PUBLIC SERVICE COMPANY OF NEW MEXICO
EXECUTIVE SAVINGS PLAN
The PUBLIC SERVICE COMPANY OF NEW MEXICO EXECUTIVE SAVINGS PLAN (the
"Plan") is adopted and approved on ________________________, 1998, to be
effective as of July 1, 1998. The Plan is established and maintained by the
Public Service Company of New Mexico (the "Company" or "PNM") solely for the
purpose of permitting certain of its Key Employees who participate in the Public
Service Company of New Mexico Master Employee Savings Plan ("MESP") to receive
contributions equal to amounts in excess of the limitations on contributions
imposed by the Internal Revenue Code of 1986, as amended (the "Code"), on
defined contribution plans to which that section applies.
Accordingly, the Company hereby adopts the Plan pursuant to the terms
and provisions set forth below:
ARTICLE I
DEFINITIONS
Wherever used herein the following terms shall have the meanings
hereinafter set forth:
1.1. "Board" means the Board of Directors of the Company or any
authorized committee of the Board.
1.2. "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any regulations relating thereto.
1.3. "Company" means the Public Service Company of New Mexico, a
corporation, or, to the extent provided in Section 8.8 below, any successor
corporation or other entity resulting from a merger or consolidation into or
with the Company or a transfer or sale of substantially all of the assets of the
Company.
1.4. "Compensation" as used in this Plan is defined in the Qualified
MESP, Section 2.05 ("Base Compensation," used in determining Employer
Contributions) or Section 2.19 ("Eligible Compensation," used in determining
Participant Contributions), as applicable.
1.5. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended. This Plan is an unfunded, nonqualified plan for the benefit of a
select group of management or highly compensated employees that is not subject
to the general funding or discrimination requirements of ERISA.
1.6. "Key Employee" means an employee who meets the requirements of
Code ss. 416(i) and who is a highly compensated employee and a member of a
select group of management, as such terms are used pursuant to Section 201(2) of
ERISA.
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1.7. "Participant" means a Key Employee of the Company who is a
Participant under the Qualified MESP who earns in excess of the Code ss.
401(a)(17) limitations and to whom or with respect to whom contributions, as
defined below, may be made under the Plan.
1.8. "Plan" means the Public Service Company of New Mexico Executive
Savings Plan, as adopted herein.
1.9. "Plan Year" means the calendar year or any other
12-consecutive-month period that runs concurrent with the Plan Year designated
in the Qualified MESP.
1.10. "Qualified MESP" means the Public Service Company of New Mexico
Master Employee Savings Plan ("MESP") established effective January 1, 1975, and
Amended and Restated effective January 1, 1998, as may be further amended from
time to time.
1.11. "Qualified MESP Company Matching and Employer Contribution" means
the total of all Matching and Employer Contributions made by the Company for the
benefit of a Participant under and in accordance with the terms of Article IV of
the Qualified MESP in any Plan Year.
1.12. "Qualified MESP Salary Reduction Contribution" means the Salary
Reduction Contribution made by the Company for the benefit of a Participant
under and in accordance with the terms of Article V of the Qualified MESP in any
Plan Year.
1.13. "Qualified MESP Subaccount A (Participant's Contribution)" means
the account established for a Participant under Article VI of the Qualified
MESP, and as used in this Plan shall mean only the separate account known as the
Salary Reduction Account.
1.14. "Qualified MESP Subaccount B (Employer's Contribution)" means the
account established for a Participant under Article VI of the Qualified MESP,
and as used in this Plan shall mean only the separate accounts known as Matching
Contributions Account and Employer Contributions Account.
1.15. "Supplemental Salary Reduction Agreement" means the written
Supplemental Salary Reduction Agreement entered into by a Participant with the
Company pursuant to this Plan.
1.16. "Supplemental Company Matching and Employer Contributions" means
the Matching and Employer Contributions made by the Company for the benefit of a
Participant under and in accordance with the terms of the Plan in any Plan Year.
1.17. "Supplemental Salary Reduction Contribution" means the Salary
Reduction Contribution made by the Company for the benefit of a Participant
under and in accordance with the terms of the Plan in any Plan Year.
1.18. "Supplemental Subaccount A (Supplemental Salary Reduction
Contributions)" means the account maintained by the Company under the Plan for a
Participant that is credited with amounts contributed under Section 3.2 of the
Plan.
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1.19. "Supplemental Subaccount B (Supplemental Company Matching and
Employer Contributions)" means the account maintained by the Company under the
Plan for a Participant that is credited with amounts contributed under Section
3.3 of the Plan.
