Exhibit 10(b)
SALARY DEFERRAL PROGRAM
of the
TEXAS UTILITIES COMPANY SYSTEM
(As restated effective April 1, 1998)
Section 1. Purpose
1.1 Purpose. The Salary Deferral Program of the Texas Utilities
-------
Company System (the "Plan") is established, effective April 1, 1991, and is
amended and restated as of April 1, 1998, for the purpose of providing a
mechanism for certain key employees of Participating Employers to defer a
portion of their Salary and Bonus, motivating key employees, and recognizing
the contributions of such employees to the Company as the Plan sponsor. The
Plan is designed as an unfunded arrangement maintained "primarily for the
purpose of providing deferred compensation for a select group of management or
highly compensated employees" as determined under the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"). ERISA Section
201(2).
Section 2. Definitions
2.1 Definitions. Whenever used herein, the following terms shall
-----------
have the meanings set forth below:
(a)"Account" means the individual account maintained by the Company for each
Participant for recording Salary and Bonus Deferrals made by, and Matching
Awards made on behalf of, each Participant in the Plan, and earnings on such
Deferrals and Matching Awards.
(b)"Adjustment Date" means the last day of each calendar quarter and such
other dates as the Committee in its discretion may prescribe.
(c)"Beneficiary" means the person or persons named by the Participant as the
recipient(s) of any distribution remaining to be paid to the Participant under
the Plan upon the Participant's death.
(d)"Board of Directors" means the Board of Directors of the Company.
(e)"Bonus" means the cash portion of any future bonus or incentive award paid
by a Participating Employer to a Participant with respect to services to be
performed by a Participant during a Plan Year, or any other future special or
extraordinary cash payment payable by a Participating Employer to a
Participant during a Plan Year.
(f)"Business Unit" means a subsidiary, division or operating unit of the
Company designated by the Chief Executive Officer of the Company which will
focus on its own unique products, services and markets.
(g)"Change in Control" means a change in control of a nature that would be
required to be reported in response to Item 1(a) of the Securities and
Exchange Commission Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), or would have been required to be so reported but for the
fact that such event had been "previously reported" as that term is defined
in Rule 12b-2 of Regulation 12B under the Exchange Act; provided that, without
limitation, such a change in control shall be deemed to have occurred if (i)
any Person is or becomes the beneficial owner (as defined in Rule 13-d3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities ordinarily (apart from rights accruing under special
circumstances) having the right to vote at elections of directors ("Voting
Securities"), or (ii) individuals who constitute the Board of Directors on the
date hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board (either by a specific vote or
by approval of the proxy statement of the Company in which such person is
named as a nominee for director, without objection to such nomination) shall
be, for purposes of this clause (ii), considered as though such person were a
member of the Incumbent Board, or (iii) a recapitalization of the Company
occurs which results in either a decrease by 33% or more in the aggregate
percentage ownership of Voting Securities held by Independent Shareholders (on
a primary basis or on a fully diluted basis after giving effect to the
exercise of stock options and warrants) or an increase in the aggregate
percentage ownership of Voting Securities held by non-Independent Shareholders
(on a primary basis or on a fully diluted basis after giving effect to the
exercise of stock options and warrants) to greater than 50%. For purposes of
this definition, the term "Person" shall mean and include any individual,
corporation, partnership, group, association or other "person", as such term
is used in Section 14(d) of the Exchange Act, other than the Company, a
subsidiary of the Company or any employee benefit plan(s) sponsored or
maintained by the Company or any subsidiary thereof, and the term "Independent
Shareholder" shall mean any shareholder of the Company except any employee(s)
or director(s) of the Company or any employee benefit plan(s) sponsored or
maintained by the Company or any subsidiary thereof.
(h)"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(i)"Committee" means the Salary Deferral Program Administrative Committee,
which shall be comprised, initially, of members who serve on the Employees'
Thrift Plan Committee. Subsequently, members of the Committee shall be
appointed by the Chief Executive of the Company.
(j)"Company" means Texas Utilities Company, its successors and assigns.
