On March 28, 1994 you entered into a final version of a letter agreement
which provided in paragraph 4. a method to credit you additional years of
service should you work until age 65 and set forth the manner for calculating
the retirement benefit. Since the date of the letter agreement the Company has
amended its Pension Plan and the Excess Benefit Plan to institute a Cash Balance
Plan. This plan resulted in a significant adverse change to the benefits
available to you under the original letter agreement. In order to continue the
benefit as it existed at the time of the March 28 offer letter the Company will
use the use the then existing pension formula as the basis to determine your
supplemental retirement benefits previously discussed. This formula is being
added to the pension formula as Supplement A, a copy of which is attached
hereto.
The Company therefore offers to you the following benefit in full and
complete satisfaction of its commitment to you in its offer letter of March 28,
1994:
In the event you are still employed by the Company at age 65, your
retirement benefits payable from TNMP's Excess Benefit Plan will be
calculated using the Supplement A formula.
In the case of a "Change-in-Control", you will become fully vested in
this supplemental pension benefit. The benefit will be accrued and vested
as of the date of the change-in-control or the date at which the executive
would have been age 62, whichever benefit is greater. "Change of Control"
is defined as that term is defined in the Executive Severance Compensation
Agreement which you have executed previously with the Company .
If you agree with the foregoing please sign in the space provided below.
/s/ Xxxx Xxxxxxx Dated February 16, 1998
Xxxx Xxxxxxx, Chairman - Compensation Committee
Texas-New Mexico Power Company
/s/ Xxxxxx X. Xxxxx Dated February 16, 1998
Xxxxxx Xxxxx, Chairman, President & CEO
TNP Board of Directors
SUPPLEMENT A
In the event the executive is still employed by the Company at age 65,
their retirement benefits payable from Texas-New Mexico Power Company's Excess
Benefit Plan will be calculated using the Supplement A formula.
FORMULA:
1.3% of career average compensation times 30 years of service, plus
0.4% of the excess of career average compensation over one-half of the
Social Security maximum wage base in the year of retirement times 30
years of service.
If the executive retires prior to age 65 (but not earlier than age 55 and 5
years of service) the 30 years of service used in the formula will be reduced by
one year for each year that the retirement precedes age 65. If the executive
retires before age 65 and requests a monthly benefit payment, the amount of the
monthly payment will be the actuarial equivalent of the benefit payable at age
65. If the executive retires prior to age 55 and 5 years of service, no benefit
would be provided under the terms of the employment contract (except in the case
of a change-in-control).
This benefit will be reduced by the benefits that are provided by the
Texas-New Mexico Power Company Pension Plan (qualified plan) and the retirement
benefits provided by previous employers under their qualified and non-qualified
plans.
