Exhibit 10.78


 


CAP ROCK ENERGY CORPORATION


SUPPLEMENTAL EXECUTIVE DEFERRED


COMPENSATION RETIREMENT PLAN


 


PLAN DOCUMENT


 

















 


TABLE OF CONTENTS


 


	
  ARTICLE I  PURPOSE OF PLAN

  
	
  1.1

  	
  PURPOSE
  OF PLAN

  
	
   

  	
   

  
	
  ARTICLE II  DEFINITIONS

  
	
  2.1

  	
  ACCOUNT

  
	
  2.2

  	
  BENEFICIARY

  
	
  2.3

  	
  BOARD

  
	
  2.4

  	
  CODE

  
	
  2.5

  	
  COMMITTEE

  
	
  2.6

  	
  COMPANY

  
	
  2.7

  	
  COMPANY CONTRIBUTION

  
	
  2.8

  	
  COMPENSATION

  
	
  2.9

  	
  EFFECTIVE
  DATE

  
	
  2.10

  	
  ELIGIBLE
  EMPLOYEE

  
	
  2.11

  	
  ENTRY DATE

  
	
  2.12

  	
  NONQUALIFIED DEFERRAL CONTRIBUTION

  
	
  2.13

  	
  PARTICIPANT

  
	
  2.14

  	
  PARTICIPANT ENROLLMENT AND ELECTION FORM

  
	
  2.15

  	
  PLAN

  
	
  2.16

  	
  PLAN YEAR

  
	
  2.17

  	
  TRUST

  
	
  2.18

  	
  TRUSTEE

  
	
  2.19

  	
  VALUATION
  DATE

  
	
   

  	
   

  
	
  ARTICLE III  ELIGIBILITY AND PARTICIPATION

  
	
  3.1

  	
  REQUIREMENTS

  
	
  3.2

  	
  RE-EMPLOYMENT

  
	
  3.3

  	
  CHANGE OF EMPLOYMENT CATEGORY

  
	
   

  	
   

  
	
  ARTICLE IV 
  NONQUALIFIED DEFERRAL CONTRIBUTIONS

  
	
  4.1

  	
  NONQUALIFIED DEFERRAL ELECTIONS

  
	
  4.2

  	
  PAYROLL DEDUCTIONS

  
	
  4.3

  	
  TIMING OF CONTRIBUTION

  
	
   

  	
   

  
	
  ARTICLE V 
  COMPANY CONTRIBUTIONS

  
	
  5.1

  	
  COMPANY CONTRIBUTION

  
	
  5.2

  	
  TIMING OF CONTRIBUTION

  



 

















 


	
  ARTICLE VI  PLAN ACCOUNTS

  
	
  6.1

  	
  ESTABLISHMENT OF ACCOUNTS

  
	
  6.2

  	
  NONQUALIFIED DEFERRAL ACCOUNT

  
	
  6.3

  	
  COMPANY CONTRIBUTION ACCOUNT

  
	
  6.4

  	
  ALLOCATION OF INCOME

  
	
   

  	
   

  
	
  ARTICLE VII  ALLOCATION OF FUNDS

  
	
  7.1

  	
  ALLOCATION OF EARNINGS OR LOSSES ON
  ACCOUNTS

  
	
  7.2

  	
  ACCOUNTING FOR DISTRIBUTION

  
	
  7.3

  	
  INTERIM VALUATIONS

  
	
   

  	
   

  
	
  ARTICLE VIII  VESTING

  
	
  8.1

  	
  NONQUALIFIED DEFERRAL CONTRIBUTIONS

  
	
  8.2

  	
  COMPANY CONTRIBUTIONS

  
	
   

  	
   

  
	
  ARTICLE IX 
  PAYMENTS OF BENEFITS

  
	
  9.1

  	
  PAYMENTS OF BENEFITS

  
	
  9.2

  	
  WITHDRAWAL OF FUNDS

  
	
   

  	
   

  
	
  ARTICLE X 
  COMMITTEE ADMINISTRATION

  
	
  10.1

  	
  COMMITTEE

  
	
   

  	
   

  
	
  ARTICLE XI  THE TRUST

  
	
  11.1

  	
  ESTABLISHMENT OF TRUST

  
	