(k)"Deferral" means the deferral of Salary and/or Bonus under this Plan as
provided for in Section 4 hereof.
(l)"Deferral Period" means the period of deferral, beginning with the first
day of the applicable Plan Year, which shall be seven years for the Seven Year
Option and which shall be the period ending with Retirement for the Retirement
Option. Notwithstanding the foregoing, the Deferral Period shall end on the
date of death, Disability, or termination of employment and, to the extent
that amounts otherwise eligible for distribution under this Plan combined with
the Participant's other remuneration exceeds the Applicable Employee
Remuneration for such year, and subject to the subsequent Transition
Provision, the Deferral Period for such excess amount shall end with
Retirement or such earlier date as of which such amounts, or any part thereof,
combined with other remuneration does not exceed the Applicable Employee
Remuneration. For purposes of this definition, "Applicable Employee
Remuneration" means applicable employee remuneration as that term is defined
in Section 162(m), or any successor provision, of the Code. Transition
2
provision, of the Code. Transition Provision: Notwithstanding any other
provisions contained herein, the Deferral Period for amounts subject to an
Election made for periods prior to April 1, 1995, shall be the Deferral
Deferral Period applicable at the time of the Election.
(m)"Disability" shall have the meaning given to it under the Texas Utilities
System Employee Long-Term Disability Income Plan.
(n)"Early Retirement" means Retirement at age fifty-five or later but prior to
Normal Retirement.
(o)"Eligible Employee" means an employee of a Participating Employer whose
Salary as of January 1, 1991, is $80,000 or more. For each year subsequent to
1991, an Eligible Employee is an Employee whose Salary as of January 1 of such
year is $80,000 or more, as indexed consistent with the Consumer Price Index
for such year.
(p)"Matching Award" means contributions made by the Participating Employers
pursuant to Section 5.1 herein.
(q)"Normal Retirement" means Retirement at age sixty-two or later.
(r)"Participant" means an Eligible Employee who elects to participate in the
Plan and whose Account(s) has not been completely distributed.
(s)"Participating Employer" means the Company and each of its subsidiaries,
affiliates or Business Units which elect to participate and adopt this Plan
and are approved by the Committee for participation in this Plan. The
Participating Employers, as of the date of the restatement of this Plan (i.e.,
April 1, 1998), are listed on Exhibit "A" attached hereto. Participation in
the Plan by additional Participating Employers will commence as of the
beginning of the Plan Year following Committee approval of such participation.
(t)"Plan Administrator" means the person(s) or entities appointed by the
Committee to assist in carrying out the operation of the Plan.
(u)"Plan Year" means the twelve-month period beginning April 1 and ending
March 31.
(v)"Rate" means the earnings rate to be applied to certain Deferrals and
Matching Awards under Section 6.2 and pursuant to Section 9.1 hereof for the
Deferral Period which shall be the greater of: (i) the actual earnings rate,
as determined by the Trustee, for assets held in Trust under the Seven-Year
Option and invested in accordance with the provisions of Section 6.2; and (ii)
the Alternative Rate. The term "Alternative Rate" shall mean the average
earnings rate, as determined by the Trustee, of interest rates payable on
Treasury Notes of the United States Government with a maturity period of ten
years. Income credited under the Alternative Rate shall be determined by
multiplying the Alternative Rate for the Plan Year within the Deferral Period
times the average balance in the Account for such Plan Year, including income
earned for prior periods. Income on all Accounts under the Plan shall be
deemed to have been earned on a consistent basis.
(w)"Retirement" shall have the meaning given it under the Retirement Plan for
Employees of the Texas Utilities Company System.
3
(x)"Retirement Option" means the option to defer receipt of certain amounts of
Salary and Bonus until Retirement.
(y)"Salary" means the annualized rate of normal base pay earnings, prior to
any deferrals, of an Employee exclusive of overtime, bonuses or any fringe
benefits.
(z)"Seven Year Option" means the option to defer receipt of certain amounts of
Salary and Bonus for seven years.
(aa)"Trust" means the trust established by Texas Utilities Company to assist
it in meeting its obligations under the Plan.
