1
SOUTHWEST GAS CORPORATION
EXECUTIVE DEFERRAL PLAN
Effective March 1, 1986
Amended and restated March 1, 1988
Amended and restated March 1, 1989
Amended and restated March 1, 1990
Amended and restated October 29, 1992
Amended and restated May 10, 1994
2
MASTER PLAN DOCUMENT
OF THE
SOUTHWEST GAS CORPORATION
EXECUTIVE DEFERRAL PLAN
PURPOSE
The purpose of this Plan is to provide specified benefits to a select group
of key employees who contribute materially to the continued growth,
development and future business success of SOUTHWEST GAS CORPORATION.
ARTICLE 1
DEFINITIONS
For purposes hereof, unless otherwise clearly apparent from the context, the
words and phrases listed below shall be defined as follows:
1.1 "Account Balance" means a Participant's individual fund comprised of
Deferrals, Company Contributions and interest earnings credited thereon
up to the time of Benefit Distribution.
1.2 "Base Annual Salary" means the yearly compensation paid to an Executive,
excluding bonuses, commissions, overtime, and nonmonetary awards for
employment services to the Company.
1.3 "Beneficiary" means the person or persons, or the estate of a
Participant, named to receive any benefits under the Plan upon the death
of a Participant.
1.4 "Benefit Account Balance" shall have the meaning set forth in Article
5.3.
1.5 "Benefit Distribution" means the date benefits under the Plan commence
or are paid in full to a Participant, or because of his death, to his
Beneficiary, which will occur within 90 days of notification to the
Company of the event that gives rise to such distribution.
1.6 "Board of Directors" means the Board of Directors of Southwest Gas
Corporation.
1.7 "Bonus" means the portion of actual awards, if any, paid in cash
following the end of a Performance Period under the terms of Southwest
Gas Corporation's 1993 Management Incentive Plan.
3
1.8 "Committee" means the administrative committee appointed by the Board of
Directors to manage and administer the Plan in accordance with the
provisions of the Plan.
1.9 "Company" means Southwest Gas Corporation and such of its Subsidiaries
as the Board of Directors may select to become parties to the Plan.
1.10 "Company Contributions" means the amount added, if any, to a
Participant's Account Balance in accordance with Article 3.2 of the
Plan.
1.11 "Deferral(s)" means the amount of Base Annual Salary and Bonus
transferred to the Plan accounts.
1.12 "Executive" means any officer of Southwest Gas Corporation.
1.13 "Employee" means any full-time employee of the Company as determined
under the personnel policies and practices of the Company.
1.14 "Master Plan Document" means this legal instrument containing the
provisions of the Plan.
1.15 "Moody's Rate" means Moody's Seasoned Corporate Bond Rate which is an
economic indicator consisting of an arithmetic average of yields of
representative bonds (industrial and AAA, AA and A rated public
utilities) as of January 1 prior to each Plan Year as published by
Moody's Investors Service, Inc. (or any successor thereto), or, if such
index is no longer published, a substantially similar index selected by
the Board of Directors.
1.16 "Moody's Composite Rate" means the average of the Moody's Rate on
January 1 for the five years prior to Benefit Distribution.
1.17 "Participant" means any Executive who is an officer of Southwest Gas
Corporation who executes a Plan Agreement or an Employee of the Company
who has been selected to participate in the Plan and who executes a Plan
Agreement.
1.18 "Plan" means the Executive Deferral Plan of the Company evidenced by
this Master Plan Document.
1.19 "Plan Agreement" means the form of written agreement which is entered
into from time to time, by and between the Company and a Participant.
1.20 "Plan Year" means the year beginning on March 1 of each year.
4
1.21 "Retire" or "Retirement" means the severance from employment with the
Company on or after attaining age fifty-five (55) with ten Years of
Service, other than by death, disability or Termination of Employment.
1.22 "Subsidiary" means any corporation, partnership, or other organization
which is at least 50 percent owned by the Company or a Subsidiary of the
Company.
1.23 "Terminates Employment" means the ceasing of employment with the
Company, either voluntarily or involuntarily, excluding Retirement,
disability or death.
1.24 "Years of Service" means the length of time a Participant has been
employed by the Company as defined in the Southwest Gas Corporation
Retirement Plan for Employees.
ARTICLE 2
ELIGIBILITY
2.1 An Executive shall become eligible to participate in the Plan as of the
effective date of his election as an officer by the Board of Directors.