1.20. "Valuation Date" shall mean the end of each calendar quarter or
any other period that runs concurrent with the Valuation Date designated in the
Qualified MESP.
ARTICLE II
ELIGIBILITY
A Participant in the Qualified MESP who has made the maximum elective
deferrals under Code ss. 402(g) or the maximum contributions under the terms of
the Qualified MESP and is a Key Employee shall be eligible to participate in the
Plan and to receive the Supplemental Salary Reduction Contributions as elected
by the Participant and Supplemental Company Matching and Employer Contributions
hereunder.
ARTICLE III
SUPPLEMENTAL CONTRIBUTIONS
3.1. Supplemental Salary Reduction Agreement. As a condition to the
Company's obligation to make a Supplemental Salary Reduction Contribution for
the benefit of a Participant pursuant to Section 3.2 below, the Participant must
execute a Supplemental Salary Reduction Agreement in the form attached hereto or
as modified by the Company from time to time. The Supplemental Salary Reduction
Agreement for any Plan Year shall be made before the beginning of that Plan Year
and shall remain in full force and effect for subsequent Plan Years unless
revoked by a Participant by written instrument delivered to the Company prior to
the beginning of the Plan Year in which such revocation is to be effective. This
Agreement is supplemental to the initial Salary Reduction Agreement made
pursuant to the Qualified MESP.
3.2. Supplemental Salary Reduction Contributions.
(a) Any Participant may elect to defer, pursuant to a Supplemental
Salary Reduction Agreement, the receipt of a portion of the compensation
otherwise payable to him or her by the Company in any Plan Year. The amount of
compensation deferred hereunder by a Participant shall be equal to:
(i) a percentage of such compensation not to exceed six
percent (6%), reduced by
(ii) the amount the Participant elects to have the Company
contribute to his or her Qualified MESP Subaccount A during
the same Plan Year, as reduced by limitations on contributions
imposed by the Code.
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The amount deferred pursuant to this paragraph (a) shall be a Supplemental
Salary Reduction Contribution allocated to the Supplemental Subaccount A
maintained for the Participant for such Plan Year.
(b) Should it be determined, after completion of all nondiscrimination
testing that an additional elective contribution could have been allocated to
the Participant's Qualified MESP Subaccount A for such Plan Year, then the
Participant may elect to have the additional amount:
(i) deducted from the Participant's Supplemental Subaccount A
and transferred to the Participant's Qualified MESP Subaccount
A; or
(ii) paid directly to the Participant; or
(iii) remain in this Plan.
Any transfer or payment of such additional amount shall occur no later
than March 31 of the Plan Year following the Plan Year for which such
nondiscrimination testing is made.
(c) In no event shall any deduction from the Participant's Supplemental
Subaccount A for any Plan Year pursuant to Paragraph (b) of this Section exceed
the amount that the Participant elected to defer for such Plan Year pursuant to
Paragraph (a) of this Section. No earnings or appreciation attributable to any
amount transferred or paid under Paragraph (b) of this Section shall be
transferred or paid but shall remain in the Supplemental Subaccount A for the
benefit of the Participant.
(d) The election by which a Participant elects to defer compensation
under a Supplemental Salary Reduction Agreement and the additional election
provided in Paragraph (b), above, shall be in writing, signed by the
Participant, and delivered to the Company prior to January 1 of the Plan Year in
which the compensation to be deferred is otherwise payable to the Participant;
except that:
(i) for the Plan Year in which the Plan is initially
implemented, a Participant may make such election within 30
days after the date on which the Plan is effective; and
(ii) for the Plan Year in which a Participant first becomes
eligible to participate in the Plan, such Participant may make
such election within 30 days after the date he or she becomes
eligible.
Any deferral election made by a Participant shall be irrevocable with respect to
the Plan Year covered by such election. A Participant may, however, revoke the
election by delivering to the Company a written instrument prior to the
beginning of the Plan Year for which such revocation is to be effective.
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3.3. Supplemental Company Matching and Employer Contributions.
(a) Each Plan Year, the Company shall make Supplemental Company
Matching and Employer Contributions to this Plan on behalf of each Participant
in an amount equal to:
(i) the Qualified MESP Company Matching Contribution (as
defined in Section 4.01(a)(2) of the Qualified MESP) and
Employer Contributions (as defined in Section 4.01(a)(4) of
the Qualified MESP) that would have been allocated to the
Qualified MESP Subaccount B of the Participant for the Plan
Year with respect to the amount deferred by the Participant
pursuant to Section 3.2(a)(1), without giving effect to any
reductions required by the limitations imposed by the Code on
the Qualified MESP, reduced by
(ii) the amount of the Qualified MESP Company Matching and
Employer Contributions actually allocated to the Participant's
Qualified MESP Subaccount B for the Plan Year.
