SUPPLEMENTAL EMPLOYEE RETIREMENT AGREEMENT
for
XXXXXXX X. XXXXX
THIS SUPPLEMENTAL EMPLOYEE RETIREMENT AGREEMENT FOR XXXXXXX X. XXXXX
(the "Agreement") is made and entered into this 14th day of March 14, 2000, by
and between Public Service Company of New Mexico ("PNM" or "the Company" or "the
Employer") and XXXXXXX X. XXXXX ("Employee").
WHEREAS, PNM is the Plan Sponsor of the Public Service Company of New
Mexico Employees' Retirement Plan (the "Retirement Plan");
WHEREAS, Employee is a Participant in the Retirement Plan;
WHEREAS, eligibility for and entry into the Retirement Plan was frozen
effective January 1, 1998;
WHEREAS, Employee stopped accruing Credited Service under the
Retirement Plan as of his Credited Service Termination Date (January 1, 2000);
WHEREAS, PNM desires to continue to receive the benefit of Employee's
knowledge, experience, reputation and services through Employee's continued
employment until at least January 1, 2010, and is willing to offer Employee a
retention incentive; and
WHEREAS, it is the intent of this Agreement to provide for the payment
of supplemental retirement benefits to Employee, such that Employee shall be
deemed to accrue the equivalent of Credited Service pursuant to the Retirement
Plan, to attain the equivalent of thirty (30) years of Credited Service as of
January 1, 2010 under the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties hereto, the parties do hereby agree as follows:
1. Additional Retirement Benefits. PNM agrees to pay Employee
supplemental retirement benefits equal to the difference between the monthly
benefits deemed payable to Employee under the Retirement Plan in accordance with
Section 3 of the Agreement, and the benefit that would have been payable to
Employee under the Retirement Plan, calculated as though Employee:
(a) Is granted sufficient Credited Service on January 1, 2000
so as to accrue the equivalent of ten (10) years of Credited Service as of the
Employee's Credited Service Termination Date; and
(b) Continued earning Credited Service beyond Employee's
Credited Service Termination Date at the rate of two (2) years of Credited
Service for each year of continuous employment for the years 2000 through 2009;
and
For purposes of this Section 1, additional years of Credited Service
shall be determined in the same manner as if they were being credited under the
Retirement Plan including, but not limited to, the rules regarding crediting
partial years of service and leaves of absence.
Notwithstanding anything to the contrary contained in this Section 1,
in the event that the Employee is terminated by the Company for Cause, all of
the Credited Service awarded to Employee under this Agreement shall, unless
otherwise determined by the Board, be forfeited. For purposes of this Agreement,
Cause shall be defined as:
(1) The willful and continued failure of the Employee to
substantially perform his duties with the Company, or willful failure
to report to work for more than thirty (30) consecutive days; or
(2) The willful engaging by the Employee in conduct which is
demonstrably and materially injurious to the Company, monetarily or
otherwise, including acts of fraud, misappropriation or embezzlement
for personal gain at the expense of the Company, conviction of a
felony, or conviction of a misdemeanor involving immoral acts.
2. Calculation of Additional Retirement Benefits. The benefit provided
for in Section 1 of this Agreement shall be calculated based upon the Retirement
Plan in effect on January 1, 2000, as modified by Section 1 above. The monthly
benefit that would be payable to Employee under the Retirement Plan shall be
calculated disregarding limitations imposed by the Internal Revenue Code of 1986
(the "Code"), Sections 401(a)(17) and 415 and similar Code and regulatory
limitations.
3. Calculation of Retirement Plan Benefits, No Duplication of Benefits.
The benefits deemed payable under the Retirement Plan shall be calculated:
(a) Assuming a deemed commencement date for the payment of such
benefits being the later of: (i) the earliest date Employee could have begun
receiving benefits under the Retirement Plan or (ii) the date the Employee
commences receiving benefits under this Agreement;
(b) Assuming a single life annuity form of payment;
(c) Based upon the Retirement Plan in effect on the date such
benefits are deemed to have commenced and based on Employee's actual Credited
Service and Average Earnings as provided for in the Retirement Plan, using the
highest salary for three consecutive years prior to January 1, 1998, the
effective date that the Retirement Plan was frozen; and
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(d) For purposes of Section 1, Employee shall not accrue more than
thirty (30) years of Credited Service pursuant to the terms and conditions of
this Agreement.
4. Supplemental Retention Provision. In the event the Employee is
terminated by the Company for any reason other than Cause, is Constructively
Terminated, or the Employee's termination is a result of a "Change in Control"
as that term is defined in the Public Service Company of New Mexico First
Restated and Amended Executive Retention Plan ("Executive Retention Plan")
effective December 7, 1998, and as may be subsequently amended from time to time
at the discretion of PNM, as of the "Termination Date" applicable under the
Executive Retention Plan, Employee shall receive the following supplemental
retirement benefits in lieu of the Supplemental Retirement Benefits outlined in
Section 5.5.1 of the Executive Retention Plan:
The cash equivalent of the present value of the incremental
benefit the Employee would receive under this Supplemental
Employee Retirement Agreement as if his service and age were
increased by the number of years equal to the multiplier (2.5
years) used to determine Severance Pay in the Executive
Retention Plan.
For purposes of this Section 4, and this Agreement, Constructively Terminated or
Constructive Termination shall be defined as a termination of employment with
the Company as a consequence of any of the following events:
(1) A reduction in base salary;
(2) A reduction in title or a reassignment of duties which are
inconsistent with the status or responsibilities of the Employee
immediately prior to such reassignment;
(3) A relocation of Employee's principal office more than
seventy (70) miles from Santa Fe, New Mexico; or
(4) A requirement that Employee move his residence from Santa
Fe, New Mexico.