(bb)"Trustee" means the trustee appointed by the Committee to hold assets of
the Plan.
(cc)"Vesting Period" means the period beginning with the date of the beginning
of the Plan Year of deferral and ending with the end of the seventh Plan Year.
Section 3. Deferral Eligibility and Participation
3.1 Eligibility. An Eligible Employee shall be eligible to
-----------
participate in the Plan as of the beginning of the Plan Year upon compliance
with the provisions of Section 4 herein.
3.2 Participation. All Eligible Employees may elect on an election
-------------
form prescribed by the Committee to make Deferrals of a percentage of Salary
and Bonus, under the Retirement Option, the Seven Year Option, or a
combination thereof, in one percent (1%) increments, up to a maximum of fifty
percent (50%) of Salary and one hundred percent (100%) of Bonus.
Section 4. Election to Defer
4.1 Deferral Election. An Eligible Employee may elect, irrevocably,
-----------------
by written notice to the Plan Administrator on an election form and in the
manner prescribed by the Plan Administrator, to defer a percentage of Salary
and Bonus, up to the maximum Deferral percentages provided for above, during
the Plan Year.
4.2 Salary Deferrals. Salary deferred under the Plan will be ratably
----------------
deducted in each pay period during the Plan Year.
4.3 Bonus Deferrals. Bonus deferred under the Plan will be deferred
---------------
at the time that the Bonus would otherwise have been paid.
Section 5. Matching Awards, Vesting, and Forfeitures.
5.1 Matching Awards. Each Participating Employer shall contribute to
---------------
the Account of each Participant employed by such Participating Employer, as a
Matching Award, an amount equal to one hundred percent (100%) of the
Participant's Salary Deferral up to a maximum Salary Deferral of eight percent
(8%). Such contribution shall be credited at the time of the crediting of the
Salary Deferral amount to be matched.
5.2 Vesting. Subject to the forfeiture provisions of Section 5.3, a
-------
Participant shall at all times be one hundred percent (100%) vested in the
Participant's Salary Deferrals, Bonus Deferrals and all earnings thereon. A
Participant shall be one hundred percent (100%) vested in the Participant's
Matching Awards, and on income earned on such Matching Awards at the end of
the Vesting Period. Notwithstanding any other provision of this Plan, a
4
Participant's Account shall become one hundred percent (100%) vested upon the
Participant's Normal Retirement, death, or Disability regardless of the
applicable Vesting Period.
5.3 Forfeitures. The following amounts shall be forfeited from a
-----------
Participant's Account as of the date upon which the forfeiture is created:
(a) Seven Year Option Forfeitures.
-----------------------------
(1) Early Retirement. An amount equal to four percent (4%) of the portion of
----------------
the Participant's Account balance relating to Matching Awards and earnings
thereon, and Salary Deferrals subject to Matching Awards and earnings thereon,
for each full year Retirement occurs prior to Normal Retirement shall be
forfeited.
(2) Termination for other than Death, Disability or Retirement. If termination
----------------------------------------------------------
of service with the Company occurs for reasons other than death, Disability,
or Retirement, Matching Awards and all earnings thereon shall be forfeited.
(b) Retirement Option Forfeitures.
-----------------------------
(1) Early Retirement. An amount equal to four percent (4%) of the
----------------
Participant's Account balance relating to non-vested Matching Awards and
earnings thereon, and Salary Deferrals subject to Matching Awards and earnings
thereon, for each full year Retirement occurs prior to Normal Retirement shall
be forfeited.
(2) Termination for other than Death, Disability or Retirement. If termination
----------------------------------------------------------
of service with the Company occurs for reasons other than death, Disability,
or Retirement, Matching Awards and all earnings thereon for Plan Years which
are nonvested, shall be forfeited.
