.3 ( Senior Management Group Severance Benefits ) shall comply with the requirements of this Section.

(a)               General .  The Release Agreement shall contain 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 are given to the Participant to sign and return the Release Agreement to the Company.

Exhibit 10.31

(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 them 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 Enhanced Severance Benefits and Senior Management Group Severance Benefits.  If a Senior Management Participant revokes an executed Release Agreement, the Senior Management Participant may receive Regular Severance Benefits described in Section 4.1 ( Regular Severance Benefits ), provided the Participant satisfies all the eligibility requirements of Section 3.1 ( Regular Severance Benefits ), except the requirement for receipt of the Notice of Impaction.

3.5              Certain Employees Ineligible For Benefits.   The following Employees shall be ineligible to receive Regular, Enhanced, or Senior Management Severance Benefits hereunder:

(a)               Employees who have not completed their introductory service period of six months;

(b)               Employees whose terms and conditions of employment are subject to collective bargaining;

(c)                Employees whose employment with the Company is terminated for Cause; and

(d)               Employees who voluntarily resign from employment with the Company for reasons other than those that constitute Constructive Termination.

Article IV
BENEFITS

4.1              Regular Severance Benefits .  Participants satisfying the eligibility requirements set forth in Section 3.1 ( Eligibility for Regular Severance Benefits ) shall be entitled to the following benefits:

(a)               Severance Pay .  Severance pay shall be in a lump-sum amount equal to two (2) months of Base Salary, plus one (1) additional week of Base Salary for each Year of Service.

(b)               Medical, Dental and Vision Coverage .  Medical, dental and vision coverage under the Health Plan, as the Participant had elected prior to Notice of Termination, shall be provided for the three (3) months immediately following the Employee's termination date to the same extent as the Company and the Participant were paying for the coverage prior to termination.  Participant contributions that were required for participation in the Healt