EXHIBIT 7-15-1
EMPLOYMENT CONTRACT
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), dated as of April 29,
1998, but effective as provided herein, is made and entered into by and between
Sierra Pacific Resources, a Nevada corporation (the "Company"), and Xxxxxxx X.
Xxxxxx (the "Executive").
WHEREAS, the Executive has been serving as the President and Chief
Operating Officer of Nevada Power Company, a Nevada corporation ("Nevada
Power");
WHEREAS, the Company and Nevada Power have executed a merger agreement
(the "Merger Agreement") which contemplates the merger (the "Merger") of Nevada
Power with and into a subsidiary ("Desert Sub") of the Company, with Desert Sub
(to be renamed Nevada Power Company) as the survivor (the "Surviving Company")
and certain other transactions, all of which will become effective at the
Effective Time (as defined in the Merger Agreement);
WHEREAS, in order to induce Executive to serve, on and after the
Effective Time, as the Chairman of the Board and Chief Executive Officer of the
Company and Chairman of the Board of each of Sierra Pacific Power Company and
Surviving Company (collectively, the "Utility Subsidiaries"), the Company
desires to provide Executive with compensation and other benefits on the terms
and conditions set forth in this Agreement;
WHEREAS, the Company considers it in the best interests of its
stockholders to xxxxxx the continuous employment of certain key management
personnel;
WHEREAS, the Company recognizes that, as is the case for most publicly
held companies, the possibility of a Change in Control (as defined herein)
exists;
WHEREAS, the Company wishes to assure itself of continuation of
management following the Effective Time, including in the event of a Change in
Control; and
WHEREAS, the Company wishes to employ the Executive and the Executive
is willing to render services, both on the terms and subject to the conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, it is agreed as follows:
1. EMPLOYMENT.
1.1 The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to undertake employment with the Company, upon the terms
and conditions herein set forth.
1.2 Employment will be for a term commencing on the Effective Time
(the "Effective Date") and, subject to earlier expiration upon the Executive's
termination under Section 5, expiring on the third anniversary of the Effective
Time (the "Employment Term"). The Employment Term may be extended by mutual
written agreement of the parties. In the event a Change in Control (as defined
in Section 6.2) occurs less than three years before the end of the Employment
Term, the Employment Term will be extended for a period ending on the third
anniversary of the occurrence of the Change in Control, except that in the event
the occurrence of a Change in Control as described in Section 6.2(iv) occurs
less than three years before the end of the Employment Term, the Employment Term
will be extended for a period ending on the later of (i) the third anniversary
of the occurrence of such Change in Control or (ii) the earlier of (a) the day
after any transaction, occurrence or event described in any agreement,
announcement or resolution referred to in Section 6.2(iv) (a "Transaction") is
consummated or (b) the date it is determined by resolution of the Board of
Directors of the Company (the "Board") adopted in good faith that such
Transaction will not be consummated. (The Employment Term, as so extended under
this Section 1.2, will thereafter constitute the "Employment Term" hereunder and
is subject to further extension as provided in this Section 1.2.)
2. POSITIONS AND DUTIES.
2.1 POSITIONS AND DUTIES. During the Employment Term, the Executive
will serve in the positions of Chairman of the
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Board and Chief Executive Officer of the Company and of Chairman of the Board of
each of the Utility Subsidiaries, and will have such powers, duties, functions,
responsibilities and authority as are (i) consistent with the Executive's
position as the Company's most senior executive officer and as Chairman of the
Boards of Directors of the Company and the Utility Subsidiaries; or
(ii) assigned to his office in the Company's and the Utility Subsidiaries'
bylaws; or (iii) reasonably assigned to him by the Board or the Board of
Directors of the Utility Subsidiaries. The Executive will report directly to
the Board. The Company will use its best efforts to cause the Executive to be
elected as a member of the Board and as Chairman of the Board throughout the
Employment Term and will use its best efforts to cause him to be included in the
management slate for election as a director at every stockholders' meeting at
which his term as a director would otherwise expire. In addition, the Company
will cause the Executive to be elected a member of the Board of Directors, and
as Chairman thereof, of each Utility Subsidiary throughout the Employment Term.
2.2 COMMITMENT. During the Employment Term, the Executive will be
the Company's full-time employee and, except as may otherwise be approved in
advance in writing by the Board, and except during vacation periods and
reasonable periods of absence due to sickness, personal injury or other
disability, the Executive will devote substantially all of his business time and
attention to the performance of his duties hereunder. Notwithstanding the
foregoing, the Executive may, (i) subject to the approval of the Board, serve as
a director of a company which is not engaged in "Competition" (as defined in
Section 9.1) with the Company or any Subsidiary (as defined in Section 6.2),
(ii) serve as an officer, director or otherwise participate in purely
educational, welfare, social, religious and civic organizations, and (iii)
manage personal and family investments.