Section 6. Investments and Earnings
6.1 Investments and Earnings For Deferrals and Matching Awards After
----------------------------------------------------------------
April 1, 1998. With respect to Salary and Bonus Deferrals and Matching Awards
- -------------
made from and after April 1, 1998, the amount credited to a Participant's
Account shall be adjusted as of each Adjustment Date to reflect such gain,
loss and/or expenses incurred based on the experience of the investments
selected by the Participant prior to the date prescribed by the Committee for
the investment of his or her Account and taking into account additional
Deferrals credited to and distributions made from such Account since the last
Adjustment Date. The Committee shall have sole and absolute discretion with
respect to the number and type of investment choices made available for
selection by Participants, the timing and manner of Participant investment
elections and the method by which adjustments are made. The designation of
investment choices by the Committee shall be for the sole purpose of adjusting
Accounts pursuant to this Section and this provision shall not obligate the
Participating Employers to invest or set aside any assets for the payment of
benefits hereunder; provided, however, that a Participating Employer may
invest a portion of its general assets in investments, including investments
which are the same as or similar to the investment choices designated by the
Committee and selected by Participants, but any such investments shall remain
part of the general assets of such Participating Employer and shall not be
deemed or construed to grant a property interest of any kind to any
Participant, designated beneficiary or estate. The Committee shall notify the
Participants of the investment choices available and the procedures for making
and changing investment elections.
6.2 Investments and Earnings For Deferrals and Matching Awards Made
---------------------------------------------------------------
Prior to April 1, 1998. The Trustee shall continue to invest Salary Deferrals
- ----------------------
and Matching Awards made prior to April 1, 1998 under the Seven
5
Year Option, together with all earnings on such Salary Deferrals and Matching
Awards, in a fixed income fund of investment grade securities under investment
guidelines established by the Committee. The Trustee shall continue to invest
all other contributions to Participants' Accounts made prior to April 1, 1998
ina manner consistent with investment guidelines established by the Committee.
At the time of distribution of the portion of Accounts attributable to Salary
Deferrals and Matching Awards made prior to April 1, 1998, Participants will
receive their Account balances relating to such pre-April 1, 1998 Salary
Deferrals and Matching Awards, including income determined by applying the
Rate.
Section 7. Participant Accounts
7.1 Separate Accounts. The Plan Administrator shall establish and
-----------------
maintain separate individual Accounts for each Participant for Salary and
Bonus Deferrals, Matching Awards and earnings thereon for each Plan Year.
7.2 Unsecured Interest. No Participant or Beneficiary shall have any
------------------
security interest whatsoever in any assets of the Company or any Participating
Employer. To the extent that any person acquires a right to receive payments
under the Plan, such right shall not be secured or represented by any assets
of the Company or any Participating Employer.
Section 8. Distribution of Accounts
8.1 Value of Participant's Accounts.
-------------------------------
(a) Deferrals and Matching Awards Made On or After April 1, 1998. The value of
------------------------------------------------------------
the portion of a Participant's Account relating to Salary and Bonus Deferrals
and Matching Awards made on or after April 1, 1998, shall be determined based
upon the amount credited to such Account as of the most recent Adjustment Date
plus any Deferrals and Matching Awards credited to such Account since such
Adjustment Date.
(b) Deferrals and Matching Awards Made Prior to April 1, 1998. The value of
---------------------------------------------------------
the portion of a Participant's Account relating to Salary Deferrals and
Matching Awards made prior to April 1, 1998 shall be determined as of the last
day of the applicable Deferral Period, or, if earlier, at termination of
employment.
(c) Reduction of Accounts Upon Distributions and Forfeitures. The amount of
--------------------------------------------------------
each distribution made with respect to an Account and any forfeiture amounts
applied pursuant to Section 5.3 shall be deducted from the balance credited to
such Account at the time of distribution or forfeiture.
8.2 Form and Timing of Distribution. The value of the Participant's
-------------------------------
Accounts at distribution shall be paid in cash, as follows:
(a) Seven-Year Option -in a lump-sum distribution as soon as practicable after
-----------------
the end of the Deferral Period or, if earlier, termination of employment, but
in no event later than sixty days following such date. No interest shall
accrue or be paid for the period from the end of the Deferral Period until
distribution.