(b) If amounts are deducted from a Participant's Supplemental
Subaccount A and transferred to the Participant's Qualified MESP Subaccount A
pursuant to the Participant's election under Section 3.2(b)(i), all Supplemental
Company Matching and Employer Contributions made pursuant to this Section
relating to such transferred amounts shall be deducted from the Participant's
Supplemental Subaccount B and transferred to the Participant's Qualified MESP
Subaccount B, subject to the following:
(i) a transfer pursuant to this Section shall occur at the
same time as a transfer pursuant to Section 3.2(b)(i). Any
Supplemental Company Matching or Employer Contribution shall
be transferred to the Qualified MESP only to the extent that
the Qualified MESP, after receiving such transferred
contribution, will satisfy the nondiscrimination tests set
forth in Code ss. 401(m) for the applicable Plan Year;
(ii) no earnings or appreciation attributable to any amount
transferred pursuant to this Section shall be transferred, but
shall remain in the Supplemental Subaccount B for the benefit
of the Participant; and
(iii) if a Participant elects to have an additional elective
contribution paid to him pursuant to Section 3.2(b)(ii), any
Supplemental Company Matching or Employer Contribution
relating to such amount shall remain in the Supplemental
Subaccount B for the benefit of the Participant.
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(c) The Company shall make Supplemental Matching and Employer
Contributions in the initial year of implementation of this Plan on behalf of
any Key Employee whose compensation exceeds Code ss. 401(a)(17) limitations on
contributions during the initial year of implementation of this Plan, based on
the Key Employee's elective deferral percentage as stated in the Supplemental
Salary Reduction Agreement filed with the Company pursuant to Section 3.2(d)(i)
above, as if such Supplemental Salary Reduction Agreement had been in effect
from January 1 of the initial year of implementation of this Plan.
ARTICLE IV
INVESTMENT OF SUPPLEMENTAL
CONTRIBUTIONS
4.1. Supplemental Salary Reduction Contributions.
(a) Amounts credited hereunder to the Supplemental Subaccount A of a
Participant shall be treated as if they were actually invested in the Qualified
MESP Subaccount A of the Participant and shall be subject to the same
Participant investment elections, including the right at any time during a Plan
Year to change investment elections among the available options under the
Qualified MESP.
(b) The Participant's earnings history shall be summarized on each
Valuation Date and the investment results shall be used to adjust the
Participant's Supplemental Subaccount A to reflect any gains or losses.
4.2. Supplemental Company Matching and Employer Contributions.
(a) All amounts credited to the Supplemental Subaccount B of a
Participant for any Plan Year shall be treated as if they were actually invested
in the Qualified MESP Subaccount B of the Participant and shall be subject to
the same Participant investment elections, including the right at any time
during a Plan Year to change investment elections among the available options
under the Qualified MESP.
(b) The Participant's earnings history shall be summarized on each
Valuation Date and the investment results shall be used to adjust the
Participant's Supplemental Subaccount B to reflect any gains or losses.
ARTICLE V
DISTRIBUTIONS
5.1. Right to Receive Distribution. All amounts, including gains and
losses, credited to a Participant's Supplemental Subaccount A in accordance with
Section 4.1 of the Plan, and to his or her Supplemental Subaccount B in
accordance with Section 4.2, shall be distributed to a Participant or his or her
beneficiary only upon termination of the Participant's employment with the
Company for any reason, including death or change in control, as defined in the
Public Service Company of New Mexico Executive Retention Plan, or any successor
plan.
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5.2. Form of Distribution. All amounts distributable under the Plan
shall be made solely in the form of a single lump sum payment.
5.3. Amount of Distribution. The amount of payment due to a Participant
under any of these circumstances is equal to the account balance credited to
that Participant as of the Valuation Date next following the event that triggers
the distribution, subject to applicable tax or other withholding requirements,
if any.
5.4. Timing of Distribution. Funds will be distributed within an
administratively reasonable period of time (generally ten (10) working days)
after receiving a written request, unless prohibited by the Company cash
position.
5.5. Withdrawal of Contributions. No hardship withdrawals shall be
permitted from the Plan.