   

  	
   

  
	
  ARTICLE XII  ADMINISTRATION

  
	
  12.1

  	
  ADMINISTRATIVE AUTHORITY

  
	
  12.2

  	
  MUTUAL EXCLUSION OF RESPONSIBILITY

  
	
  12.3

  	
  UNIFORMITY OF DISCRETIONARY ACTS

  
	
  12.4

  	
  LITIGATION

  
	
  12.5

  	
  PAYMENT OF ADMINISTRATION EXPENSES

  
	
  12.6

  	
  CLAIMS
  PROCEDURE

  
	
  12.7

  	
  LIABILITY OF COMMITTEE, INDEMNIFICATION

  
	
  12.8

  	
  EXPENSES

  
	
  12.9

  	
  TAXES

  
	
  12.10

  	
  ATTORNEY’S
  FEES

  



 

















 


ARTICLE
I - PURPOSE OF PLAN


 


1.1                                 PURPOSE OF PLAN.   The Company intends
and desires by the adoption of this Plan to recognize the value to the Company
of the past and present services of Eligible Employees covered by the Plan and
to encourage an assure their continued service with the Company by making more
adequate provisions for their future retirement security.


 


This Plan has been adopted to
provide certain select management and highly compensated employees of Cap Rock
Energy Corporation the opportunity to accumulate deferred compensation until
retirement, disability, resignation, dismissal or death.


 


This Plan is intended to be “a
plan which is unfunded and maintained by an employer primarily for the purpose
of providing deferred compensation for a select group of management or highly
compensated employees” within the meaning of Sections 201(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”) and
shall be interpreted and administered in a manner consistent with that intent.


 


ARTICLE
II - DEFINITIONS


 


2.1                                 ACCOUNT means those separate accounts established and
maintained under the Plan in the name of each Participant as required pursuant
to the provisions of Article VII.


 


2.2                                 BENEFICIARY means a Participant’s beneficiary or
beneficiaries identified on the Participant Enrollment and Election Form.


 


2.3                                 BOARD means the Board of Directors of Cap Rock Energy
Corporation.


 


2.4                                 CODE means the Internal Revenue Code of 1986 and the regulations
thereunder, as amended from time to time.


 


2.5                                 COMMITTEE means the Retirement Committee appointed by the
Board.


 


2.6                                 COMPANY means Cap Rock Energy Corporation or any company which
is a successor as a result of merger, consolidation, liquidation, transfer of
assets, or other reorganization.


 


2.7                                 COMPANY CONTRIBUTION means an amount contributed
by the Company pursuant to the provisions of Article V.


 


2.8                                 COMPENSATION means base salary or wages, plus overtime,
bonuses, commissions, etc., which is paid the employee by the Company for the
performance of duties during the Plan Year. 
Compensation used shall be prior to any salary deferrals.


 


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2.9                                 EFFECTIVE DATE means the date on which the Company
adopts the Plan.


 


2.10                           ELIGIBLE EMPLOYEE means, for any Plan Year (or
applicable portion thereof), person employed by the Company who is determined
by the Board to be a member of select group of management or highly compensated
employees, who is designated by the Board to be eligible under the Plan.  By fifteen
days prior to the beginning of a Plan Year, the Company shall notify those
individuals, if any, who will be Eligible Employees for the next Plan Year. If
the Company determines that an employee first becomes an Eligible Employee
during a Plan Year, the Company shall notify such employee of its determination
and of the date during the Plan Year on which the employee shall. first become an Eligible Employee.


 


2.11                           ENTRY DATE means the date as determined by the Company.


 


2.12                           NONQUALIFIED DEFERRAL CONTRIBUTION
means Compensation that is due to be earned and which would otherwise be paid
to the Participant, which the Participant elects to defer under the Plan and
which is contributed on behalf of each Participant by the Company pursuant to
the provisions of Article IV.


 


2.13                           PARTICIPANT means any person so designated in accordance
with the provisions of Article III, including where appropriate according to
the context of the Plan, any former employee who is or may become (or whose
Beneficiaries may become) eligible to receive a benefit under the Plan.


 


2.14                           PARTICIPANT ENROLLMENT AND ELECTION
FORM means the form on which a Participant elects to defer Compensation
hereunder and on which the Participant makes certain other designations as
required thereon.