6
(b) Retirement Option -
-----------------
(i) If Participant Retires - in twenty annual installments beginning in the
----------------------
year after the date of such Retirement. With respect to the portion of the
Participant's Account relating to Salary and Bonus Deferrals and Matching
Awards made on or after April 1, 1998, the Participant shall have a one-time,
irrevocable election prior to the commencement of such installments to have
such installments paid: (1) on a fixed annuity basis using a fixed annuity
rate of return determined by the Committee ("Fixed Annuity"); or (2) on a
variable annuity basis taking into consideration the earnings and losses
credited to the Participant's Account as a result of the investment elections
made by the Participant during the annuity period ("Variable Annuity"); or (3)
a combination of a Fixed Annuity and a Variable Annuity as selected by the
Participant in 1% increments. With respect to the portion of the
Participant's Account relating to Salary Deferrals and Matching Awards made
prior to April 1, 1998, such installments shall be in a fixed amount which
shall amortize the value of such portion of the Participant's Account over
twenty annual installments using the Rate as a projected earnings rate of
return. In the event of the death of a Participant or Beneficiary during the
distribution period, the Plan Administrator may direct that the remainder of
the Account be distributed to the estate of the Participant or Beneficiary in
a lump-sum distribution as soon as practicable after death occurs.
(ii) If Participant Terminates - in a lump-sum distribution as soon as
-------------------------
practicable after termination occurs but in no event later than sixty days
following such date. No interest shall accrue or be paid for the period from
the date of termination until distribution.
Section 9. Certain Elections for Pre-April 1, 1998 Participants
9.1 Election to Continue Under Prior Plan Provisions. Notwithstanding
------------------------------------------------
anything herein to the contrary, Eligible Employees who, as of March 31,
1998, were Participants in this Plan will be given the opportunity,
pursuant to a one-time, irrevocable written election, to have certain Plan
provisions relating to permitted Deferrals, Matching Awards and investments
which were in effect immediately prior to the effective date of the
restatement of this Plan and are described in Exhibit "B" attached hereto and
incorporated herein by reference (the "Prior Plan Provisions") apply with
respect to their future Plan participation. Such election shall be made at
the time and on an election form prescribed by the Committee.
9.2 Election for Investment of Pre-April 1, 1998 Deferrals and
----------------------------------------------------------
Matching Awards. Notwithstanding anything herein to the contrary, Eligible
- ---------------
Employees who, as of March 31, 1998, were Participants in this Plan and who do
not make the election provided for in Section 9.1 to have the Prior Plan
Provisions apply to their future Plan participation, will be given the
opportunity, pursuant to a one-time, irrevocable written election, to have the
investment provisions set forth in Section 6.1 and the valuation provisions
set forth in Section 8.1(a) apply to the entirety of their Account, including
Salary Deferrals and Matching Awards made prior to April 1, 1998. Such
election shall be made at the time and on an election form prescribed by the
Committee. The Account of each Participant who makes such election shall be
valued as of March 31, 1998 using the actual rate of return of such Account
assets in accordance with the investment provisions of Section 6.2. From and
after April 1, 1998, the provisions of Sections 6.2 and 8.1(b) shall not apply
to any portion of their Account. Furthermore, the rate of return calculated
under Section 8.2(b) shall, with respect to the Participant's entire Account,
be the actual rate of return credited to the Participant's Account as of the
Adjustment Date in accordance with Section 6.1.
7
Section 10. Nontransferability
10.1 Nontransferability. In no event shall the Company or any
------------------
Participating Employer make any distribution or payment under this Plan to any
assignee or creditor of a Participant or a Beneficiary. Prior to the time of
a distribution or payment hereunder, a Participant or a Beneficiary shall have
no right by way of anticipation or otherwise to assign or otherwise dispose of
any interest under this Plan.
Section 11. Designation of Beneficiaries
11.1 Specified Beneficiary. A Participant shall designate a
---------------------
Beneficiary or Beneficiaries who, upon the Participant's death are to receive
the amounts that otherwise would have been paid to the Participant. All
Beneficiary designations shall be in writing and signed by the Participant,
and shall be effective only if and when delivered to the Plan Administrator
during the lifetime of the Participant. A Participant may, from time to time
during his lifetime, change his Beneficiary or Beneficiaries by a signed,
written instrument delivered to the Plan Administrator. The payment of
amounts shall be in accordance with the last unrevoked written designation of
the Beneficiary that has been signed and so delivered.
