PUBLIC SERVICE COMPANY OF NEW MEXICO
FIRST RESTATED AND AMENDED
EXECUTIVE RETENTION PLAN
The Public Service Company of New Mexico (the "Company" or "PNM")
hereby adopts the following First Restated and Amended Executive Retention Plan
(the "Plan"), effective December 7, 1998.
WHEREAS, the Company adopted the initial Executive Retention Plan
effective January 1, 1992;
WHEREAS, the Company first amended the Plan on January 1, 1994, and
again on August 1, 1994;
WHEREAS, on December 7, 1998, the Compensation and Human Resources
Committee of the PNM Board of Directors ("Board") approved certain benefits upon
a Change in Control and authorized certain amendments to affected plans,
including this Plan; and
WHEREAS, the Company desires to amend and restate this Plan to
incorporate the approved Change in Control benefits, as follows:
I. PURPOSE
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The Company considers it essential to its best interests and the best
interests of its customers and stockholders to foster the continuous employment
of its key management employees. In this connection, the Company recognizes
that, as is the case with many publicly held corporations, the possibility of a
Change in Control may exist and that such possibility, and the uncertainty and
questions which it may raise among employees, may result in the departure or
distraction of key management employees to the detriment of the Company and its
ability to continue to provide efficient and reliable utility services to its
customers.
The Company has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of the Company's
key management to their assigned duties and to facilitate recruitment of future
employees without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control of the
Company, by providing competitive and fair compensation and benefits to
employees terminated under these circumstances.
In order to encourage its key management employees to remain in its
employ, a Participant shall receive the retention benefits set forth in this
Plan in the event such Participant's employment with the Company is terminated
under the circumstances described below.
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Notwithstanding the above, the Company does not intend to change its
employment at will nature, but retains its absolute right to terminate any
employee at any time. An employee Terminated or Constructively Terminated during
the Protection Period shall be entitled to benefits provided herein. An employee
who terminates employment from the Company for any other reason shall not be
entitled to benefits herein.
Notwithstanding other provisions herein, the Company does not intend to
create or offer these retention benefits in the event of a corporate
restructuring initiated by the Company in which a holding company and related
boards of directors are formed and the Company is subsequently acquired by such
holding company.
II. DEFINITIONS
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Terms or provisions in this Plan set out in proper capitals shall have
the following meanings. In construing this Plan, these terms and provisions
shall be liberally construed, to effect the intentions of the Board and the
Company.
2.1. "Base Compensation" shall mean the Participant's Base Salary and
Lump Sum Awards plus Results Pay at fifty percent (50%) of the highest stated
maximum award opportunity from the Company in effect during the Protection
Period. In the event a part-time or job-share employee's Base Compensation is
based upon a full-time position, such Base Compensation shall be proportionately
reduced by multiplying the same by a fraction the numerator of which is the
number of hours the employee is scheduled to work each week and the denominator
of which is forty (40).
2.2. "Base Salary" shall mean the Participant's highest annual stated
salary from the Company in effect during the Protection Period.
2.3. "Board" shall mean the Board of Directors of the Company or by
delegation of authority, the Compensation and Human Resources Committee of the
Board, or any successor committee.
2.4. "Cause" for purposes of Termination of a Participant's
employment, shall mean:
2.4.1. the willful and continued failure of a Participant to
substantially perform his or her duties with the Company after a written demand
for substantial performance is delivered to the Participant which specifically
identifies the manner in which the Participant has not substantially performed
his or her duties, or willful failure to report to work for more than thirty
(30) days; or
2.4.2. the willful engaging by the Participant in conduct
which is demonstrably and materially injurious to the Company, monetarily or
otherwise, including acts of fraud, misappropriation, violence, or embezzlement
for personal gain at the expense of the Company, conviction of a felony, or
conviction of a misdemeanor involving immoral acts.