The Committee in its sole discretion may select any other Employee to
become eligible to participate in the Plan.
2.2 If a Participant ceases to be an officer of Southwest Gas Corporation
and he continues as an Employee, the Committee in its sole discretion
will determine whether such Employee will continue to be eligible to
participate in the Plan.
2.3 Once eligible to participate in the Plan, an Executive or an Employee
has to complete, execute and return to the Committee a Plan Agreement to
become a Participant in the Plan. Continued participation in the Plan
is subject to compliance with any further conditions as may be
established by the Committee.
ARTICLE 3
DEFERRAL COMMITMENT AND COMPANY CONTRIBUTION
3.1 A Participant may defer up to 50 percent of his Base Annual Salary and
Bonus received during a Plan Year; provided, that such Deferral exceeds
$2,000 per Plan Year.
3.2 If a Participant makes a Deferral commitment, the Company will
contribute an amount equal to 50 percent of the Participant's Deferral,
up to a maximum of 3 percent of the Participant's Base Annual Salary, to
the Participant's Account Balance.
5
3.3 Prior to the commencement of each Plan Year, a Participant will advise
the Committee, in writing, of his Base Annual Salary Deferral commitment
for the upcoming Plan Year. At that same time, a Participant will also
make his Bonus Deferral commitment for the Plan Year following the
upcoming Plan Year. If a Participant fails to so advise the Committee,
through no fault of the Company, he will not be permitted to defer any
of his Base Annual Salary during upcoming Plan Year or Bonus during the
next subsequent Plan Year.
3.4 A Participant's Deferral commitment will be exercised on a per pay
period basis for the portion of his Base Annual Salary that is deferred.
The exercise of a Participant's Deferral commitment with respect to his
Bonus will occur at the time the Bonus is paid.
3.5 The Committee reserves the right to adjust any Participant's Deferral
commitment during a Plan Year to ensure that a Participant's actual
Deferral does not exceed the maximum allowable amount.
3.6 In the event an Executive or an Employee becomes a Participant in the
Plan during a Plan Year, such Participant may defer up to 50 percent of
the remaining portion of his Base Annual Salary for the current Plan
Year. At that same time, a Participant will also make his Bonus
Deferral commitment for the upcoming Plan Year. Such Participant must
make his Deferral commitment by advising the Committee, in writing, at
the time he elects to become a Participant in the Plan.
3.7 In the event a Participant defaults on his Base Annual Salary Deferral
commitment, the Participant will not be allowed to make any further
Deferrals during the current Plan Year and may not make any Deferrals
for the subsequent Plan Year. In the event a Participant defaults on his
Bonus Deferral commitment for a particular Plan Year, the Participant
will not be able to defer any of his Bonus for that Plan Year or the
subsequent Plan Year.
3.8 The Committee may waive for good cause the default penalty specified in
Article 3.7 upon the request of the Participant.
6
ARTICLE 4
INTEREST, CREDITING AND VESTING
4.1 A Participant's Account Balance at the start of a Plan Year and any
Deferrals and Company contributions made during a Plan Year will earn,
except as provided for in Article 4.2, interest annually at 150 percent
of the Moody's Rate. Interest will be credited to a Participant's
account for Deferrals and Company contributions made during the Plan
Year, as if all Deferrals and contributions were made on the first day
of the Plan Year.
4.2 If a Participant Terminates Employment prior to completing five (5)
Years of Service with the Company, interest credited for all Deferrals
and vested Company contributions to a Participant's Account Balance will
be adjusted based on the Moody's Rate during the period he participated in
the Plan.
4.3 Company contributions and interest earned on such contributions will
vest to a Participant at the rate of 20 percent per Year of Service and
will vest completely once a Participant has five Years of Service with
the Company.
4.4 In the event a Participant is allowed to postpone Benefit Distribution
under the Plan, his Account Balance will earn interest annually under
the provisions of Article 4.1, until Benefit Distribution.
ARTICLE 5
PLAN BENEFIT PAYMENTS
5.1 A Participant's Account Balance will be paid to the Participant in a
lump-sum payment at the time of Benefit Distribution, unless the
Participant qualifies to receive benefit payments over a specific
benefit payment period.
5.2 A Participant's Account Balance will earn interest under the provisions
of Article 4.1 until the time of Benefit Distribution.