 


2.15                           PLAN means this Cap Rock Energy Corporation Supplemental
Executive Deferred Compensation Retirement Plan.


 


2.16                           PLAN YEAR means the twelve (12) month period ending on
December 31 each year.


 


2.17                           TRUST means the trust fund established pursuant to the Plan.


 


2.18                           TRUSTEE means the trustee named in the agreement establishing
the Trust and such successor and/or additional trustees as may be named
pursuant to the terms of the agreement establishing the Trust.


 


2.19                           VALUATION DATE means the last day of each Plan Year and
any other date that the Company, in its sole discretion, designates as a
Valuation Date.


 


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ARTICLE III - ELIGIBILITY AND PARTICIPATION


 


3.1                                 REQUIREMENTS.   Every Eligible Employee as
of the Effective Date shall be eligible to become a Participant on the
Effective Date. Every other Eligible Employee shall be eligible to become a
Participant on the first Entry Date occurring on or after the date on which he
or she becomes an Eligible Employee. No individual shall become a Participant,
however, if he or she in not an Eligible Employee on the date his or her
participation is to begin.


 


Participation in the Plan is
voluntary. In order to participate, an otherwise Eligible Employee must execute
a valid Participant Enrollment and Election Form in such manner as the Company
may require and must agree to make Nonqualified Deferral Contributions as
provided in Article IV.


 


3.2                                 RE-EMPLOYMENT.   If a Participant whose
employment with the Company is terminated is subsequently re-employed, he or
she shall become a Participant in the Plan in accordance with the provisions of
Section 3.1 of this Article.


 


3.3                                 CHANGE OF EMPLOYMENT CATEGORY.   During
any period in which a Participant remains in the employ of the Company, but
ceases to be an Eligible Employee, he or she shall not be eligible to make
additional Nonqualified Deferral Contributions under this Plan.


 


ARTICLE IV - NONQUALIFIED DEFERRAL
CONTRIBUTIONS


 


4.1                                 NONQUALIFIED DEFERRAL ELECTIONS.   In
accordance with rules established by the Company, a Participant may elect to
make a Nonqualified Deferral Contribution with respect to a Plan Year by use of
a Participant Enrollment and Election Form.


 


4.2                                 PAYROLL DEDUCTIONS.   Nonqualified
Deferral Contributions shall be made through payroll deductions. The
Participant may change the amount of his or her Nonqualified Deferral
Contribution amount by delivering to the Company at least fifteen days prior to  the beginning of any quarter a new Participant Enrollment and Election
form with such change being first effective for Compensation to be earned in
the first payroll period of the quarter. Once made, a Nonqualified
Deferral Contribution payroll deduction election shall continue in force
indefinitely, until changed by the Participant on a subsequent Participant
Enrollment and Election Form delivered to the Company.


 


4.3                                 TIMING OF CONTRIBUTION.   Nonqualified
Deferral Contributions shall be made at the same time Eligible Employees are
paid.


 


ARTICLE
V - COMPANY CONTRIBUTIONS


 


5.1                                 COMPANY CONTRIBUTION.   In its
sole discretion, the Company may make a Company Contribution on behalf a
Participant.


 


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5.2                                 TIMING OF CONTRIBUTION.   Company
Contributions shall be made as soon as administratively feasible after declared
by the Board.


 


ARTICLE
VI - PLAN ACCOUNTS


 


6.1                                 ESTABLISHMENT OF ACCOUNTS.   There
shall be established and maintained by the Company separate Accounts in the
name of each Participant, as required and as described in this Article VI.


 


6.2                                 NONQUALIFIED DEFERRAL ACCOUNT.   The
Company shall establish an Account to which are credited a Participant’s
Nonqualified Deferral Contributions, plus amounts equal to any income, gains,
or losses (to extent realized, based upon fair market value of the Account’s
assets) attributable or allocable to the Participant’s Account.


 


6.3                                 COMPANY CONTRIBUTION ACCOUNT.   The
Company shall establish an Account to which are credited a Participant’s
Company Contributions, plus amounts equal to any income, gains, or losses (to
extent realized, based upon fair market value of the Account’s assets)
attributable or allocable to the Participant’s Account.