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Provided, however, that Section 2.4.1 shall not apply if: (i) the
failure results from such Participant's incapacity due to verifiable physical or
mental illness substantiated by appropriate medical evidence; or (ii) it is an
anticipated or actual failure after the issuance of a Notice of Termination by
the Participant due to Constructive Termination. For purposes of this
definition, an act or failure to act by a Participant shall not be deemed
"willful" if done or omitted to be done by the Participant in good faith and
with a reasonable belief that his or her action was in the best interest of the
Company. Notwithstanding the foregoing, a Participant shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered
to such Participant a copy of a resolution duly adopted by the affirmative vote
of all members of the Committee at a meeting thereof called and held for such
purpose (after reasonable notice to the Participant and an opportunity for the
Participant together with his or her counsel, to be heard before the Committee),
finding that in the good faith opinion of the Committee, the Participant was
guilty of conduct set forth in Section 2.4.1 and 2.4.2 above and specifying the
particulars in detail.
2.5. "Change in Control" shall be deemed to have occurred (any required
approval, including any final nonappealable regulatory order, having been
obtained) subject to the exceptions and modifications set forth in this Section
and in the Plan:
2.5.1. if any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) becomes directly or indirectly the "beneficial
owner" as defined in Rule 13d-3 under the Exchange Act, of securities of the
Company representing twenty percent (20%) or more of the combined voting power
of the Company's then outstanding securities;
2.5.2. if during any period of two (2) consecutive years
(excluding any period prior to the effective date of this Plan), the following
individuals cease, for any reason, to constitute a majority of the Board:
(i) directors who were directors at the beginning of such
period; and
(ii) any new directors whose election by the Board or
nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3rds)
of the directors then still in office who either were
directors at the beginning of the period or whose
election or nomination for election was previously so
approved (such new directors being referred to as
Approved New Directors);
2.5.3. if the shareholders of the Company approve a merger or
consolidation of the Company with another company, corporation or subsidiary
that is not affiliated with the Company immediately preceding the Potential
Change in Control; or
2.5.4. upon the adoption of a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
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Section 2.5.1. shall not apply if the "person" as referred to therein
is, or shall be: (i) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company; or (ii) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
In Section 2.5.2., the Approved New Director shall not include a
director designated by a person who has entered into an agreement with the
Company to effect a transaction described in Section 2.5.1, 2.5.3 or 2.5.4
hereof.
Section 2.5.3. shall not apply to a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least eighty
percent (80%) of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation.
2.6. "Code" shall mean the Internal Revenue Code of 1986, as may be
amended from time to time.
2.7. "Committee" shall mean a committee consisting of at least three
(3) members, appointed by the Board to administer the Plan.
2.8. "Company" shall mean the Public Service Company of New Mexico. As
used in this Plan, "Company" shall also mean any successor to its assets, as
described in Article II, Section 2.5.3 and 2.5.4, that assumes and agrees to
perform the Company's obligations hereunder, by operation of law or otherwise.
"Company" shall also include any holding company owning the Company or
subsidiary of such holding company.
2.9. "Constructive Termination" shall mean, without a Participant's
express written consent, the occurrence after the commencement of the Protection
Period of any of the following circumstances, subject to the exceptions and
modifications at the end of this Section 2.9:
2.9.1. a significant reduction in the Participant's Base
Salary;
2.9.2. the relocation of the Participant's principal office to
a location more than fifty (50) miles from the location of such office during
the Protection Period;
2.9.3. the failure of the Company, within the time period
contained in Section 7.1 of the Plan, to obtain a written agreement from any
successor to assume and agree to perform the Company's obligations pursuant to
this Plan; the date on which any such succession becomes effective shall be then
deemed the Termination Date;
2.9.4. any purported Termination of the Participant's
employment by the Company which is not effected by a Notice of Termination
satisfying the requirements of Section 2.15 below;
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2.9.5. the requirement, for continued employment with the
Company, that the Participant maintain a residence more than fifty (50) miles
from the location of his or her residence during the Protection Period; or
2.9.6. the Participant is reassigned duties within the Company
which are: (i) inconsistent with his or her employment status with the Company
immediately prior to the Protection Period; or (ii) a substantial adverse
alteration in the nature or status of his or her responsibilities from those in
effect immediately prior to the Protection Period.
Provided that the above shall not apply if such circumstances are fully
corrected prior to the Termination Date specified in the Notice of Termination.
Any purported Termination as set forth in Section 2.9.4 which is not
effected by a Notice of Termination satisfying the requirements of Section 2.15
below, shall not be effective.
A Participant's right to terminate his or her employment due to
Constructive Termination shall not be affected by his or her incapacity due to a
verifiable physical or mental illness substantiated by appropriate medical
evidence.
