Exhibit (10) 18
CENTRAL AND SOUTH WEST SYSTEM
SPECIAL EXECUTIVE RETIREMENT PLAN
(As Amended and Restated Effective July 1, 1997)
The Central and South West Special Executive Retirement Plan, an unfunded,
nonqualified deferred compensation plan originally adopted by Central and South
West Corporation in 1979, has been amended and restated effective as of July 1,
1997. The provisions of the Special Executive Retirement Plan as amended and
restated below will apply only to eligible employees of Central and South West
Corporation and its subsidiaries who are employed by a Participating Employer
(as hereinafter defined) on or after July 1, 1997. Special Executive Retirement
Plan benefits payable to any employee of a Participating Employer, who retired
or otherwise terminated employment before July 1, 1997, will be determined under
the terms of the Special Executive Retirement Plan in effect on June 30, 1997.
1. Purpose. The purpose of the Special Executive Retirement
Plan is generally to provide (i) benefits in excess of the limitations under
Sections 401(a)(17) and 415 of the Code for employees who participate in the
Central and South West System Cash Balance Retirement Plan and (ii) benefits
that supplement the benefits payable under the Cash Balance Retirement Plan to
selected employees.
2. Definitions. The following definitions are used throughout
the Special Executive Retirement Plan. Terms that appear in initial capital
letters that are not defined in this Section have the meanings set forth in the
Cash Balance Retirement Plan.
(a) "Board of Directors" means the Board of Directors of
the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended and in effect from time to time.
(c) "Committee" means the Compensation Committee of the
Board of Directors.
(d) "Company" means Central and South West Corporation, a
Delaware corporation.
(e) "Grandfathered Participant" means a Participant who
(i) is an employee of a Participating Employer on July 1, 1997, and (ii) has
both attained age 50 and completed at least ten years of vesting service under
the Retirement Plan on such date.
(f) "Participant" means an employee who is eligible to
receive benefits under the Special Plan. The term "Participant" will include a
deceased Participant's beneficiary who is entitled to receive a death benefit
under the Retirement Plan.
(g) "Participating Employer" means the Company and each
subsidiary of the Company that is a participating employer under the Retirement
Plan.
(h) "Prior Plan Formula" means the Career Average Pay
Formula or the Final Average Pay Formula under the Retirement Plan.
(i) "Retirement Plan" means the Central and South West
System Cash Balance Retirement Plan sponsored by the Company, as amended and
restated effective July 1, 1997, and as further amended and in effect from time
to time, which is a defined benefit pension plan intended to qualify under
Section 401(a) of the Code.
(j) "Special Plan" means the Central and South West
System Special Executive Retirement Plan, as amended and in effect from time to
time.
3. Excess Benefit.
(a) Eligibility. A Participant who is eligible to
receive a benefit under the Retirement Plan will be eligible to receive the
excess benefit described in subsection (b) or subsection (c) below.
(b) Cash Balance Benefit. A Participant who receives a
benefit under the cash balance provisions of the Retirement Plan will be
entitled to receive a benefit under the Special Plan in an amount equal to the
difference between (i) and (ii), where:
(i) is the benefit that would be payable to the
Participant under the cash balance provisions of the Retirement Plan
determined before applying any provision reducing retirement benefits
because of the limitation on compensation under Section 401(a)(17) of
the Code or the maximum benefit limitations under Section 415 of the
Code; and
(ii) is the benefit payable to the Participant under
the cash balance provisions of the Retirement Plan after applying the
limitation on compensation under Section 401(a)(17) of the Code and the
maximum benefit limitations of Section 415 of the Code.
(c) Prior Formula Benefit. Notwithstanding the foregoing
provisions of this Section, if the Retirement Plan benefit paid to a Participant
is the benefit the Participant had accrued at July 1, 1997, under a Prior Plan
Formula, the Participant's Special Plan benefit (if any) will be the benefit
the Participant had earned as of July 1, 1997, determined under the provisions
of the Central and South West System Special Executive Retirement Plan in
effect on June 30, 1997.
4. Final Average Pay Cash Balance Benefit.
(a) Eligibility. A Participant who is eligible to receive
a benefit under the cash balance provisions of the Retirement Plan and who at
termination of employment holds the office of Vice President of a Participating
Employer or any higher corporate office will be entitled to receive the benefit
described in subsection (b) below.
(b) Benefit. An eligible Participant will be entitled to
receive a benefit under the Special Plan in an amount equal to the greater of
the benefit described in (i)(A) or (i)(B) below, in either case reduced by the
benefit described in (ii) below, where:
(i)(A) is the benefit that would be payable to the
Participant under the cash balance provisions of the Retirement Plan
determined before applying any provision reducing retirement benefits
because of the limitation on compensation under Section 401(a)(17) of
the Code or the maximum benefit limitations under Section 415 of the
Code;
(i)(B) is the benefit that would be payable to the
Participant under the cash balance provisions of the Retirement Plan if
the Participant's Cash Balance Account were credited with an amount
determined by multiplying the Participant's Final Average Pay by the
sum of the Participant's annual compensation contribution percentages
under the Retirement Plan (beginning with the Plan Year for which the
Participant is first allocated an annual contribution credit), but
without any interest credits under the Retirement Plan, and determined
before applying any provision reducing retirement benefits because of
the limitation on compensation under Section 401(a)(17) of the Code or
the maximum benefit limitations under Section 415 of the Code; and
(ii) is the benefit payable to the Participant under
the cash balance provisions of the retirement Plan after applying the
limitation on compensation under Section 401(a)(17) of the Code and the
maximum benefit limitations under Section 415 of the Code.