5.3 If a Participant is entitled to receive Plan benefit payments over a
specific benefit payment period, his Account Balance at the commencement
of Benefit Distribution will be credited with an amount equal to the
interest such balance would have earned assuming distribution in equal
monthly installments over the specific benefit payment period, at a
specified interest rate, thereby creating a Benefit Account Balance.
The Benefit Account Balance will then be paid to the Participant in
equal monthly installments over the specific benefit payment period.
7
ARTICLE 6
RETIREMENT BENEFIT PAYMENTS
6.1 A Participant who Retires from the Company qualifies to receive his
Account Balance over a period of either 120, 180 or 240 months. The
Committee will have complete discretion to determine the retirement
benefit payment period that will be awarded to an individual
Participant.
6.2 A Participant who Terminates Employment after attaining age 55 with less
than ten (but more than five) Years of Service with the Company, may
qualify to receive his Account Balance under the provisions of Article
6.1, if the Committee permits postponing Benefit Distribution under the
provisions of Article 9.2.
6.3 The interest rate used to calculate the amount that will be credited to
a Participant's Account Balance, to determine his Benefit Account
Balance under the provisions of Article 5.3, will be 150 percent of the
Moody's Composite Rate.
ARTICLE 7
PRERETIREMENT SURVIVOR BENEFIT PAYMENTS
7.1 If a Participant dies while he is an employee of the Company, his
Account Balance will be paid to his Beneficiary in a lump sum
distribution at the time of Benefit Distribution or in equal monthly
installments over the 180 month survivor benefit payment period. The
Committee, in its sole discretion, will determine whether the
Participant's Beneficiary will qualify for payment over the survivor
benefit payment period.
7.2 If the Committee determines to pay the Beneficiary over the survivor
benefit payment period, the interest rate used to determine the amount
that will be credited to a Participant's Account Balance, to determine
his Benefit Account Balance under the provisions of Article 5.3, will be
the Moody's Composite Rate.
ARTICLE 8
POSTRETIREMENT SURVIVOR BENEFIT PAYMENTS
8.1 If a Participant dies after the commencement of retirement or disability
benefit payments under Articles 6 or 10 but prior to such benefits
having been paid in full, the Participant's benefit payments will continue
to be paid to the Participant's Beneficiary through the end of the
originally awarded benefit payment period, except as provided for in
Article 11.7.
8
8.2 If a Participant, who has been permitted by the Committee to postpone
Benefit Distribution under the provisions of Article 9.2, dies after he
Terminates Employment but prior to the commencement of benefit payments,
his Beneficiary will commence receiving retirement benefit payment at
the time the Participant would have qualified for such payments under
the provisions of Article 6.2.
ARTICLE 9
TERMINATION BENEFIT PAYMENTS
9.1 A Participant who Terminates Employment with the Company prior to
Retirement will receive his Account Balance in a lump sum payment at
Benefit Distribution, unless he is permitted by the Committee to
postpone Benefit Distribution under the provisions of Article 9.2.
9.2 If a Participant Terminates Employment prior to completing ten (but more
than five) Years of Service after attaining age 55, the Committee, in
its sole discretion, may postpone Benefit Distribution until the date
the Participant would have qualified to Retire under the provisions of
the Plan.
ARTICLE 10
DISABILITY BENEFIT PAYMENTS
10.1 A Participant shall be considered disabled if he qualifies for a
disability benefit under the Company's group long-term disability plan.
In the event a Participant does not qualify for benefits under the group
long-term disability plan, the Committee, in its sole discretion, may
determine that a Participant is disabled under the provisions of the
Plan.
10.2 Notwithstanding the provisions of Article 4.3, Company contributions and
interest earned on such contributions will be fully vested to the
Participant at the time he is determined to be disabled under this
Article.
10.3 If a Participant is disabled within the first five Years of Service with
the Company, he will receive his Account Balance in a lump sum payment
at Benefit Distribution.
10.4 If a Participant is disabled after five Years of Service with the
Company, his Account Balance will be paid to him in equal monthly
installments over the 180 month disability benefit payment period.
10.5 If a Participant qualifies to receive his Account Balance over the
disability benefit payment period, the interest rate used to calculate
the amount that will be credited to a Participant's Account Balance, to
determine his Benefit Account Balance under the provisions of Article
5.3, will be 150 percent of the Moody's Composite Rate.