Provided further, that a Participant's continued employment for a
period exceeding sixty (60) days following an event that constitutes
Constructive Termination shall constitute Participant's consent to, or a waiver
of any rights with respect to, such Constructive Termination event. Consent to
or waiver of any rights with respect to one Constructive Termination event shall
not constitute a waiver of Participant's rights with respect to any other event
that constitutes Constructive Termination.
2.10. "Disability" shall have the same meaning as provided in the
Company's long term disability plan for the provision of long term disability
benefits
2.11. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
2.12. "Lump Sum Award" shall mean any cash award paid as a merit
increase in lieu of an increase in base salary received during the twelve (12)
month period immediately preceding the Participant's Termination Date.
2.13. "Management Committee Members" shall mean those key management
employees included in the Plan membership roster beginning with the commencement
of the Protection Period and ending upon a Change In Control, who are at the
same time also designated by the Company as members of its Management Committee
or its successor committee.
2.14. "MESP" shall mean the Public Service Company of New Mexico Master
Employee Savings Plan and Trust.
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2.15. "Notice of Termination" shall mean a notice from either the
Company or a Participant, as applicable. In the event the termination is for
Cause or based on Constructive Termination, the notice shall indicate the
specific termination provision in this Plan relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
Termination of the Participant's employment. However, the Company retains its
rights as an at will employer to terminate any employee at any time and for any
reason.
2.16. "Other Participants" shall mean Executive Retention Plan
Participants, excluding Management Committee Members.
2.17. "Participant" shall mean any non-union employee including a
Management Committee Member who is listed on the Executive Retention Plan roster
that is generally submitted to and approved no less than annually by the
Compensation and Human Resources Committee of the Board, or its successor.
2.18. "Potential Change in Control of the Company," subject to the
exceptions as set forth at the end of this Section 2.18, shall be deemed to have
occurred if:
2.18.1. the Company enters into a letter of intent or an
agreement, the consummation of which would result in the occurrence of the
Change in Control of the Company;
2.18.2. a credible announcement or report is made through a
filing with the Securities and Exchange Commission, a major financial
publication, a Company press release, or other similar medium of an intention to
take actions which if consummated would constitute a Change in Control of the
Company;
2.18.3. a case is pending before an appropriate regulatory
authority for approval of any transaction the consummation of which would result
in a Change in Control, or, as the result of such case, an order approving such
transaction is effective or an order disapproving such transaction is subject to
appeal; and/or,
2.18.4. the Board adopts a resolution to the effect that, for
purposes of this Plan, a Potential Change in Control of the Company has
occurred.
2.19. "Protection Period" shall mean the period beginning with a
Potential Change in Control and ending:
2.19.1. upon the abandonment or cessation of the intention,
consideration or undertaking of activities that gave rise to the Potential
Change in Control; or
2.19.2. in all other cases, twenty-four (24) months after a
Change in Control.
For purposes of this definition, such abandonment or cessation of an
intention, consideration or undertaking of a Change in Control shall be deemed
to have occurred:
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(i) if a credible announcement or report is made (through a
filing with the Securities and Exchange Commission, a
major financial publication, a Company press release,
or similar medium) that: (a) such intention,
consideration or undertaking has been abandoned or has
ceased; or (b) circumstances exist from which no
reasonable person would conclude that the persons
attempting the Change in Control would have a realistic
possibility of success;
(ii) in the case of a Potential Change in Control of the
Company described in Section 2.18.2, nine (9) months
have elapsed without the occurrence of additional
circumstances that advance a Change in Control;
(iii) in the case of a Potential Change in Control of the
Company described in Section 2.18.3, the regulatory
case has been withdrawn or otherwise ended without
resulting in a final, nonappealable order approving a
transaction the consummation of which would result in a
Change in Control; or
(iv) the Board rescinds an earlier resolution that a
Potential Change in Control has occurred.
Concurrent or overlapping Protection Periods may be triggered by the
occurrence of multiple independent Potential Change in Control events.
2.20. "Results Pay" shall mean an annual incentive bonus award or any
successor or other incentive plan that is intended to be in lieu of the Results
Pay Program.
2.21. "Retirement Plan" shall mean the Public Service Company of New
Mexico Employees' Retirement Plan, effective January 1, 1997.
