SUPPLEMENTAL EMPLOYEE RETIREMENT AGREEMENT
for
XXXXXX X. XXXXXX
THIS SUPPLEMENTAL EMPLOYEE RETIREMENT AGREEMENT FOR XXXXXX X. XXXXXX
(the "Agreement") is made and entered into this 22nd day of March, 2000, by and
between Public Service Company of New Mexico ("PNM" or "the Company" or "the
Employer") and XXXXXX X. XXXXXX ("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 (December 31, 1998);
WHEREAS, PNM desires to receive the benefit of Employee's knowledge,
experience, reputation and services through Employee's continued employment
until at least February 28, 2005, 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
February 28, 2005 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 this Agreement, and the benefit that would have been payable to
Employee under the Retirement Plan, calculated as though Employee is granted
additional Credited Service so as to accrue the equivalent of a total of thirty
(30) years of Credited Service as of February 28, 2005.
Notwithstanding anything to the contrary contained in this Section 1,
in the event that the Employee voluntarily terminates or is terminated by the
Company for Cause prior to February 28, 2005, the additional 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 February 28, 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
(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. Acceleration of Benefits. In the event 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 defined in the
Public Service Company of New Mexico First Restated and Amended Executive
Retention Plan effective December 7, 1998 and as may be subsequently amended
from time to time at the discretion of PNM, prior to the completion of five (5)
years of service, the retirement benefits available to Employee under this
Agreement shall be accelerated and Employee shall receive the full retirement
benefits provided herein as if his date of termination were February 28, 2005.
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For purposes of 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; or
(3) A relocation of Employee's principal office more than
seventy (70) miles from Employee's current work location.
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, plus two (2) additional
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 granted to the Employee
under this Agreement.
6. Eligibility for Retiree Medical Benefits. In the event the Employee
is terminated by the Company for any reason other than Cause, is Constructively
Terminated, upon a Change in Control, or upon Retirement, the Employee shall be
eligible to receive retiree medical benefits pursuant to the terms of the
Retirement Plan and its Retiree Medical Benefits Funding Plan as though Employee
had previously terminated employment after attaining his Early Retirement Date
as defined under the Retirement Plan. If Employee terminates employment on or
before February 28, 2005, the applicable premium amount shall be determined as
though Employee is age 45 and has 20 years of Credited Service. If Employee
terminates employment after February 28, 2005, the applicable premium amount
shall be determined by including the Credited Service granted under this
Agreement.
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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.
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.
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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.
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
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XXXXXXXX X. XXXXXXX,
Chairman and Chief Executive Officer
/s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX
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