11.2 Estate as Beneficiary. If a Participant designates a
---------------------
Beneficiary without providing in the designation that the Beneficiary must be
living at the time of each distribution, the designation shall vest in the
Beneficiary all of the distributions whether payable before or after the
Beneficiary's death, and any distributions remaining upon the Beneficiary's
death shall be made to the Beneficiary's estate. In the event a Participant
shall not designate a Beneficiary or Beneficiaries, or if, for any reason,
such designation shall be ineffective, in whole or in part, as determined
solely in the discretion of the Plan Administrator, the distribution that
otherwise would have been paid to such Participant shall be paid to the
Participant's estate.
Section 12. Rights of Participants
12.1 Employment. All Participants understand they are employees at
----------
will. Therefore, nothing in the Plan shall interfere with or limit in any way
the right of the Company or any Participating Employer to terminate, for any
or no reason, any Participant's employment at any time, nor confer upon a
Participant any right to continue in the employ of the Company or any
Participating Employer.
Section 13. Administration
13.1 Administration. The Committee shall be responsible for the
--------------
administration of the Plan. The Committee is authorized, in its sole
discretion, to interpret the Plan, to prescribe, amend, and rescind rules and
regulations relating to the Plan, provide for conditions and assurances deemed
necessary or advisable to protect the interests of the Company, and to make
all other determinations necessary or advisable for the administration of the
Plan. The determination of the Committee, interpretation or other action made
or taken pursuant to the provisions of the Plan, shall be final and shall be
binding and conclusive for all purposes and upon all persons whomsoever. The
Committee shall appoint a Plan Administrator to assist in carrying out the
operations of the Plan and a Trustee of the Trust to accompany the Plan.
13.2 Annual Reports. The Plan Administrator shall render annually a
--------------
written report to each Participant which shall set forth, at a minimum, the
Participant's Account balances as of the end of the most recent Plan Year.
8
Section 14. Amendment or Termination of the Plan
14.1 Amendment or Termination of the Plan. The Board of Directors
------------------------------------
may amend, terminate, or suspend the Plan at any time. Any such amendment,
termination, or suspension of the Plan shall be effective on such date as the
Board of Directors may determine. An amendment or modification of the Plan
may affect Participants at the time thereof as well as future Participants,
but no amendment or modification of the Plan for any reason may diminish any
Participant's Accounts as of the effective date thereof. As soon as
practical, but in no event more than fifteen (15) days following Plan
termination, the Participating Employers shall make irrevocable contributions
to the Trust in an aggregate amount, as determined by the Committee, which
when added to the total value of the assets of the Trust at such time equals
the total amount credited to all Accounts as of the date of Plan termination.
Each Participant shall receive, as soon as practical after Plan termination,
but in any event within thirty (30) days following Plan termination, a lump
sum distribution of his Account based on the value of his Account as of the
date of Plan termination.
Section 15. Corporate Changes
15.1 Dissolution or Liquidation. Notwithstanding any provision
--------------------------
herein to the contrary, upon the dissolution or liquidation of the Company,
the Participants' Accounts shall vest as of the day preceding the date of
dissolution or liquidation and shall not be subject to the forfeiture
provisions of this Plan. The Company shall cause the full amount of each
Participant's Account to be paid in cash in a lump sum to the Participant, or
his Beneficiary, as soon as is practicable, but in no event later than sixty
days following the date of dissolution or liquidation.