2.22. "Severance Pay" shall mean the retention benefits provided to a
Participant pursuant to Article V, Section 5.1 hereof.
2.23. "Termination" or "Terminated" shall mean the involuntary
termination of a Participant's employment with the Company for any reason other
than: (i) for Cause; (ii) Death; or (iii) Disability.
2.24. "Termination Date" shall mean, if a Participant's employment is
terminated for any reason, the date specified in the Notice of Termination. In
the case of a termination for Cause pursuant to Section 2.4 above, the
Termination Date shall be immediately upon receipt of the Notice of Termination.
In the case of a Termination as defined in Section 2.23, the Termination Date
shall be not less than fifteen (15) days from the date the Notice of Termination
is given. In the case of Constructive Termination, pursuant to Section 2.9, the
Termination Date shall be not less than fifteen (15) nor more than sixty (60)
days from the date the Notice of Termination is given.
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III. TERM OF PLAN
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The Plan shall continue in effect until terminated by the Board,
provided that: (i) if the Protection Period has begun, the Plan shall continue
for the Protection Period; and (ii) notwithstanding termination of this Plan,
should a Potential Change in Control occur within twenty-four (24) months
following such termination, this Plan shall be self-reviving and continue for
the Protection Period.
IV. ELIGIBILITY FOR SEVERANCE BENEFITS
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4.1. Eligibility of Participant. Only those non-union employees listed
on the Executive Retention Plan roster(s) at the beginning of the Protection
Period through the end of the Change in Control are eligible to become
Participants in the Plan. If a Participant's employment with the Company
terminates for any reason (whether voluntary or involuntary) before the
commencement of the Protection Period, he or she shall no longer be a
Participant hereunder.
4.2. Change in Control of Company. During the Protection Period, a
Participant, after signing a release agreement, shall be entitled to the
benefits described herein if such Participant's employment is Terminated during
this period by: (i) the Company; or (ii) the Participant due to Constructive
Termination following the Participant's giving of a Notice of Termination to the
Company. The requirement that a Notice of Termination be given by the
Participant shall be waived, however, if such Constructive Termination occurs
pursuant to Article II, Section 2.9.3 hereof. Notwithstanding the foregoing:
4.2.1. if a Participant's employment is Terminated or
Constructively Terminated during the Protection Period, but such Participant is
immediately reemployed by the surviving entity or the party acquiring the assets
of Company, then such Participant shall not be entitled to the benefits herein,
except as provided by Section 2.9.3 hereof; or
4.2.2. any Participant who without express authority actively
participates in advancing a Change in Control, whether on their own behalf or on
behalf of someone else, shall not be eligible for benefits herein. Participants
who, by virtue of their position and duties with the Company, are involved in
facilitating an orderly transition to a successor company shall remain eligible
to receive the benefits provided herein; or
4.2.3. if a Participant's employment is Terminated or
Constructively Terminated as a result of the acquisition of the Company by a
holding company formed in connection with a corporate restructuring initiated by
the Company, and the Participant is immediately re-employed by the Company or
assigned to a subsidiary of such holding company, the Participant shall not be
entitled to benefits herein.
4.3. Release Agreement. In order to be eligible for any benefits
hereunder, a Participant otherwise satisfying the requirements of this Plan must
sign and deliver to the Company a non-revoked release agreement provided by the
Company, waiving claims such Participant may have against the Company.
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4.4. No Duplication of Benefits. Notwithstanding anything herein to the
contrary, the right to receive any benefits under this Plan by any Participant
is specifically conditioned upon such Participant either waiving or being
ineligible for any and all benefits under the: (i) Employee Retention Plan,
including any amendments thereto; or (ii) any successor Change in Control
severance benefit plans otherwise available to the Participant. The Company does
not intend to provide any Participant with benefits under both this Plan and
benefits under any other severance, retention or change in control plans or
agreements sponsored by the Company or an affiliate.