5. Severance Benefits. In the event the Employee is terminated or
Constructively Terminated by the Company for any reason other than Cause or as a
result of a Change in Control (as defined in paragraph 4, above), Employee shall
receive the following severance benefits in lieu of the Severance Pay provisions
contained in Section 5.4.1. of the Public Service Company of New Mexico Second
Restated and Amended Non-Union Severance Pay Plan effective August 1, 1999, and
as may be subsequently amended from time to time at the discretion of PNM:
One cash lump sum payment equal to twelve (12) months of the
Participant's Base Salary, with no additional cost of living,
promotion, merit or other increases; plus severance pay the
equivalent of Regular Severance Pay in the amount of two (2)
months of Participant's Base Salary, and one (1) additional
week of Base Salary for each Year of Service. For purposes of
this Section 5, the Years of Service taken into account in
calculating the Employee's severance pay shall be deemed to
include the years of Credited Service awarded to the Employee
pursuant to the terms of this Agreement, but excluding any
supplemental benefits granted to Employee pursuant to Section
4, above.
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6. Retiree Medical Benefits.
(a) Eligibility for Retiree Medical Benefits Prior to Age 55. For
the period commencing January 1, 2000, and ending upon the date the Employee
attains age 55, the Employee's eligibility for retiree medical benefits under
the terms of the Retirement Plan and its Retiree Medical Benefits Funding Plan,
shall be determined as though Employee is age 45 and has 20 years of Credited
Service.
Notwithstanding anything to the contrary contained above, in the event
the Employee voluntarily terminates, or his employment with the Company is
terminated by the Company for Cause before attaining age 55, the Employee shall
be ineligible to receive any retiree medical benefits under either Section 6(a)
or 6(b), except as otherwise may be provided by the Retirement Plan. For
purposes of this paragraph, the Employee will not be considered as voluntarily
terminating employment in the event of a Constructive Termination.
(b) Eligibility for Retiree Medical Benefits on or After Attaining
Age 55. Upon attaining age 55, the retiree medical benefit eligibility
provisions outlined in Section 5(a) above are no longer applicable. If the
employee terminates employment after attaining age 55, the applicable premium
amount will be determined by including the Credited Service granted under this
Agreement. Notwithstanding the preceding sentence, in the event the Employee is
terminated by the Company for Cause after attaining age 55, unless otherwise
determined by the Board, all Credited Service granted under this Agreement shall
be disregarded for purposes of calculating the applicable premium amount.
7. Form, Timing and Amount of Benefit. Benefits shall be payable to
Employee upon his retirement eligibility and election, following his termination
of employment with PNM, pursuant to any annuity form available under the
Retirement Plan with appropriate actuarial equivalence adjustments as defined in
the Retirement Plan, for forms other than a single life annuity on Employee's
life.
8. Designation of Beneficiary. The latest designation of beneficiary
form filed by Employee under the Retirement Plan shall be deemed to be a
designation of the person or fiduciary to receive any amount payable under this
Agreement upon Employee's death. If no beneficiary designation has been filed,
the Employee's spouse shall be the designated beneficiary or in the event
Employee has no spouse, the Employee shall be deemed to have designated his
estate as beneficiary.
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9. No Assignment. This Agreement shall inure only to the benefit of
Employee, Employee's designated beneficiary, and Employee's estate or heirs and
may not be assigned, transferred, pledged or hypothecated in any way by Employee
or Employee's personal representative, heir, distributee, or other person
claiming under Employee and shall not be subject to execution, attachment or
similar process.
10. Source of Payments of Benefits.
(a) This Agreement is a non-qualified, unfunded and unsecured
deferred compensation arrangement. All benefits owing under this Agreement shall
be paid out of the general corporate funds of the Employer which are subject to
the claims of creditors, or out of any trust Employer shall establish or
authorize; provided that all assets paid into any such trust shall at all times
prior to actual payment to Employee or his beneficiaries remain subject to the
claims of the general creditors of Employer. Neither Employee, his designated
beneficiaries, his estate nor his heirs shall (i) have any right, title or
interest whatsoever in, or claim to, preferred or otherwise, any particular
assets of Employer or any trust that Employer may establish or designate to aid
in providing the payment described in this Agreement; or (ii) acquire any
interest greater than that of an unsecured creditor in any assets of Employer.
(b) Notwithstanding the above, upon a Change in Control as defined
in the First Restated and Amended Executive Retention Plan effective December 7,
1998, incorporated herein by reference, and subject to any subsequent amendments
thereto, 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.
11. Administrator. This Agreement shall be administered by the Board of
Directors of PNM or any individual or committee appointed by it, or their
successors, with written notice to Employee.
12. Amendment. This Agreement may be amended only by written consent of
both parties.
13. Controlling Law. This Agreement shall be interpreted under the laws
of the State of New Mexico.
14. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of any successor of PNM and any such successor shall be deemed
substituted for PNM under the terms of this Agreement. As used in this
Agreement, the term "successor" shall include any person, firm, corporation or
other business entity which, at any time, whether by merger, purchase or
otherwise, acquires all or substantially all of the assets or business of PNM.
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15. Reorganization. Upon reorganization of the Company into a holding
company structure pursuant to the New Mexico Electric Utility Industry
Restructuring Act of 1999, the holding company shall succeed to the Company's
obligations under this Agreement. Employee's employment by the holding company
shall be considered as continuous employment for purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto, personally or by their
authorized representatives, have executed this Supplemental Employee Retirement
Agreement as of the date first above written.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By: /s/ Xxxxxxxx X. Xxxxxxx
------------------------------------------
XXXXXXXX X. XXXXXXX,
Chairman and Chief Executive Officer
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------
XXXXXXX X. XXXXX
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