5.6. Coordination with Qualified MESP Elections. An election made by
the Participant under the Qualified MESP with respect to the distribution of the
Participant's accounts following termination of employment or the date for
commencement of payment under the Qualified MESP shall not be effective with
respect to the form of payment or date for commencement of payment of the
Subaccounts under the Plan unless such elections also conform to the terms of
the Plan.
5.7. Beneficiary Designation. If a Participant should die before
receiving distribution of his or her Supplemental Subaccounts A and B,
distribution shall be made to the beneficiary designated by the Participant. If
a Participant has not designated a beneficiary, or if no designated beneficiary
is living on the date of distribution, such amounts shall be distributed to
those persons entitled to receive distributions of the Participant's accounts
under the Qualified MESP and in the same method as distribution is made under
the Qualified MESP.
ARTICLE VI
ADMINISTRATION OF THE PLAN
6.1. Administration by the Company. The Company shall be responsible
for the general operation and administration of the Plan and for carrying out
the provisions herein.
6.2. General Powers of Administration. All provisions set forth in the
Qualified MESP with respect to the administrative powers and duties of the
Company and expenses of administration shall also be applicable with respect to
the Plan. The Company shall be entitled to rely conclusively upon all tables,
valuations, certificates, opinions and reports furnished by an actuary,
accountant, comptroller, counsel or other person employed by the Company with
respect to the Plan.
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ARTICLE VII
AMENDMENT OR TERMINATION
7.1. Amendment or Termination. The Company intends the Plan to be
permanent but reserves the right to amend or terminate the Plan when, in the
sole discretion of the Company, such amendment or termination is advisable. Any
such amendment or termination shall be made pursuant to a resolution of the
Board and shall be effective as of the date of such resolution.
7.2. Effect of Amendment or Termination. Any amendment or termination
of this Plan shall apply prospectively only and shall not directly or indirectly
reduce the balance of any Supplemental Subaccount held hereunder as of the
effective date of such amendment or termination. Upon termination of the Plan,
distribution of amounts in Supplemental Subaccounts A and B shall be made to the
Participant or his or her beneficiary in the manner and at the time described in
Article V of the Plan. No additional credits of Supplemental Salary Reduction
Contributions or Supplemental Company Matching and Employer Contributions shall
be made to the Supplemental Subaccounts of a Participant after termination of
the Plan, but the Company may continue to credit gains and losses to
Supplemental Subaccount A pursuant to Section 4.1, and to Supplemental
Subaccount B pursuant to Section 4.2, until the balance of such Supplemental
Subaccounts has been fully distributed to the Participant or his or her
beneficiary.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Participant's Rights Unsecured. The Plan at all times shall be
entirely unfunded and no provision shall at any time be made with respect to
segregating any assets of the Company for payment of any distributions
hereunder. The right of a Participant or his or her designated beneficiary to
receive a distribution hereunder shall be an unsecured claim against the general
assets of the Company, and neither the Participant nor a designated beneficiary
shall have any rights in or against any specific assets of the Company. All
amounts credited to a Participant's Supplemental Subaccounts A and B shall
constitute general assets of the Company and may be disposed of by the Company
at such time and for such purposes as it may deem appropriate.
8.2. General Conditions. Except as otherwise expressly provided herein,
all terms and conditions of the Qualified MESP applicable to a Qualified MESP
Salary Reduction Contribution or a Qualified MESP Company Matching or Employer
Contribution shall also be applicable to a Supplemental Salary Reduction
Contribution or a Supplemental Company Matching or Employer Contribution to be
made hereunder. Any Qualified MESP Salary Reduction Contribution or Qualified
MESP Company Matching or Employer Contribution, or any other contributions to be
made under the Qualified MESP, shall be made solely in accordance with the terms
and conditions of the Qualified MESP and nothing in this Plan shall operate or
be construed in any way to modify, amend or affect the terms and provisions of
the Qualified MESP.
8.3. No Guaranty of Benefits. Nothing contained in the Plan shall
constitute a guaranty by the Company or any other person or entity that the
assets of the Company will be sufficient to pay any benefit hereunder.
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8.4. No Enlargement of Employee Rights. No Participant shall have any
right to receive a distribution of contributions made under the Plan except in
accordance with the terms of the Plan. Establishment of the Plan shall not be
construed to give any Participant the right to be retained in the service of the
Company.
8.5. Spendthrift Provision. No interest of any person or entity in, or
right to receive a distribution under, the Plan shall be subject in any manner
to sale, transfer, assignment, pledge, attachment, garnishment, or other
alienation or encumbrance of any kind; nor may such interest or right to receive
a distribution be taken, either voluntarily or involuntarily for the
satisfaction of the debts of, or other obligations or claims against, such
person or entity, including claims for alimony, support, separate maintenance
and claims in bankruptcy proceedings.