V. SEVERANCE BENEFITS
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A Participant, who satisfies the eligibility requirements shall receive
the following benefits in lieu of any other retention or severance benefits
provided by the Company:
5.1. Severance Pay. The Company shall pay as retention benefits to a
Participant an amount as set forth on the following schedule based upon the
Participant's highest position held with the Company during the Protection
Period:
POSITION SEVERANCE PAY
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Management Committee Member 2.5 times Base Compensation
Other Participants 2.0 times Base Compensation
5.2. Results Pay. Upon termination, Participants shall receive a
pro-rata Results Pay award of fifty percent (50%) of the highest stated maximum
award opportunity in effect during the Protection Period. Notwithstanding the
above, for the purposes of the retention benefits provided herein, Participants
who are not terminated shall receive an annualized Results Pay award of fifty
percent (50%) of the highest stated maximum award opportunity at the end of the
year in which a Change in Control is approved.
5.3. Health Care, Life, Accidental Death and Dismemberment Insurance
Benefits. For a period of twenty-four (24) months for Other Participants and
thirty (30) months for Management Committee Members following the Participant's
Termination Date, the Company shall arrange to provide the Participant with
health care, term life, and accidental death and dismemberment insurance
benefits substantially similar to those which the Participant was receiving
immediately prior to the Notice of Termination for the Participant and his or
her enrolled eligible dependents. If the Participant was receiving a monthly
refund immediately prior to his or her Termination Date due to the elected level
of health care benefits, he or she will continue to receive such refund during
the applicable period.
5.4. Offsetting Benefits. Benefits otherwise receivable by the
Participant pursuant to this Article V shall be reduced to the extent comparable
benefits are actually received by the Participant from another employer of the
Participant during the applicable twenty-four (24) month or thirty (30) month
period following his or her Termination Date. Any such benefits actually
received by the Participant from another employer shall be reported by the
Participant to the Company.
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5.5. Supplemental Retirement Benefits. As of the Termination Date,
Participants shall receive the following supplemental retirement benefits:
5.5.1. cash equivalent of the present value of the incremental
benefit the Participant would receive under the Retirement Plan as if his or her
service and age were increased by the number of years equal to the multiplier
used to determine Severance Pay in Section 5.1, above; and,
5.5.2. cash equivalent of the present value of the early
retirement reduction based on the number of years equal to the multiplier used
to determine Severance Pay in Section 5.1, above; and,
5.5.3. cash equivalent of Company contributions to the
Participant's MESP account in the amount of seven and a half percent (7.5%)
times the period which corresponds to the number of years equal to the
multiplier used to determine Severance Pay in Section 5.1, above.
5.6. Full Funding of Certain Nonqualified Retirement Benefits. Upon a
Change in Control, the Company shall fully fund the Public Service Company of
New Mexico and Paragon Resources, Inc. Deferred Compensation Trust Agreement
(commonly known as the "Rabbi Trust") to provide for future entitlement to
accrued benefits under certain plans. Such plans include, but are not limited to
the following: the Accelerated Management Performance Plan, the Service Bonus
Plan, the OBRA `93, the Section 415 Plan, and various individual supplemental
employee retirement agreements in accordance with the requirements of specific
plan documents.
5.7. Reimbursement of Legal Fees. The Company also shall pay to a
Participant reasonable legal fees and expenses incurred as a result of a
Termination under the terms of this Plan (including all such fees and expenses,
if any, incurred in contesting or disputing any such termination or in seeking
to obtain or enforce any right or benefit provided by this Plan or in connection
with any tax audit or proceeding to the extent attributable to the application
of Section 4999 of the Code to any payment or benefit provided hereunder). Such
payments shall be made at the later of the: (i) applicable twenty-four (24)
month or thirty (30) month period specified above; or (ii) within five (5) days
after a Participant's notice of request for payment accompanied with such
evidence of fees and expenses incurred as the Company reasonably may require.
VI. ADMINISTRATION OF PLAN AND PAYMENT OF BENEFITS
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6.1. Plan Administration. The Plan shall be generally administered by a
Committee who shall be the named fiduciary for purposes of the Employee
Retirement Income Security Act of 1974, and who shall have the authority to
control and manage the operation of the Plan and the authority to interpret and
construe the Plan and any such interpretation and construction of any provisions
of this Plan shall be final. The Committee shall, in addition to the foregoing,
exercise such other powers and perform such other duties as it may deem
advisable in the administration of the Plan. The Committee may engage agents and
assistance from the Company, including Company counsel. The Committee shall not
be responsible for any action taken or omitted to be taken on the advice of such
counsel. The Committee is given specific authority to allocate and revoke
responsibilities among its members or designees. When the Committee has
allocated authority pursuant to the foregoing, the Committee shall not be liable
for the acts or omissions of the party to whom such responsibility has been
allocated, except to the extent provided by law.