3. PLACE OF PERFORMANCE. In connection with his employment during the
Employment Term, unless otherwise agreed by the Executive, the Executive will
have offices at each of the Company's and Surviving Company's principal
executive offices. The Executive will undertake normal business travel on
behalf of the Company.
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4. COMPENSATION AND RELATED MATTERS.
4.1 COMPENSATION.
(i) ANNUAL BASE SALARY. During the Employment Term, the
Company will pay to the Executive an annual base salary ("Base Salary") in such
amount as shall be commensurate with his position and level of responsibility as
determined by the Board (or the Compensation Committee thereof) in its sole
discretion from time to time; provided, however, that in no event shall such
Base Salary be less than the Executive's annual base salary at Nevada Power as
in effect immediately prior to the Effective Time. Base salary shall be payable
at the times and in the manner consistent with the Company's general policies
regarding compensation of executive employees. Base Salary may not be
decreased. The Board may from time to time authorize such additional
compensation to the Executive, in cash or in property, as the Board may
determine in its sole discretion to be appropriate.
(ii) ANNUAL INCENTIVE COMPENSATION. If the Board (or the
Compensation Committee thereof) authorizes any annual cash incentive
compensation or approves any other annual management incentive program or
arrangement, the Executive will be eligible to participate in such plan, program
or arrangement under the general terms and conditions applicable to executive
and management employees. The Executive's target payout under such annual
incentive compensation plans, programs and arrangements will be, subject to
achievement of applicable performance measures, on an annual level of not less
than a percentage of Base Salary equal to the target percentage of annual base
salary in effect for the Executive under Nevada Power's annual incentive
compensation plan immediately prior to the Effective Time; provided, however,
that such percentage shall in no event be less than the target payout percentage
applicable for the year to the President and Chief Operating Officer of the
Company. Subject to the foregoing, nothing in this Section 4.1(ii) will
guarantee to the Executive any specific amount of incentive compensation, or
prevent the Board (or the Compensation Committee thereof) from establishing
performance goals and compensation targets applicable only to the Executive.
(iii) LONG-TERM INCENTIVE COMPENSATION PLANS AND PROGRAMS. If
the Board (or the Compensation Committee thereof) authorizes any long-term cash
incentive plan or program, the Executive will be eligible to participate in such
plan or program under the general terms and conditions applicable to executive
and management employees. The Executive's participation in any such plan or
program
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will be, subject to achievement of applicable performance measures, at annual
target level grant of not less than a percentage of Base Salary equal to the
most recent percentage of annual base salary granted to the Executive prior to
the Effective Time as a target level grant under Nevada Power's long-term
incentive plan; provided, however, that such percentage shall in no event be
less than the target level grant percentage applicable for the year to the
President and Chief Operating Officer of the Company. Subject to the foregoing,
nothing in this Section 4.1(iii) will guarantee the Executive any specific
amount of long-term incentive compensation, or prevent the Board (or the
Compensation Committee thereof) from establishing performance goals and
compensation targets applicable only to the Executive.
4.2 EMPLOYEE AND EXECUTIVE BENEFITS. In addition to the compensation
described in Section 4.1 and subject to the following provisions of this Section
4, the Company will make or cause to be made available to the Executive and his
eligible dependents, subject to the terms and conditions of the applicable
plans, including without limitation the eligibility rules, participation in all
employee benefit plans, including all employee retirement income and welfare
benefit policies, plans, programs or arrangements, in which senior executives of
the Company participate from time to time, including any stock option, stock
purchase, stock appreciation, savings, pension, supplemental executive
retirement or other retirement income or welfare benefit, disability, salary
continuation, and any other deferred compensation, incentive compensation, group
and/or executive life, health, medical/hospital or other insurance (whether
funded by actual insurance or self-insured by the Company or an affiliate),
expense reimbursement or other employee benefit policies, plans, programs or
arrangements.
4.3 VACATION AND FRINGE BENEFITS. During the Employment Term, the
Executive shall be entitled to vacation in such amounts as would be available
under the Company's normal vacation policies applicable to senior executives, as
in effect from time to time, to an employee who as of the Effective Date would
have service with the Company equal to the aggregate of his service with Nevada
Power prior to the Effective Date plus an additional 26 years, such vacation to
be taken in accordance such normal vacation policies; and the Executive shall be
entitled to the perquisites and other fringe benefits made available to
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senior executives of the Company, commensurate with his position and level of
responsibility with the Company.
4.4 EXPENSES. The Company will promptly reimburse the Executive for
all travel and other business expenses the Executive incurs in order to perform
his duties to the Company under this Agreement in a manner commensurate with the
Executive's position and level of responsibility with the Company, and in
accordance with the Company's policy regarding substantiation of expenses.