5. Enhanced Cash Balance Benefit.
(a) Eligibility. A Participant who is otherwise eligible
to receive a benefit under Section 3 or Section 4 will receive the benefit under
this Section if the Participant has been designated by the Committee as eligible
to receive an enhanced cash balance benefit.
(b) Benefit. The Committee in its complete discretion may
provide one or more Participants with an enhanced benefit that is greater than
the benefit provided under Section 3 or Section 4. The terms and conditions of
the enhanced benefit for each eligible Participant as approved by the Committee
will be set forth on a separate Appendix to the Plan.
6. Benefit for Grandfathered Participants.
(a) Eligibility. A Participant who is a Grandfathered
Participant and whose retirement benefit under the Retirement Plan is determined
and paid to the Participant under a Prior Plan Formula will be entitled to the
benefit described in subsection (b) below.
(b) Benefit. A Grandfathered Participant will be entitled
to receive a benefit under the Special Plan in an amount equal to the difference
between (i) and (ii) where:
(i) is the Retirement Plan benefit that would be
payable to the Participant under the Prior Plan Formula determined
before applying any provision reducing retirement benefits because of
the limitation on compensation under Section 401(a)(17) of the Code or
the maximum benefit limitations under Section 415 of the Code; and
(ii) is the benefit payable to the Participant under
the Prior Plan Formula after applying the limitation on compensation
under Section 401(a)(17) of the Code and the maximum benefit
limitations under Section 415 of the Code.
7. Nonduplication of Benefits. A Participant who is eligible
to receive a Special Plan benefit under more than one Section will receive the
benefit determined under Section 3, Section 4, Section 5 or Section 6, whichever
Section produces the greatest benefit, but the Participant may not receive a
benefit under more than one of such Sections.
8. Vesting. Subject to the rights of general creditors as set
forth in Section 11 and the right of the Company to discontinue the Special Plan
as provided in Section 14, a Participant will have a vested and nonforfeitable
interest in the benefits payable under the Special Plan to the same extent and
in the same manner as the Participant's benefit is vested under the Retirement
Plan.
9. Commencement of Benefits. The benefits payable under the
Special Plan will be paid or will begin at the same time as the Participant's
benefit is paid or begins under the Retirement Plan.
10. Form of Benefits. The benefits payable under the Special
Plan will be paid to the Participant in the same form as the Participant's
benefit is paid under the Retirement Plan. Notwithstanding the foregoing, a
Participant may elect in accordance with rules and procedures adopted by the
Committee from time to time to receive his Special Plan benefit in a lump sum
payment without regard to the form of payment of his Retirement Plan benefit,
provided such election is made by the Participant at least 12 months before
benefits under the Special Plan are scheduled to be paid. All forms of payment
under the Special Plan will be calculated using the same actuarial factors and
assumptions that are used under the Retirement Plan to convert a Retirement Plan
benefit to the same form of payment.
11. Funding of Benefits. The Special Plan will be unfunded. All
benefits payable under the Special Plan will be paid from the Company's general
assets, and nothing contained in the Special Plan will require the Company to
set aside or hold in trust any funds for the benefit of a Participant, who will
have the status of a general unsecured creditor with respect to the Company's
obligation to make payments under the Special Plan. Any funds of the Company
available to pay benefits under the Special Plan will be subject to the claims
of general creditors of the Company and may be used for any purpose by the
Company.
12. Administration of the Plan. The Committee will administer
the Special Plan and will keep a written record of its action and proceedings
regarding the Special Plan and all dates, records, and documents relating to its
administration of the Plan. The Committee is authorized to interpret the Special
Plan, to make, amend, and rescind such rules as it deems necessary for the
proper administration of the Special Plan, to make all other determinations
necessary or advisable for the administration of the Special Plan and to correct
any defect or supply any omission or reconcile any inconsistency in the Special
Plan in the manner and to the extent that the Committee deems desirable to carry
the Special Plan into effect. The powers and duties of the Committee will
include, without limitation, the following:
(i) determining the amount of benefits payable to
Participants and authorizing and directing the Company with respect to
the payment of benefits under the Special Plan;
(ii) construing and interpreting the Special Plan
whenever necessary to carry out its intention and purpose and making
and publishing such rules for the regulation of the Special Plan as are
not inconsistent with the terms of the Special Plan; and
(iii) compiling and maintaining all records it
determines to be necessary, appropriate or convenient in connection
with the administration of the Special Plan.
Any action taken or determination made by the Committee will, subject to appeals
as provided in section 13 below, be conclusive on all parties.