15.2 Change in Control. Notwithstanding anything in this Plan to the
-----------------
contrary, in the event of a Change in Control: (i) the Participants' Accounts
shall vest as of the day immediately preceding the date of such Change in
Control and shall not be subject to the forfeiture provisions of this Plan,
and (ii) the Participating Employers shall, as soon as possible, but in any
event within thirty (30) days, following such Change in Control, make
irrevocable contributions to the Trust in an aggregate amount which, when
added to the total value of the assets of the Trust at such time, equals the
total amount credited to all Accounts as of the date of such Change in
Control. Thereafter, the Participating Employers shall make monthly
contributions to the Trust in aggregate amounts sufficient to maintain the
total value of Trust assets at an amount equal to the total amount credited to
all Accounts. Notwithstanding any provision of this Plan to the contrary, no
action taken on or within two years following such Change in Control to amend
or terminate this Plan shall be effective unless written consent thereto is
obtained from a majority of the Participants.
Section 16. Requirements of Law
16.1 Governing Law. The Plan, and all agreements hereunder, shall be
-------------
construed in accordance with and governed by the laws of the State of Texas.
Section 17. Withholding Taxes
17.1 Withholding Taxes. The Company shall have the right to deduct
-----------------
from all cash payments under the Plan or from a Participant's compensation an
amount necessary to satisfy any federal, state, or local withholding tax
requirements.
9
Section 18. Investment and Funding
18.1 Trust. The benefits to be derived by Participants in the Plan
-----
will be funded through the Trust, provided, however, that any assets held by
the Trust shall at all times be subject to the claims of judgment creditors of
the Company.
18.2 Funding of Trust. With respect to Deferrals made under the Seven
----------------
Year Option, the Participating Employers shall, promptly after Deferrals are
credited to Participants' Accounts, provide the Trust with resources in
amounts equal to the amounts of such Deferrals. With respect to Deferrals
made under the Retirement Option, the Participating Employers shall fund the
Trust through the purchase of corporate owned life insurance or such other
Trust assets as may be determined by the Committee from time to time.
18.3 Distributions from Trust. If Trust assets allocated to any
------------------------
Participant's Account for a Plan Year are less than the amount required to
affect a distribution to such Participant provided for in this Plan, the
applicable Participating Employer will pay such difference either through the
Trust or directly to the Participant.
18.4 Funding and Distribution Requirements Under Certain Circumstances.
-----------------------------------------------------------------
The provisions of this Section 18 shall be subject to (and, if deemed to be
contradicting, overridden by) the provisions of Section 15 of this Plan.
EXECUTED this day of , 1998.
TEXAS UTILITIES COMPANY
By: /s/ Peter B. Tinkham
-----------------------------------------
Peter B. Tinkham, Secretary
10
EHIBIT "A"
PARTICIPATING EMPLOYERS
AS OF APRIL 1, 1998
Texas Utilities Company
Texas Energy Industries Inc.
Texas Utilities Electric Company
Texas Utilities Fuel Company
Texas Utilities Mining Company
Texas Utilities Services Inc.
Texas Utilities Properties Inc.
Basic Resources Inc.
CHACO Energy Company
Southwestern Electric Service Company
ENSERCH Corporation
Enserch Processing, Inc.
Enserch Gas Transmission Company
Lone Star Gas Company of Texas, Inc.
EXHIBIT "B"
Prior Plan Provisions
The following provisions shall apply to all future Plan participation of
Participants who make the one-time irrevocable election to continue to be
governed by the Prior Plan Provisions in Section 9.1 of the Plan:
1. Deferral Election. The Participant may elect, irrevocably, by
-----------------
written notice to the Plan Administrator on an election form and in the manner
prescribed by the Plan Administrator, to defer a percentage of Salary, in one
percent (1%) increments not to exceed a maximum of ten percent (10%), during
each Plan Year, in the Retirement Option, the Seven Year Option, or a
combination thereof. Deferrals of Bonus shall not be permitted.
2. Matching Awards. The Company shall contribute to each
---------------
Participant's Account, as a Matching Award, an amount equal to one hundred
percent (100%) of the amount of Salary deferred by the Participant. Such
contribution shall be credited at the time of the crediting of the Salary
Deferral amount to be matched.