4.5 RELOCATION EXPENSES. If the Company requests that the Executive
relocate after the Effective Date to the general area of the Company's current
headquarters in Reno, Nevada, the Company will pay the Executive and, where
applicable, upon substantiation of expenses (i) at the time of relocation a
relocation allowance equal to 1/24th of the Executive's Base Salary at the time
of relocation, (ii) an allowance for up to two months' rent for temporary
housing following relocation at a rate of not more than $2,000 per month, (iii)
any additional expenses incurred by the Executive associated with up to two
house hunting trips to the Reno, Nevada area for the Executive and his wife,
(iv) relocation expenses associated with moving the Executive's family and
household goods from Las Vegas, Nevada to the Reno, Nevada area, and (v) the
normal seller's broker's commission associated with the sale of the Executive's
existing residence in Las Vegas, Nevada. In lieu of the payment provided for in
clause (v), the Executive may elect to have the Company purchase the Executive's
existing home in Las Vegas, Nevada at a price equal to the average of the fair
market values as reported in two appraisals submitted by appraisers jointly
agreed to by the Executive and the Company.
4.6 SUPPLEMENTAL RETIREMENT BENEFITS. (i) The Executive will be
eligible for a benefit under a supplemental retirement plan heretofore
established by Nevada Power for the Executive. The benefit, if any, to which
the Executive is entitled under such supplemental retirement plan will be
payable at the same time and in the same form as the benefit to which the
Executive would be entitled under the Surviving Company Retirement Plan (the
"Qualified Plan") if he were a participant therein and will be equal to:
(a) the benefit to which the Executive would be entitled under the
Qualified Plan (after application of the limitations included therein that
are imposed by the Code,
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such as Code Sections 401(a)(17) and 415) determined as if the Executive (I)
were a participant in the Qualified Plan, (II) had an additional twenty-six (26)
"Years of Credited Service" under the Qualified Plan, and (III) had an
additional twenty-six (26) "Years of Vesting Service" under the Qualified Plan,
LESS
(b) the sum of (I) the actual amount, if any, payable to or on behalf
of the Executive under the Qualified Plan and (II) the actuarial equivalent
amounts, if any, of the vested retirement benefits to which the Executive
is entitled under any qualified or non-qualified defined benefit plan in
which the Executive participated while previously employed by Entergy
Services, Inc. and San Diego Gas & Electric Company or their affiliates
(such amounts under clauses (a) and (b) to be determined without regard to
any assignment of benefits under a qualified domestic relations order, and
the actuarial equivalents under clause (b)(II) to be determined using the
applicable actuarial assumptions as specified in the Qualified Plan).
(ii) The Executive will be eligible to continue to participate in the
Surviving Company Supplemental Executive Retirement Plan, as amended from time
to time (the "SERP"). For purposes of applying the SERP and without further
need to amend the SERP, the Executive will be credited with two (2) years of
"Service" under the SERP for each of the first five years of actual "Service"
thereunder.
5. TERMINATION. Notwithstanding the Employment Term specified in Section
1.2, the termination of the Executive's employment hereunder will be governed by
the following provisions:
5.1 DEATH. In the event of the termination of the Executive's
employment during the Employment Term by reason of the Executive's death, the
Company will pay to the Executive's beneficiaries or estate, as appropriate,
promptly after the Executive's death, (i) the unpaid Base Salary to which the
Executive is entitled, pursuant to Section 4.1, through the date of the
Executive's death, and (ii) for any accrued but unused vacation days, to the
extent and in the amounts, if any, provided under the usual policies and
arrangements, as modified by Section 4.3, which cover the Executive. This
Section 5.1 will not limit the entitlement of the Executive's estate or
beneficiaries to any death or other benefits then available to the Executive
under any
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life insurance, stock ownership, stock options, or other benefit plan or policy
that is maintained by the Company or its affiliates for the Executive's benefit
or in which the Executive participated.
5.2 DISABILITY.
(i) If the Executive has incurred a Disability (as defined
below) during the Employment Term, the Company may give the Executive written
notice of its intention to terminate the Executive's employment. In such event,
the Executive's employment with the Company will terminate effective on the 30th
calendar day after receipt of such notice by the Executive, provided that within
the 30 calendar days after such receipt, the Executive will not have returned to
full-time performance of his duties. The Executive will continue to receive his
Base Salary (less any amounts payable to the Executive for such period under any
short- or long-term disability plan maintained by the Company or an affiliate)
and benefits until the date of termination. In the event of the Executive's
Disability, the Company will pay the Executive, promptly after the Executive's
termination, (a) the unpaid Base Salary to which he is entitled, pursuant to
Section 4.1, through the date of the Executive's termination (less any amounts
payable to the Executive for such period under any short- or long-term
disability plan maintained by the Company or an affiliate), and (b) for any
accrued but unused vacation days, to the extent and in the amounts, if any,
provided under the usual policies and arrangements, as modified by Section 4.3,
which cover the Executive. This Section 5.2 will not limit the entitlement of
the Executive or the Executive's estate or beneficiaries to any disability or
other benefits then available to the Executive under any disability insurance or
other benefit plan or policy that is maintained by the Company or its affiliates
for the Executive's benefit or in which the Executive participated.