13. Claims Procedure.
(a) Claim for Benefits. If a Participant does not,
receive the timely payment of the benefits which the Participant believes are
due under the Special Plan, the Participant may make a claim for benefits in the
manner hereinafter provided.
All claims for benefits under the Special Plan will be
made in writing and will be signed by the Participant. Claims will be submitted
to the Committee, or to a representative designated by the Committee. If the
Participant does not furnish sufficient information with the claim for the
Committee to determine the validity of the claim, the committee will indicate to
the Participant any additional information which is necessary for the Committee
to determine the validity of the claim.
Each claim hereunder will be acted on and approved or
disapproved by the Committee within 90 days following the receipt by the
Committee of the information necessary to process the claim. In the event the
Committee denies a claim for benefits in whole on in part, the Committee will
notify the Participant in writing of the denial of the claim and notify the
Participant of his right to a review of the Committee's decision. Such notice by
the Committee will also set forth, in a manner calculated to be understood by
the Participant, the specific reason for such denial, the specific provisions of
the Special Plan on which the denial is based, a description of any additional
material or information necessary to perfect the claim with an explanation of
the Special Plan's appeals procedure as set forth in this Section.
If no action is taken by the Committee on an
Participant's claim within 90 days after receipt by the Committee, such claim
will be deemed to be denied for purposes of the following appeals procedure.
(b) Appeal of Claims Denial. Any Participant whose claim
for benefits is denied in whole or in part may appeal for a review of the
decision by the full Committee. Such appeal must be made within three months
after the Participant has received actual or constructive notice of the denial
as provided above. An appeal must be submitted in writing within such period and
must:
(i) request a review by the Committee of the claim
for benefits under the Special Plan;
(ii) set forth all of the grounds upon which the
Participant's request for review is based and any facts in
support thereof; and
(iii) set forth any issues or comments which the
Participant deems pertinent to the appeal.
The Committee will regularly review appeals by Participants.
The Committee will act upon each appeal within 60 days after receipt thereof
unless special circumstances require an extension of the time for processing, in
which case a decision will be rendered by the Committee as soon as possible but
not later than 120 days after the appeal is received by the Committee.
The Committee will make a full and fair review of each appeal
and any written materials submitted by the Participant in connection therewith.
The Committee may require the Participant to submit such additional facts,
documents, or other evidence as the Committee in its discretion deems necessary
or advisable in making its review. The Participant will be given the opportunity
to review pertinent documents or materials upon submission of a written request
to the Committee, provided the Committee finds the requested documents or
materials are pertinent to the appeal.
On the basis of its review, the Committee will make an
independent determination of the Participant's eligibility for benefits under
the Special Plan. The decision of the Committee on any claim for benefits will
be final and conclusive upon all parties thereto.
In the event the Committee denies an appeal in whole or in
part, the Committee will give written notice of the decision to the Participant,
which notice will set forth, in a manner calculated to be understood by the
Participant, the specific reasons for such denial and which will make specific
reference to the pertinent provisions of the Special Plan on which the
Committee's decision is based.
14. Miscellaneous.
(a) No Right to Employment. Nothing in the special Plan
will confer upon a Participant the right to continue in the employ of the
Company or an affiliate of the Company or will limit or restrict the right of
the Company or any affiliate to terminate the employment of a Participant at any
time or without cause.
(b) Assignment. Except as otherwise provided in the
Special Plan, no right or benefit under the Special Plan will be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and
any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge
such right or benefit will be void. No such right or benefit will in any manner
be liable for or subject to the debts, liabilities or torts of a Participant.
(c) Amendment and Termination. The Special Plan may be
amended or terminated by the Board of Directors at any time, provided that no
such action will have the effect of decreasing a Participant's accrued benefit
without the Participant's written consent.
(d) ERISA. The Special Plan is intended to qualify as a
plan of deferred compensation providing benefits for "management or highly
compensated" employees within the meaning of Sections 201, 301 and 401 of ERISA
and therefore exempt from Parts 2, 3 and 4 of Title I of ERISA. In the event the
Special Plan does not qualify for either exemption, as determined by the final
judgment of a court of competent jurisdiction or by an opinion of counsel, the
Special Plan will terminate, and, except for accrued benefits and benefits in
pay status, no further benefits will accrue or be paid hereunder.
Notwithstanding the foregoing or any other provision of the Plan to the
contrary, the Company will be obligated to pay all accrued benefits and benefits
in pay status at the time of Plan termination.
(e) Invalid Provisions. If any provision in the Special
Plan is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remaining provisions will nevertheless continue to full force
and effect without being impaired or invalidated in any way.
(f) Governing Law. The special Plan will be construed and
governed in all respects in accordance with applicable federal law and, to the
extent not preempted by such federal law, in accordance with the law of the
State of Texas, including the Texas statute of limitations, but without regard
to the conflicts of laws principles of such State.
Executed at Dallas, Texas this 1st day of July 1, 1997.
CENTRAL AND SOUTH WEST CORPORATION
By /s/ E.R. Brooks
E. R. Brooks, Chairman and
Chief Executive Officer