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6.2. Payment Form and Date. The payments provided for herein shall be
made in the form of a lump sum distribution not later than the fifth (5th) day
following the Termination Date, provided however, that if the amount of such
payments cannot be finally determined on or before such day, the Company shall
pay to the Participant on such day an estimate, as determined in good faith by
the Company, of the minimum amount of such payments and shall pay the remainder
of such payments together with interest at the rate provided in Section
1274(b)(2)(B) of the Code as soon as the amount thereof can be determined, but
in no event later than the thirtieth (30th) day after the Termination Date. In
the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a loan by
the Company to the Participant, payable by Participant on the fifth (5th) day
after demand for repayment is made by the Company, together with interest at the
rate provided in Section 1274(b)(2)(B) of the Code.
6.3. Benefits Payable. In the event that any payments of benefits
collectively received or to be received by a Participant in connection with this
Plan or any other plan, arrangement or agreement with the Company or any
affiliate thereof, or any person whose actions result in a Change in Control or
any affiliate of such person would be subject to any excise tax imposed by Code
Sections 280G and 4999, such total payments shall be augmented to place the
Participant in the same after-tax position as if the excise tax had not been
imposed.
VII. SUCCESSORS, BINDING AGREEMENT
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7.1. Successors. The Company will negotiate to require any independent
successor to all or substantially all of the assets of the Company to provide
written confirmation, within thirty (30) days of the effective date of the
Change in Control, of its agreement to assume and perform the Company's
obligations pursuant to this Plan.
7.2. Binding Agreement. This Plan shall inure to the benefit of and be
enforceable by a Participant's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devises and legatees.
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VIII. NOTICE
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For the purpose of this Plan, notices and all other communications
provided for in the Plan shall be in writing and shall be deemed to have been
duly given when delivered. or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the Participant at his or her
last known address and to the Company at Alvarado Square, Albuquerque, New
Mexico 87158, provided that all notices to the Company shall be directed to the
attention of the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
IX. AMENDMENT
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The Plan may be amended, in whole or in part, or terminated at any
time, except that: (i) no amendment shall impair or abridge the obligations of
the Company already incurred pursuant to Articles IV and V; and (ii) no such
Plan amendment shall become or shall be effective during the twenty-four (24)
month period immediately preceding the Protection Period and during the
Protection Period to the extent that such amendment impairs or abridges the
rights or benefits of an employee of the Company who was a Participant upon the
effective date of such Plan amendment. Notwithstanding the foregoing, the Plan
may be amended at will at any time and from time to time by the Company, or to
reflect changes necessary due to revisions to, or interpretations of: (i) the
Employee Retirement Income Security Act of 1974, as amended; (ii) Code Section
280G; or (iii) any other provision of applicable state or federal law.
X. MISCELLANEOUS
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10.1. Governing Law. The validity, interpretation, construction and
performance of this Plan shall be governed by the laws of the State of New
Mexico.
10.2. Code and Exchange Act References. All references to sections of
the Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
10.3. Withholding. Any payments provided for hereunder shall be paid
subject to any applicable withholding required under federal, state or local
law.
10.4. Survival of Rights. In addition to the limitations on termination
of this Plan pursuant to Article III hereof, any obligations of the Company to
make payments that have been due to Participants who have, at the time of
expiration of the Plan, satisfied the eligibility requirements pursuant to
Article IV above during the term hereof, shall survive the termination of this
Plan.
10.5. No Employment Contract. Notwithstanding anything to the contrary
contained in this Plan: (i) the execution of the Plan shall not create an
express or implied contract of employment for a specified term between the
Participant and the Company; and (ii) unless otherwise expressly provided, in
writing, by such officer as may be specifically designated by the President, the
employment relationship between the Participant and the Company shall be defined
as employment at will, where either party may terminate the relationship with or
without cause. If such termination occurs after the commencement of the
Protection Period, Notice of Termination shall be given pursuant to Section 2.15
and the Termination Date shall be determined pursuant to Section 2.24.