(ii) For purposes of this Agreement, "Disability" will mean the
Executive's incapacity due to physical or mental illness or injury substantially
to perform his duties on a full-time basis for six consecutive months and within
30 calendar days after a notice of termination is thereafter given by the
Company the Executive will not have returned to the full-time performance of the
Executive's duties; provided, however, if the Executive disagrees with a
determination to terminate him because of Disability, the question of the
Executive's Disability will be subject to the certification of a qualified
medical doctor agreed
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to by the Company and the Executive or, in the event of the Executive's
incapacity to designate a doctor, the Executive's legal representative. In the
absence of agreement between the Company and the Executive, each party will
nominate a qualified medical doctor and the two doctors will select a third
doctor, who will make the determination as to Disability. In order to
facilitate such determination, the Executive will, as reasonably requested by
the Company, (a) make himself available for medical examinations by a doctor in
accordance with this Section 5.2(ii), and (b) grant the Company and any such
doctor access to all relevant medical information concerning him, arrange to
furnish copies of medical records to such doctor and use his best efforts to
cause his own doctor to be available to discuss his health with such doctor.
5.3 CAUSE.
(i) The Company may terminate the Executive's employment
hereunder for Cause (as defined below) during the Employment Term by written
notice as provided in Section 12.6. In the event of the Executive's termination
for Cause, the Company will promptly pay to the Executive (or his
representative) the unpaid Base Salary to which he is entitled, pursuant to
Section 4.1, through the date the Executive is terminated and the Executive will
be entitled to no other compensation or benefits, except as otherwise due to him
under applicable law or pursuant to any benefit plan or policy that is
maintained by the Company or its affiliates in which the Executive participated.
(ii) For purposes of this Agreement, "Cause" means that, prior
to the end of the Employment Term, (a) the Executive shall have committed or
engaged in:
(1) an intentional act of fraud, embezzlement or theft in
connection with the Executive's duties or in the course of the
Executive's employment with the Company;
(2) an intentional breach of any of the express covenants
set forth in Section 9.1, 9.2 or 9.3;
(3) intentional wrongful damage to property of the Company
or any Subsidiary; or
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(4) gross negligence or gross misconduct against the
Company or another employee, or in carrying out the Executive's duties
and responsibilities;
and any such act shall have been materially harmful to the Company, (b) the
Executive shall have engaged in intentional and repeated failure substantially
to carry out the Executive's duties and responsibilities (other than any such
failure resulting from the Executive's incapacity due to physical or mental
illness or injury that qualifies as a Disability or would qualify as a
Disability if such incapacity continued for the required length of time), which
failure is not or cannot be cured within five business days after the Company
has given written notice to the Executive specifying in detail the particulars
of the acts of omissions deemed to constitute such failure, or (c) the Executive
shall have been convicted of a felony. For purposes of this Agreement, no act
or failure to act on the part of the Executive shall be deemed "intentional" if
it was due primarily to an error in judgment or negligence, but shall be deemed
"intentional" only if done or omitted to be done by the Executive not in good
faith and without reasonable belief that the Executive's action or omission was
in the best interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for "Cause" hereunder
unless and until there shall have been delivered to the Executive a written
notice from the Company stating that it has determined that the Executive had
committed an act constituting "Cause" as herein defined and specifying the
particulars thereof in detail. Nothing herein will limit the right of the
Executive or the Executive's beneficiaries to contest the validity or propriety
of any such determination.
5.4 TERMINATION.
(i) INVOLUNTARY TERMINATION. The Executive's employment
hereunder may be terminated during the Employment Term by the Company for any
reason other than death, Disability or for Cause by written notice as provided
in Section 12.6. In the event of such an involuntary termination, the Executive
will be entitled to the payments and benefits provided in Section 5.5. This
Section 5.4(i) and Section 5.5, however, will not limit the entitlement of the
Executive to any other benefits then available to the Executive under any
benefit plan or policy that is maintained by the Company or its affiliates for
the Executive's benefit or in which the Executive participated. The Executive
will be treated for purposes of this Agreement as having been
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involuntarily terminated by the Company for reasons other than death, Disability
or for Cause if the Executive terminates his employment with the Company for any
of the following reasons (each, a "Good Reason") prior to the date of the
Executive's death, Disability or on which the Executive has committed or engaged
in an act constituting Cause: (a) the Company has materially breached any
provision of this Agreement and within 10 calendar days after notice thereof
from the Executive, the Company fails to cure such breach; (b) a successor or
assign (whether direct or indirect, by purchase, merger, consolidation,
operation of law or otherwise) to all or substantially all of the business
and/or assets of the Company fails to assume all duties, obligations and
liabilities of the Company under the Agreement pursuant to Section 12.2(i); (c)
a reduction in the scope or value of the aggregate benefits and incentive
compensation described in Sections 4.1(iii), 4.2, 4.3, 4.5 and 4.6 provided to
the Executive or the termination or denial of the Executive's rights to such
benefits or incentive compensation, any of which is not remedied by the Company
within 10 calendar days after receipt by the Company of written notice from the
Executive of such reduction or termination; (d) the Executive is not elected to
or is removed from the Board; (e) the Board fails to appoint the Executive as
Chief Executive Officer of the Company or to elect the Executive as Chairman of
the Board, or the Executive is removed from any such position; (f) the Executive
is not elected to or is removed from any of the Boards of Directors of the
Utility Subsidiaries or the position of Chairman of the Boards of Directors of
any of the Utility Subsidiaries; or (g) a reduction in the Executive's Base
Salary or the opportunity to earn annual incentive compensation under Section
4.1(ii) on a basis at least as favorable to the Executive (in terms of each of
the amount of benefits, levels of coverage and performance measures and levels
of required performance) as the benefits payable thereunder prior to the
reduction or the failure to pay the Executive Base Salary or incentive
compensation earned when due. Notwithstanding the provisions of clauses (e) or
(f) of the preceding sentence or Section 6.1(a) or (b), any change in the
Executive's title or titles required by law, rule, order or regulation of any
agency with competent jurisdiction shall not be deemed Good Reason for purposes
of this Agreement.