9
ARTICLE 11
BENEFICIARIES
11.1 A Participant shall have the right to designate any person as his
Beneficiary to whom benefits under this Plan shall be paid in the event
of the Participant's death prior to the total distribution of his
Benefit Account Balance under the Plan. If greater than 50 percent of
the Benefit Account Balance is designated to a Beneficiary other than
the Participant's spouse, such Beneficiary designation must be consented
to by the Participant's spouse. Each Beneficiary designation must be in
written form prescribed by the Committee and will be effective only when
filed with the Committee during the Participant's lifetime.
11.2 A Participant shall have the right to change the Beneficiary
designation, subject to spousal consent under the provisions of Article
11.1, without the consent of any designated Beneficiary by filing a new
Beneficiary designation with the Committee. The filing of a new
Beneficiary designation form will cancel all Beneficiary designations
previously filed.
11.3 The Committee shall acknowledge, in writing, receipt of each Beneficiary
designation form.
11.4 The Committee shall be entitled to rely on the Beneficiary designation
last filed by the Participant prior to his death. Any payment made in
accordance with such designation shall fully discharge the Company from
all further obligations with respect to the amount of such payments.
11.5 If a Beneficiary entitled to receive benefits under the Plan is a minor
or a person declared incompetent, the Committee may direct payment of
such benefits to the guardian or legal representative of such minor or
incompetent person. The Committee may require proof of incompetency,
minority or guardianship as it may deem appropriate prior to
distribution of any Plan benefits. Such distribution shall completely
discharge the Committee and the Company from all liability with respect
to such payments.
11.6 If no Beneficiary designation is in effect at the time of the
Participant's death, or if the named Beneficiary predeceased the
Participant, then the Beneficiary shall be: (1) the surviving spouse;
(2) if there is no surviving spouse, then his issue per stirpes; or (3)
if no surviving spouse or issue, then his estate.
11.7 If a Beneficiary receiving benefit payments under the provisions of
Articles 7 or 8 of the Plan dies prior to the completion of the benefit
payment period, the total of the remaining benefit payments will be
paid, in a lump sum amount, to the contingent Beneficiary designated by
the Participant under the provisions of Article 11.1.
10
If the Participant has failed to designate a contingent Beneficiary, the
total of the remaining benefit payments will be paid, in lump sum amount,
to the Beneficiary's estate.
ARTICLE 12
LEAVE OF ABSENCE
12.1 If a Participant is authorized by the Company for any reason to take a
paid leave of absence, the Participant's Deferral commitment shall
remain in full force and effect.
12.2 If a Participant is authorized by the Company for any reason to take an
unpaid leave of absence, the Participant's Deferral commitment shall be
suspended until the leave of absence ends and the Participant's
employment resumes.
ARTICLE 13
EMPLOYER LIABILITY
13.1 Amounts payable to a Participant shall be paid exclusively from the
general assets of the Company.
13.2 The Company shall have no obligation under the Plan to a Participant or
a Participant's Beneficiary, except as provided in this Master Plan
Document.
13.3 The Participant must cooperate with the Committee in furnishing all
information requested by the Company to facilitate the payment of his
Benefit Account Balance. Such information may include the results of a
physical examination if any is required for participation in the Plan.
ARTICLE 14
NO GUARANTEE OF CONTINUING EMPLOYMENT
14.1 The terms and conditions of this Plan shall not be deemed to constitute
a contract of employment between the Company and a Participant.
Moreover, nothing in the Plan shall be deemed to give a Participant the
right to be retained in the service of the Company or to interfere with
the right of the Company to discipline or discharge the Participant at
any time.
11
ARTICLE 15
TERMINATION, AMENDMENT OR MODIFICATION OF THE PLAN
15.1 The Board of Directors may at any time, without notice, amend the Plan
in whole or in part provided, however, that no amendment shall be
effective to decrease or restrict the amount of interest to be credited
under the provisions of Article 4.1 on an Account Balance as of the date
of such amendment.
15.2 The Board of Directors reserves the right to partially or completely
terminate the Plan at any time and for any reason.
15.3 The Board of Directors may partially terminate the Plan by instructing
the Committee not to accept any additional Deferral commitments. In the
event of a partial termination, the remaining provisions of the Plan
shall continue to operate and be effective for all Participants in the
Plan, as of the date of such partial termination.