8.6. Applicable Law. The Plan shall be construed and administered under
the laws of the State of New Mexico.
8.7. Incapacity of Recipient. If any person entitled to a distribution
under the Plan is deemed by the Company to be incapable of personally receiving
and giving a valid receipt for such payment, then, unless and until claim
therefor shall have been made by a duly appointed guardian or other legal
representative of such person, the Company may provide for such payment or any
part thereof to be made to any other person or institution then contributing
toward or providing for the care and maintenance of such person. Any such
payment shall be a payment for the account of such person and a complete
discharge of any liability of the Company and the Plan therefor.
8.8. Successors. This Plan shall be binding upon the successors and
assigns of the Company and upon the heirs, beneficiaries and personal
representatives of those individuals who become Participants hereunder.
8.9. Unclaimed Benefit. Each Participant shall keep the Company
informed of his or her current address and the current address of his or her
designated beneficiary. The Company shall not be obligated to search for the
whereabouts of any person. If the location of a Participant is not made known to
the Company within three (3) years after the date on which payment of the
Participant's Supplemental Subaccounts A and B may first be made, payment may be
made as though the Participant had died at the end of the three (3) year period.
If, within one additional year after such three (3) year period has elapsed, or,
within three (3) years after the actual death of a Participant, the Company is
unable to locate any designated beneficiary of the Participant, then the Company
shall have no further obligation to pay any benefit hereunder to such
Participant or designated beneficiary and such benefit shall be irrevocably
forfeited.
8.10. Limitations on Liability. Notwithstanding any of the preceding
provisions of the Plan, neither the Company nor any individual acting as
employee or agent of the Company shall be liable to any Participant, former
Participant or other person for any claim, loss, liability or expense incurred
in connection with the Plan.
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8.11. Headings for Convenience Only. The headings and subheadings of
this Plan are inserted for convenience and reference only and are not to be used
in construing this instrument or any provision herein.
8.12. Severability. If any provision of this Plan is held to be illegal
or invalid, such illegalilty or invalidity shall not affect the remaining
provisions of this Plan, and the remaining provisions shall be construed and
enforced as if such illegal or invalid provision had never been inserted herein.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by
its President and Chief Executive Officer ("CEO") on the date and year first
above written.
PUBLIC SERVICE COMPANY OF
NEW MEXICO
--------------------------------
BENJAMIN F. MONTOYA
President and CEO
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PUBLIC SERVICE COMPANY OF NEW MEXICO
EXECUTIVE SAVINGS PLAN
SUPPLEMENTAL SALARY REDUCTION AGREEMENT
I have reviewed the terms and conditions of the Public Service Company
of New Mexico (the "Company" or "PNM") Executive Savings Plan (the "Plan"). I
hereby agree to the terms and conditions of the Plan and acknowledge that the
Plan can be amended or terminated at the discretion of the Company pursuant to
Article VII of the Plan. As a further condition to receiving a Supplemental
Salary Reduction Contribution under the Plan, I hereby agree as follows:
|_| 1. The salary otherwise payable to me by the Company for any
calendar year, commencing with the year which begins on
January 1, _______, shall be reduced by _______ percent
(____%) (not to exceed 6%) and the amount of such reduction
shall be a Supplemental Salary Reduction Contribution
allocated to my Supplemental Subaccount A pursuant to the Plan
for such year.
|_| 2. Any deferral election I make shall be irrevocable with
respect to the Plan Year covered by such election. My deferral
election shall remain in full force and effect for subsequent
Plan Years unless I revoke the election by delivering to the
Company a written instrument prior to the beginning of the
Plan Year for which such revocation is to be effective.
|_| 3. In the event that additional contributions can be made to
my Qualified MESP Subaccount A, in accordance with Section
3.2(b) of the Plan, then no later than March 31 of such
calendar year following a calendar year for which an election
is in effect, the Company shall:
|_| Allocate from my Supplemental Subaccount A to my
Qualified MESP Subaccount A that portion (not to
exceed 100%) of my Supplemental Salary Reduction
Contribution made for my benefit equal to the maximum
amount of Salary Reduction Contributions that can be
made to my Qualified MESP Subaccount A under all
applicable limitations of the Internal Revenue Code;
or
|_| The Company shall pay such amount directly to me; or
|_| The Company shall retain such amount in my Supplemental
Subaccount A.
Dated: ________________________
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Signature of Participant
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