(ii) VOLUNTARY TERMINATION. The Executive may voluntarily
terminate the Agreement at any time by notice to the Company as provided in
Section 12.6. In the event of the Executive's voluntary termination, the
Company will promptly pay the Executive (a) the unpaid Base Salary to which the
Executive
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is entitled, pursuant to Section 4.1, through the date of the Executive's
termination, and (b) for any accrued but unused vacation days, to the extent
and in the amounts, if any, provided under the usual policies and
arrangements, as modified by Section 4.3, which cover the Executive. This
Section 5.4(ii) will not limit the entitlement of the Executive to any other
benefits then available to the Executive under any benefit plan or policy
that is maintained by the Company or its affiliates for the Executive's
benefit or in which the Executive participated.
5.5 TERMINATION PAYMENTS AND BENEFITS.
(i) FORM AND AMOUNT. Upon the Executive's involuntary
termination other than by reason of death, Disability or for Cause as provided
in Section 5.4(i), the Company will promptly pay or provide to the Executive:
(a) the unpaid Base Salary to which the Executive is
entitled, pursuant to Section 4.1, through the date of the Executive's
termination,
(b) for any accrued but unused vacation days, to the extent
and in the amounts, if any, provided under the usual policies and
arrangements, as modified by Section 4.3, which cover the Executive,
(c) a lump sum payment within five (5) business days after
termination in an amount equal to three times the sum of (A) the
annual rate of Base Salary (prior to any deferrals or reductions under
qualified or non-qualified plans) being paid to the Executive
immediately prior to termination (or immediately prior to any
reduction therein occurring prior to termination, if greater), plus
(B) the aggregate annual bonus, incentive or other payments of cash
compensation (determined without regard to any deferral election) to
which the Executive would have been entitled in accordance with
Section 4.1(ii) under the bonus, incentive, profit-sharing,
performance, discretionary pay or similar agreement, policy, plan,
program or arrangement of the Company or its affiliates in which the
Executive was participating for the year in which the termination
occurs (or for the year in which any prior reduction therein occurs,
if greater) based on the assumption that target performance goals
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for such year would be met and such payments would be made, and
(d) For a period of 36 months following the termination
(the "Continuation Period"), the Company will arrange to provide the
Executive with health (including medical/hospital, dental and vision)
and life benefits substantially similar to those that the Executive
was receiving or entitled to receive immediately prior to termination
(or, if greater, immediately prior to the reduction, termination, or
denial described in Section 5.4(i)(c)). Benefits otherwise receivable
by the Executive pursuant to this Section 5.5(i)(d) will be reduced to
the extent comparable benefits are actually received by or in respect
of the Executive from another employer during the Continuation Period
following the Executive's termination, and any such benefits actually
received shall be reported by the Executive or other recipient to the
Company.
(ii) MAINTENANCE OF BENEFITS. During the Continuation Period
set forth in Section 5.5(i)(d), the Company will use its best efforts to
maintain in full force and effect for the continued benefit of the Executive all
benefits referenced therein or will arrange to make available to the Executive
benefits substantially similar to the referenced benefits. Such benefits will
be provided to the Executive on the same terms and conditions (including
employee contributions toward the premium payments) under which the Executive
was entitled to participate immediately prior to the Executive's termination
(or, if more favorable to the Executive, immediately prior to the reduction,
termination or denial described in Section 5.4(i)(c)). To the extent, however,
the coverage or benefits provided under Section 5.5(i)(d) results in the
Executive or any dependent or beneficiary thereof incurring additional federal,
state or local taxes that would otherwise not have been incurred in connection
with the provision of such coverage or benefits had the Executive's employment
not been terminated, the Company shall promptly pay the Executive, dependent or
beneficiary, as the case may be, on an after-tax basis, an additional payment in
an amount equal to all taxes, including interest and penalties thereon, imposed
as the result of such coverage or benefits.