 


6.4                                 ALLOCATION OF INCOME.   The Company
shall have the discretion to allocate such income, gains, or losses among
Accounts pursuant to such allocation rules as the Company deems to be
reasonable and administratively practicable.


 


ARTICLE
VII - ALLOCATION OF FUNDS


 


7.1                                 ALLOCATION OF EARNINGS OR LOSSES ON
ACCOUNTS.   Each Participant’s Account shall be invested in
such investments as the Trustee shall determine. The Trustee may (but is not
required to) consider the Participant’s investment preferences when investing
amounts credited to the Participant’s Accounts.  Such investment preferences shall be related to the Trustee at
the time and in the manner prescribed by the Company, in its sole
discretion.  The Participant’s Accounts
will be credited or debited with the increase or decrease in the realizable net
asset value or credited interest, as applicable, of each investment, as
follows. As of each Valuation Date, an amount equal to the net increase of
decrease in realizable net asset value or credited interest, as applicable (as
determined by the Trustee), of each investment option within the Trust since
the preceding Valuation Date shall be allocated among all Participants’
Accounts to be invested in that investment option in accordance with the ratio
which the portion, determined as provided herein, bears to the aggregate of all
amounts to be invested within that investment option.


 


7.2                                 ACCOUNTING FOR DISTRIBUTION.   As
of the date of any distribution under the Plan to a Participant or his or her
Beneficiary or Beneficiaries, such distribution shall be charged to the
applicable Participant’s Account.


 


7.3                                 INTERIM VALUATIONS.   If it is
determined by the Company that the value of the Trust as 


 


4

















 


of any date on which
distributions are to be made differs materially from the value of the Trust on
the prior Valuation Date upon which the distribution is to be based, the
Company, in its discretion, shall have the right to designate any date in the
interim as a Valuation Date for the purpose of revaluing the Trust so that the
Account from which the distribution is being made will, prior to the
distribution, reflect its share of such material difference in value.


 


ARTICLE
VIII - VESTING


 


8.1                                 NONQUALIFIED DEFERRAL CONTRIBUTIONS.   A
Participant shall always be one hundred percent (100%) vested in amounts
credited to his or her Nonqualified Deferral Account.


 


8.2                                 COMPANY CONTRIBUTIONS.   A
Participant’s Company Contribution Account will be subject to the vesting
schedule attached hereto as Exhibit “A”


 


ARTICLE IX - PAYMENTS OF BENEFITS


 


9.1                                 PAYMENTS OF BENEFITS.   The benefit
payable under this Plan on account of a Participant’s termination of
employment, retirement, disability, or death shall be distributed in a cash
lump sum as soon as practicable and no later than sixty (60) days after the
earlier of such termination of employment, retirement, incurrence of disability
(as determined by the Committee), or death. Any death benefit payable under the
Plan shall be payable to the Participant’s Beneficiary.


 


9.2                                 WITHDRAWAL OF FUNDS.   Any
participate may withdraw any amount of money at anytime that he or she has
contributed to this Plan without penalty from the Plan. Any participate
withdrawing money from the Plan in this manner shall be responsible for taxes
including income taxes as ordinary income.


 


ARTICLE X - COMMITTEE ADMINISTRATION


 


10.1                           COMMITTEE.   The Committee shall
administer, construe, and interpret this Plan and shall determine, subject to
the provision of this Plan, the Eligible Employees who become Participants in
the Plan from time to time and the amount, if any, due a Participant (or his or
her Beneficiary) under this Plan. No member of the Committee shall be liable
for any act done or determination made in good faith. No member of the
Committee who is a Participant in this Plan may vote on matters affecting his
or her personal benefit under this Plan, but any such member shall otherwise be
fully entitled to act in matters arising out of or affecting this Plan
notwithstanding his or her participation herein. In carrying out its duties
herein, the Committee shall have discretionary authority to exercise all powers
and to make all determinations, consistent with the terms of the Plan, in all
matters entrusted to it, and its determinations shall be given deference and
shall be final and binding on all interested parties.