3. Investments, Earnings and Valuation.
-----------------------------------
(a) The Trustee shall invest, as soon as administratively feasible, all
contributions received for Accounts held in Trust under the Seven Year Option
of the Plan in a fixed income fund of investment grade securities under
investment guidelines established by the Committee. Interest received on the
investments shall be reinvested in such fund. All other contributions shall
be invested in accordance with investment guidelines established by the
Committee.
(b) At the time of distribution, the Participant will receive his Account
balance including income determined by applying the Rate.
(c)The total of all assets held by the Trustee for Accounts held in Trust will
be deemed held in an unsegregated fund for valuation purposes. Each month the
Trustee shall determine the value of each unit by dividing the current value
of the fund by the total number of units held in all such Accounts. The value
of Accounts held in Trust under the Retirement Option of the Plan shall be
determined in the same manner as amounts deferred under the Seven Year Option
of the Plan.
4. Forfeitures. The following provisions shall apply with respect to
-----------
forfeitures in lieu of the provisions of Section 5.3 of the Plan. The amounts
described below shall be forfeited from an Account as of the date upon which
the forfeiture is created:
(a) Seven Year Option Forfeitures.
-----------------------------
(i) Early Retirement. An amount equal to four percent (4%) of the total
----------------
Account balance for each full year Retirement occurs prior to Normal
Retirement shall be forfeited.
(ii) Termination for other than Death, Disability or Retirement. If
----------------------------------------------------------
termination of service with the Company occurs for reasons other than death,
Disability, or Retirement, income on and contributions to the Matching Account
shall be forfeited and income in excess of six percent (6%) per annum credited
to Salary Deferrals shall be forfeited.
(b) Retirement Option Forfeitures.
-----------------------------
(i) Early Retirement. An amount equal to four percent (4%) of the total
----------------
Account balance for all non-vested Plan Years for each full year Retirement
occurs prior to Normal Retirement shall be forfeited.
(ii) Termination for other than Death, Disability or Retirement. If
----------------------------------------------------------
termination of service with the Company occurs for reasons other than death,
Disability, or Retirement, income earned on and contributions to the Matching
Account, for Plan Years which are nonvested, shall be forfeited and income in
excess of six percent (6%) per annum credited to Salary Deferrals shall be
forfeited for all nonvested Plan Years.
5. Value of a Participant's Account. The cash value of a Participant's
--------------------------------
Account shall be determined as of the last day of the applicable
Deferral Period, or, if earlier, at termination of employment.
6. Form and Timing of Distributions. The following provisions shall
--------------------------------
apply with respect to the form and timing of distributions in lieu of Section
8.2 of the Plan. The value of a Participant's Account at distribution shall
be paid in cash as follows:
(a) Seven-Year Option - in a lump-sum distribution as soon as practicable
-----------------
after the end of the Deferral Period or, if earlier, termination of
employment, but in no event later than sixty days following such date. No
interest shall accrue or be paid for the period from the end of the Deferral
Period until distribution.
(b) Retirement Option -
-----------------
(i) If Participant Retires - in twenty annual installments beginning twelve
----------------------
months after the date of such Retirement. Such installments shall be in a
fixed amount which shall amortize the value of the Participant's Account over
twenty annual installments using the Rate as a projected earnings rate of
return. In the event of the death of the Participant or Beneficiary during
the distribution period, the Plan Administrator may direct that the remainder
of the Account be distributed to the estate of the Participant or Beneficiary
in a lump-sum distribution as soon as practicable after death occurs.
(ii) If Participant Terminates - in a lump-sum distribution as soon as
-------------------------
practicable after termination occurs but in no event later than sixty days
following such date. No interest shall accrue or be paid for the period from
the date of termination until distribution.
7. Certain Inapplicable Provisions. The provisions of Sections 3.2,
-------------------------------
4.3, 5.1, 5.3, 6.1 and 8.1(a) of the Plan shall not apply and shall be of no
force or effect with respect to any portion of the Participant's Account or
his prior or future Plan participation. All of the remaining provisions of
the Plan shall remain in full force and effect.
Salary Deferral Program
of the
Texas Utilities Company System
This document constitutes part of a prospectus covering securities that have
been registered under the Securities Act of 1933.
February 20, 1998