15.4 In the event that the Board of Directors completely terminates the Plan,
the Plan shall cease to operate and the Committee shall pay out to each
Participant his Account Balance, plus interest to be credited to the
Account Balance, as of the date of the Plan's termination. The
Committee, in its sole discretion, may either make a lump sum
distribution at the time of Benefit Distribution or in equal monthly
installments over the 60 month Plan termination benefit payment period.
If the Committee determines to pay a Participant over the Plan
termination benefit payment period, the interest rate used to calculate
the amount that will be credited to a Participant's Account Balance, to
determine his Benefit Account Balance under the provisions of Article
5.3, will be 150 percent of the Moody's Composite Rate.
15.5 In the event of a hostile or non-negotiated takeover of the Company, the
benefits of this Plan will become 100 percent vested for all
Participants and the interest credited to a Participant's Account
Balance under any provision of this Plan will be adjusted based on 200
percent of the Moody's Rate.
15.6 Once benefits payments have commenced, termination of the Plan shall not
terminate the rights of a Participant or his Beneficiary to continue to
receive such payments. For all other Participants, the termination of
the Plan will limit benefits under the Plan to those provided for in
Article 15.4 herein.
12
ARTICLE 16
RESTRICTIONS ON ALIENATION OF BENEFITS
16.1 To the maximum extent permitted by law, no interest or benefit under the
Plan shall be assignable or subject in any manner to alienation, sale,
transfer, claims of creditors, pledge, attachment or encumbrances of any
kind.
ARTICLE 17
ADMINISTRATION OF THE PLAN
17.1 The general administration of the Plan, as well as construction and
interpretation thereof, shall be vested in the Committee. The number of
members of the Committee shall be established by, and the members shall
be appointed from time to time by, and shall serve at the pleasure of,
the Board of Directors of the Company.
17.2 Subject to the Plan, the Committee shall from time to time establish
rules, forms and procedures for the administration of the Plan. Except
as otherwise expressly provided, the Committee shall have the exclusive
right to interpret the Plan and to decide any and all matters arising
thereunder. The Committee's decisions shall be conclusive and binding
upon all persons having or claiming to have any right or interest under
the Plan.
17.3 The Committee may employ such consultants, advisors and managers as it
deems necessary or useful in carrying out its duties.
17.4 No member of the Committee shall be liable for any act or omission of
any other member of the Committee, nor for any act or omission on his
own part, excepting his own willful misconduct. The Company shall
indemnify and save harmless each member of the Committee against any and
all expenses and liabilities arising out of his membership on the
Committee, with the exception of expenses and liabilities arising out of
his own willful misconduct.
17.5 To enable the Committee to perform its functions, the Company shall
supply full and timely information to the Committee on all matters
relating to the compensation of all Participants, their retirement,
death or other cause for termination of employment, and such other
pertinent facts as the Committee may require.
17.6 The Committee shall have the power, in its sole discretion, to change
the manner and time of payments to be made to a Participant or
Beneficiary from that set forth herein, if requested to do so by such
Participant or Beneficiary.
13
ARTICLE 18
MISCELLANEOUS
18.1 Any notice given under the Plan shall be in writing and shall be mailed
or delivered to:
SOUTHWEST GAS CORPORATION
Executive Deferral Plan
Administrative Committee
5241 Spring Mountain Road
Las Vegas, NV 89102
18.2 The Plan shall be binding upon the Company and its respective
successors, and upon a Participant, Participant's Beneficiary, assigns,
heirs, executors and administrators.
18.3 The Plan shall be governed by and construed under the laws of the State
of Nevada.
18.4 Headings in this Master Plan Document are inserted for convenience of
reference only. Any conflict between such headings and the text shall
be resolved in favor of the text.
18.5 Masculine pronouns wherever used shall include feminine pronouns and
when the context dictates, the singular shall include the plural.
18.6 In case any provision of the Plan shall be held illegal or invalid for
any reason, said illegality or invalidity shall not affect the remaining
parts hereof, but the Plan shall be construed and enforced as if such
illegal and invalid provisions had never been inserted herein.
IN WITNESS WHEREOF, the Company has executed this Master Plan Document
this 13th day of May, 1994.
SOUTHWEST GAS CORPORATION
By /s/ Michael O. Maffie
_____________________________________
Its President/Chief Executive Officer
_____________________________________