 


ARTICLE XI - THE TRUST


 


11.1                           ESTABLISHMENT OF TRUST.   The
Company shall establish the Trust with the Trustee,


 


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pursuant to such terms and
conditions as are set forth in the Trust agreement to be entered into between
the Company and the Trustee. The Trust is intended to be treated as a “grantor”
trust under the Code, and the establishment of the Trust is not intended to
cause Participants to realize current income on amounts contributed thereto,
and the Trust shall be so interpreted.


 


ARTICLE XII - ADMINISTRATION


 


12.1                           ADMINISTRATIVE AUTHORITY.   Except
as otherwise specifically provided herein, the Company shall have the sole
responsibility for and the sole control of the operation and administration of
the Plan, and shall have the power and authority to take all actions including
the right to amend or terminate the Plan, and to make all decisions and
interpretations which may be necessary or appropriate in order to administer
and operate the Plan, including, without limiting the generality of the,
foregoing, the power, duty, and responsibility to:


 


a)                                      Resolve and
determine all disputes or questions arising under the Plan, including the power
to determine the rights of Eligible Employees, Participants, and Beneficiaries,
and their respective benefits, and to remedy any ambiguities, inconsistencies,
or omissions in the Plan.


 


b)                                     Adopt such rules
of procedure and regulations as in its opinion may be necessary for the proper
and efficient administration of the Plan and as are consistent with the Plan.


 


c)                                      Implement the
Plan in accordance with its terms and the rules and regulations adopted as
above.


 


d)                                     Make
determinations with respect to the eligibility of any Eligible Employee as a
Participant and make determination concerning the crediting and distribution of
Plan Accounts.


 


e)                                      Appoint any
persons or firms, or otherwise act to secure specialized advice or assistance,
as it deems necessary or desirable in connection with the administration and
operation of the Plan, and the Company shall be entitled to rely conclusively
upon, and shall be fully protected in any action or omission taken by it in
good faith reliance upon the advice or delegate from time to time by written
instrument all or any part of its duties, powers, or responsibilities under the
Plan, both ministerial and discretionary, as it deems appropriate, to any
person or committee, and in the same manner to revoke any such delegation of
duties, powers, or responsibilities. Any action of such person or committee in
the exercise of such delegated duties, powers, or responsibilities shall have
the same force and effect for all purposes hereunder as if such action had been
taken by the Company.  Further, the
Company may authorize one or more persons to execute any certificate or
document on behalf of the Company, in which event any person notified by the
Company of such authorization shall be entitled to accept and; conclusively
rely upon any such certificate or document executed by such person as representing
action by the Company until such 


 


6

















 


third person shall have been notified of the
revocation of such authority.


 


12.2                           MUTUAL EXCLUSION OF RESPONSIBILITY.   Neither
the Trustee nor the Company shall be obliged to inquire into or be responsible
for any act or failure to act, or the authority therefor, on the part of the
other.


 


12.3                           UNIFORMITY OF DISCRETIONARY ACTS.   Whenever
in the administration or operation of the Plan discretionary actions by the
Company are required or permitted, such actions shall be consistently and
uniformly applied to all persons similarly situated, and no such action shall
be taken which shall discriminate in favor of any particular person or


group of persons.


 


12.4                           LITIGATION.   Except as may be otherwise
required by law, in any action or judicial proceeding affecting the Plan, no
Participant or Beneficiary shall be entitled to any notice or service of
process, and any final judgment entered in such action shall be binding on all
persons interested in or claiming under the Plan.


 


12.5                           PAYMENT OF ADMINISTRATION EXPENSES.   All
expenses incurred in the administration and operation of the Plan and the
Trust, including any taxes payable by the Company in respect of the Plan or
Trust or payable by or from the Trust pursuant to its terms shall be paid by
the Company.