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(iii) RESIGNATION. If at the Executive's termination of
employment the Executive is a member of the Board or a board of any affiliate of
the Company, no benefit will be paid or made available under Section 5.5(i)(c)
or Section 5.5(i)(d) unless the Executive first executes and delivers to the
Company a resignation from membership on the Board and from membership on the
boards of all affiliates of the Company, as the case may be, such resignation to
be effective on receipt of the payment to which the Executive is entitled under
Section 5.5(i)(c).
6. CHANGE IN CONTROL PROVISIONS.
6.1 IMPACT OF CHANGE IN CONTROL. In the event of a "Change in
Control" of the Company, as defined in Section 6.2, (i) if the Executive's
employment is involuntarily terminated during the Employment Term without Cause
after the Change in Control, (a) the covenants of Sections 9.1, 9.3 and 10 will
be inapplicable to the Executive, and (b) the covenant of Section 9.2 will
expire on the third anniversary of the date of termination of the Executive's
employment, and (ii) the definition of Good Reason, as set forth in Section
5.4(i) above, will be expanded to include the following subject to the last
sentence of Section 5.4(i):
(a) A significant adverse change in the nature or scope of
authorities, powers, functions, responsibilities or duties attached to the
positions held by the Executive from those authorities, powers, functions,
responsibilities or duties which the Executive held immediately prior to
the Change in Control;
(b) A determination by the Executive (which determination will be
conclusive and binding upon the parties hereto provided it has been made in
good faith and in all events the Executive's determination will be presumed
to have been made in good faith unless otherwise shown by the Company by
clear and convincing evidence) that a change in circumstances has occurred
following the Change in Control, including, without limitation, a change in
the scope of the business or other activities for which the Executive was
responsible immediately prior to the Change in Control, which has rendered
the Executive substantially unable to carry out, has substantially hindered
the Executive's performance of, or has caused the Executive to suffer a
substantial reduction in, any of the authorities,
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powers, functions, responsibilities or duties attached to any of the
Executive's positions immediately prior to such Change in Control, which
situation is not remedied within 10 calendar days after written notice to
the Company from the Executive of such determination; or
(c) The relocation of the Company's principal executive offices
if the Executive's principal location of work is then in such offices, or
requirement that the Executive have the Executive's principal location of
work changed, to any location that is in excess of 50 miles from the
location thereof immediately preceding the Change in Control or the
requirement that the Executive travel away from the Executive's office in
the course of discharging the Executive's responsibilities or duties
hereunder at least 20% more (in terms of aggregate days in any calendar
year or in any calendar quarter when annualized for purposes of comparison
to any prior year) than was required of Executive in any of the three full
years immediately prior to such Change in Control without, in either case,
the Executive's prior written consent.
6.2 DEFINITION OF CHANGE IN CONTROL. For purposes of this Agreement,
a "Change in Control" will be deemed to occur if at any time during the
Employment Term any of the following events occur:
(i) The Company is merged, consolidated or reorganized into
or with another corporation or other legal person, and as
a result of such merger, consolidation or reorganization
less than 65% of the combined voting power of the
then-outstanding securities or interests entitled to vote
generally in the election of directors or other
controlling persons (the "Voting Stock") of such
corporation or person immediately after such transaction
are held in the aggregate by the holders of Voting Stock
of the Company immediately prior to such transaction;
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or
other legal person, and as a result of such sale or
transfer less than 65% of the combined voting power of
the
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then-outstanding Voting Stock of such corporation or
person immediately after such sale or transfer is held in
the aggregate (directly or through ownership of Voting
Stock of the Company or Subsidiary (as defined herein))
by the holders of the Voting Stock of the Company
immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule 14D-1
(or any successor schedule, form or report), each as
promulgated pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), disclosing that
any person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) has
become the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any successor rule
or regulation promulgated under the Exchange Act) of
securities representing 20% or more of the combined
voting power of the then-outstanding Voting Stock of the
Company;
(iv) Any of (A) the Company enters into an agreement, the
consummation of which would result in the occurrence of a
Change in Control determined without regard to this
Section 6.2(iv); (B) the Company or any person (as the
term "person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) announces an intention to
take or to consider taking actions which, if consummated,
would be a Change in Control determined without regard to
this Section 6.2(iv); or (C) the Board adopts a
resolution to the effect that a transaction, event or
occurrence has occurred which constitutes a Change in
Control for purposes of this Section 6.2(iv);
(v) If, during any period of two consecutive years,
individuals who at the beginning of any such period
constitute the Directors of the Company cease for any
reason to constitute at least a majority thereof;
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PROVIDED, HOWEVER, that for purposes of this Section
6.2(v) each Director who is first elected, or first
nominated for election by the Company's stockholders, by
a vote of at least two-thirds of the Directors of the
Company (or a committee thereof) then still in office who
were Directors of the Company at the beginning of any
such period will be deemed to have been a Director of the
Company at the beginning of such period; or
(vi) The approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing provisions of Section 6.2(iii) or 6.2(iv) above,
unless otherwise determined in a specific case by majority vote of the Board, a
"Change in Control" shall not be deemed to have occurred for purposes of Section
6.2(iii) or 6.2(iv) solely because (A) the Company, (B) an entity in which the
Company directly or indirectly beneficially owns 50% or more of the outstanding
Voting Stock (a "Subsidiary"), or (C) any Company-sponsored employee stock
ownership plan or any other employee benefit plan of the Company or any
Subsidiary either files or becomes obligated to file a report or a proxy
statement under or in response to Schedule 13D or Schedule 14D-1(or any
successor schedule, form or report or item therein) under the Exchange Act
disclosing beneficial ownership by it of shares of Voting Stock, whether in
excess of 20% or otherwise, or because a Change in Control (determined without
regard to this sentence) of the Company has occurred or will occur in the future
by reason of such beneficial ownership. In addition, and notwithstanding
anything to the contrary contained in this Agreement or the foregoing provisions
of this Section 6.2, a "Change in Control" for purposes of this Section 6.2 and
this Agreement shall not be deemed to have resulted from, and shall not be
deemed to have occurred by reason of, entering into the Merger Agreement or the
public announcement thereof or the consummation of the Merger or the other
transactions contemplated by the Merger Agreement.
7. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY:
(i) Anything in this Agreement to the contrary notwithstanding, if it
is determined (as hereafter provided) that any payment or distribution by the
Company, any person whose actions result in a Change in Control or any affiliate
of the
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Company or such person, to or for the benefit of the Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise pursuant to or by reason of any other agreement, policy, plan,
program or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) by reason of being considered
"contingent on a change in ownership or control" of the Company, within the
meaning of Section 280G of the Code (or any successor provision thereto) or to
any similar tax imposed by state or local law, or any interest or penalties with
respect to such tax (such tax or taxes, together with any such interest and
penalties, are hereafter collectively referred to as the "Excise Tax"), then the
Executive will be entitled to receive an additional payment or payments
(collectively, a "Gross-Up Payment") in an amount such that, after payment by
the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax, imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments. No Gross-Up Payment will be made with
respect to the Excise Tax, if any, attributable to (a) any incentive stock
option, as defined by Section 422 of the Code ("ISO") granted prior to the
execution of this Agreement (unless a comparable Gross-Up Payment has
theretofore been made available with respect to such option), or (b) any stock
appreciation or similar right, whether or not limited, granted in tandem with
any ISO described in clause (a).
(ii) Subject to the provisions of Section 7(vi) hereof, all
determinations required to be made under this Section 7, including whether an
Excise Tax is payable by the Executive and the amount of such Excise Tax and
whether a Gross-Up Payment is required to be paid by the Company to the
Executive and the amount of such Gross-Up Payment, will be made by a nationally
recognized firm of certified public accountants (the "Accounting Firm") selected
by the Executive in his sole discretion. The Executive will direct the
Accounting Firm to submit its determination and detailed supporting calculations
to both the Company and the Executive within 15 calendar days after the
Executive's termination, if applicable, and any other such time or times as may
be requested by the Company or the Executive. If the Accounting Firm determines
that any Excise Tax is payable by the Executive, the Company will pay the
required Gross-Up Payment
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to the Executive within five business days after receipt of such determination
and calculations with respect to any Payment to the Executive. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
will, at the same time as it makes such determination, furnish the Company and
the Executive an opinion that the Executive has substantial authority not to
report any Excise Tax on the Executive's federal, state, local income or other
tax return. Any determination by the Accounting Firm as to the amount of the
Gross-Up Payment will be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments that will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to
Section 7(vi) hereof and the Executive thereafter is required to make a payment
of any Excise Tax, the Executive will direct the Accounting Firm to determine
the amount of the Underpayment that has occurred and to submit its determination
and detailed supporting calculations to both the Company and the Executive as
promptly as possible. Any such Underpayment will be promptly paid by the
Company to, or for the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(iii) The Company and the Executive will each provide the
Accounting Firm access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determinations and
calculations contemplated by Section 7(ii) hereof.
(iv) The federal, state and local income or other tax returns
filed by the Executive will be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive. The Executive will make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of the Executive's federal income tax
return as filed with the Internal Revenue Service and corresponding state and
local tax returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company, evidencing such
payment. If prior to the filing of the Executive's federal income tax return,
or corresponding state or local tax return, if
-19-
relevant, the Accounting Firm determines that the amount of the Gross-Up Payment
should be reduced, the Executive will within five business days pay to the
Company the amount of such reduction.