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10.6. Mitigation of Benefits. The Participant shall not be required to
mitigate the amount of payment provided for in Article V by seeking other
employment or otherwise, nor, except as specifically provided in Article V,
shall the amount of any payment or benefit provided for in Article V be reduced
by: (i) any compensation earned by the Participant as the result of employment
by another employer; (ii) by retirement benefits; or (iii) offsets against any
amount claimed to be owed by the Participant to the Company.
10.7. No Right of Assignment. Neither a Participant nor any person
taking on behalf of a Participant may anticipate, assign or alienate (either at
law or in equity) any benefit provided under the Plan and the Committee shall
not recognize any such anticipation, assignment or alienation. Furthermore, a
benefit under the Plan is not subject to attachment, garnishment, levy,
execution or other legal or equitable process.
10.8. Service of Process. The Secretary of the Company shall be an
agent for service of process in matters relating to this Plan.
10.9. Headings. The headings and subheadings in this Plan are inserted
for convenience and reference only and are not to be used in construing this
instrument or any provision hereof.
10.10. Gender and Number. Where the context so requires, words in the
masculine gender shall include the feminine and neuter genders, the plural shall
include the singular, and the singular shall include the plural.
10.11. Severance Pay Plan. Notwithstanding anything herein to the
contrary, the Plan shall be interpreted as, and is intended to qualify as, a
severance pay plan, pursuant to 29 CFR Section 2510.3-2(b), and therefore does
not constitute an Employee Pension Benefit Plan pursuant to Section 3(2) of the
Employee Retirement Income Security Act of 1974. In this regard, the following
additional provisions shall apply with respect to all benefits hereunder:
10.11.1. the benefits hereunder are not contingent, directly
or indirectly, upon a Participant's retirement;
10.11.2. all benefits due hereunder shall be fully paid or
provided within the applicable twenty-four (24) month or thirty (30) month
period after the Participant's Termination Date.
10.12. Validity. The invalidity or unenforceability of any provision of
this Plan shall not affect the validity or enforceability of any other provision
of this Plan, which shall remain in full force and effect.
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XI. CLAIMS PROCEDURES
---------------------
11.1. Except for determination and selections specifically reserved to
the Board pursuant to the Plan, the Committee shall make all determinations as
to a Participant's right to a benefit pursuant to the Plan. The Committee,
within ninety (90) days after receipt of Participant's written notice of
objection to benefits payable or claim for benefits, shall render a written
decision on the objection to the benefits payable or the claim for benefits. If
the objection to benefits payable or the claim for benefits is denied, either in
whole or in part, the decision shall include:
(i) The specific reason or reasons for the denial;
(ii) An indication of the specific Plan provisions on which
the denial is based;
(iii) A description of any additional material or information
necessary for the claimant to perfect the claim and any
explanation of why such material or information is
necessary; and
(iv) An explanation of the Plan's appeal procedure,
indicating that the appeal of the adverse determination
must be in writing addressed to the Committee, and
received within sixty (60) days after the receipt by
the claimant of the Committee's written denial of
benefits. Failure to perfect an appeal within the sixty
(60)-day period shall make the decision conclusive.
11.2. If the claimant should appeal to the Committee, he or she, or his
or her duly authorized representative, must do so in writing and may submit, in
writing, whatever issues and comments he or she, or his or her duly authorized
representative, feel are pertinent. The claimant, or his or her duly authorized
representative, may review pertinent Plan documents. The Committee shall render
a written decision on the question of the benefits payable, or the claim for
benefits, setting forth the specific reasons for its decision including a
reference to the Plan's provisions within sixty (60) days after receipt of the
request for reconsideration, unless special circumstances (such as a hearing)
would make the rendering of a decision within the sixty (60) day limit
unfeasible, but in no event shall the Committee render a decision respecting a
denial for a claim for benefits later than one hundred twenty (120) days after
its receipt of a request for a reconsideration.
11.3. Any denial by the Committee of a Participant's claim for benefits
under the Plan shall be stated in writing and such notice shall be written in a
manner that may be understood without legal or actuarial counsel.
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The foregoing First Restated and Amended Executive Retention Plan was
approved by the Board on December 7, 1998.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By_________________________________________
BENJAMIN F. MONTOYA
President and Chief Executive Officer
24951
15