 


12.6                           CLAIMS PROCEDURE.


 


a)                                      Notice of Claim.
Any Eligible Employee or Beneficiary, or the duly authorized representative of
an Eligible Employee or Beneficiary, may file with the Committee a claim for a
Plan benefit. Such a claim must be in writing on a form provided by the
Committee and must be delivered to the Committee, in person or by mail, postage
prepaid. Within ninety (90) days after the receipt of such a claim, the
Committee shall send to the claimant, by mail, postage prepaid, a notice of the
granting or the denying, in whole or in part, of such claim, unless special
circumstances require an extension of time for processing the claim. In no
event may the extension exceed ninety (90) days from the end of the initial
period. If such an extension is necessary, the claimant will be given a written
notice to this effect prior to the expiration of the initial ninety (90) day
period. The Committee shall have full discretion to deny or grant a claim in
whole or in part in accordance with the terms of the Plan. If notice of the
denial of a claim is not furnished in accordance with this Section, the claim
shall be denied and the claimant shall be permitted to exercise his or her
right to review pursuant to Sections 13.6(c) and 13.6(d) of the Plan, as
applicable.


 


b)                                     Action on Claim.
The Committee shall provide to every claimant who is denied a claim for
benefits a written notice setting forth, in a manner calculated to be
understood by the claimant:


 


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(i)                                     The specific
reason or reasons for the denial;


 


(ii)                                  A specific reference
to the pertinent Plan provisions on which the denial is based;


 


(iii)                               A description of any
additional material or information necessary of the claimant to perfect the
claim and an explanation of why such material or information is necessary; and


 


(iv)                              An explanation of the
Plan’s claim review procedure.


 


c)                                      Review of Denial.
Within sixty (60) days after the receipt by a claimant of written notification
of the denial (in whole or in part) of a claim, the claimant or the claimant’ s
duly authorized representative, upon written application to the Committee,
delivered in person or by certified mail, postage prepaid, may review pertinent
documents and may submit to the Committee, in writing, issues and comments
concerning the claim.


 


d)                                     Decision on
Review. Upon the Committee’s receipt of a notice of a request for review, the
Committee shall make a prompt decision on the review and shall communicate the
decision on review in writing to the claimant The decision on review shall be
written in a manner calculated to be understood by the claimant and shall
include specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.  The decision on review shall be made not
later than sixty (60) days after the Committee’s receipt of a request for a
review, unless special circumstances require an extension of time for
processing, in which case a decision shall be rendered not later than one
hundred twenty (120) days after receipt of the request for review. If an
extension is necessary, the claimant shall be given written notice of the
extension by the Committee prior to the expiration of the initial sixty (60)
day period. If notice of the decision on review is not furnished in accordance
with this Section, the claim shall be denied on review.


 


12.7                           LIABILITY OF COMMITTEE,
INDEMNIFICATION.    To the extent permitted by law, the
Committee or any Company employee shall not be liable to any person for any
action taken or omitted in connection with the interpretation and
administration of this Plan unless attributable to his or her own bad faith or
willful misconduct.


 


12.8                           EXPENSES.   The cost of the establishment of
the Plan and the adoption of the Plan by the Company, including but not limited
to legal and accounting fees, shall be borne by the Company.


 


12.9                           TAXES.   All amounts payable hereunder shall be
reduced by any and all federal, state, and local taxes imposed upon an Eligible
Employee or his or her Beneficiary which are required to be paid or withheld by
Company. The determination by the Company regarding applicable income and 


 


8

















 


employment tax withholding
requirements shall be final and binding on the Eligible Employee.


 


12.10                     ATTORNEY’S FEES.   The Company shall pay
the reasonable attorney’s fees incurred by any Eligible Employee in an action
brought against Company to enforce Eligible Employee’s rights under the Plan,
provided that such fees shall only be payable in the event that the Eligible
Employee prevails in such action.


 


	
  CAP ROCK
  ENERGY CORPORATION

  
	
   

  	
   

  
	
  By:  /s/ Celia Zinn

  	
   

  
	
  Celia Zinn, Controller

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  November 14,
  2002

  	
   

  	
   

  
				



 


9

















 


Exhibit “A”


 


VESTING SCHEDULE


 




	
  1 Year - 10

  	
  %

  
	
  2 Years - 20

  	
  %

  
	
  3 Years - 30

  	
  %

  
	
  4 Years - 40

  	
  %

  
	
  5 Years - 60

  	
  %

  
	
  6 Years - 80

  	
  %

  
	
  7 Years -
  100

  	
  %

  






 












* This Vesting Schedule includes
all prior years that a participant participating in this Plan participated in
the Cap Rock Electric Cooperative, Inc. Supplemental Executive Deferred
Compensation Retirement Plan.


 


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