(v) The fees and expenses of the Accounting Firm for its
services in connection with the determinations and calculations contemplated by
Sections 7(ii) and (iv) hereof will be borne by the Company. If such fees and
expenses are initially paid by the Executive, the Company will reimburse the
Executive the full amount of such fees and expenses within five business days
after receipt from the Executive of a statement therefor and reasonable evidence
of his payment thereof.
(vi) The Executive will notify the Company in writing of any
claim by the Internal Revenue Service or other taxing authority that, if
successful, would require the payment by the Company of a Gross-Up Payment.
Such notification will be given as promptly as practicable but no later than 10
business days after the Executive actually receives notice of such claim and the
Executive will further apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid (in each case, to the extent
known by the Executive). The Executive will not pay such claim prior to the
earlier of (a) the expiration of the 30-calendar-day period following the date
on which the Executive gives such notice to the Company and (b) the date that
any payment of amount with respect to such claim is due. If the Company
notifies the Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive will:
(a) provide the Company with any written records or documents in
the Executive's possession relating to such claim reasonably requested
by the Company;
(b) take such action in connection with contesting such claim as
the Company will reasonably request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Company;
-20-
(c) cooperate with the Company in good faith in order effectively
to contest such claim; and
(d) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company will bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and will indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of
this Section 7(vi), the Company will control all proceedings taken in connection
with the contest of any claim contemplated by this Section 7(vi) and, at its
sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim (provided, however, that the Executive may participate therein at the
Executive's own cost and expense) and may, at its option, either direct the
Executive to pay the tax claimed and xxx for a refund or contest the claim in
any permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company will determine;
provided, however, that if the Company directs the Executive to pay the tax
claimed and xxx for a refund, the Company will advance the amount of such
payment to the Executive on an interest-free basis and will indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income or
other tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which the contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
any such contested claim will be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive will be entitled
to settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(vii) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 7(vi) hereof, the Executive receives
any refund with respect to such claim, the
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Executive will (subject to the Company's complying with the requirements of
Section 7(vi) hereof) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after any taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 7(vi) hereof, a determination is made that the
Executive will not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest such
denial or refund prior to the expiration of 30 calendar days after such
determination, then such advance will be forgiven and will not be required to be
repaid and the amount of such advance will offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid by the Company to the Executive
pursuant to this Section 7.
8. MITIGATION AND OFFSET. The payment of severance compensation by the
Company to the Executive in accordance with the terms of the Agreement is hereby
acknowledged by the Company to be reasonable, and the Executive is under no
obligation to mitigate damages or the amount of any payment provided for
hereunder by seeking other employment or otherwise; nor will any profits,
income, earnings or other benefits from any source whatsoever create any
mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise, except as expressly provided in the last
sentence of Section 5.5(i)(d).
9. COMPETITION; CONFIDENTIALITY; NONSOLICITATION
9.1 (i) Subject to Section 6.1(i), the Executive hereby covenants and
agrees that during the Employment Term and for one year following the Employment
Term he will not, without the prior written consent of the Company, engage in
Competition (as defined below) with the Company. For purposes of this
Agreement, if the Executive takes any of the following actions he will be
engaged in "Competition": engaging in or carrying on, directly or indirectly,
any enterprise, whether as an advisor, principal, agent, partner, officer,
director, employee, stockholder, associate or consultant to any person,
partnership, corporation or any other business entity, that is principally
engaged in the business of the generation, purchase, transmission, distribution
or sale of electricity, the provision of natural gas or the supplying of water
services, in each case to customer segments being served or pursued in its
business plans by the Company or its Subsidiaries, in States in which the
Company or its Subsidiaries has significant operations; provided,
-22-
however, that "Competition" will not include (a) the mere ownership of
securities in any enterprise and exercise of rights appurtenant thereto or (b)
participation in management of any enterprise or business operation thereof
other than in connection with the competitive operation of such enterprise. For
purposes of applying the preceding sentence, operations of the Company or its
Subsidiaries in the State of California will be deemed not to be significant if
they are not materially greater than the operations in the aggregate of Nevada
Power and the Company and their respective Subsidiaries in the State of
California as of the date of this Agreement.
(ii) Subject to Section 6.1(i), the Executive hereby covenants
and agrees that during the Employment Term and for three years following the
Employment Term he will not assist a third party in preparing or making an
unsolicited bid for the Company, engaging in a proxy contest with the Company,
or engaging in any other similar activity.
9.2 During the Employment Term, the Company agrees that it will
disclose to Executive its confidential or proprietary information (as defined in
this Section 9.2) to the extent necessary for Executive to carry out the
Executive's obligations under this Agreement. Subject to Section 6.1(i), the
Executive hereby covenants and agrees that he will not, without the prior
written consent of the Company, during the Employment Term or thereafter
disclose to any person not employed by the Company or a Subsidiary, or use in
connection with engaging in Competition with the Company or a Subsidiary, any
confidential or proprietary information of the Company or its Subsidiaries. For
purposes of this Agreement, the term "confidential or proprietary information"
will include all information of any nature and in any form that is owned by the
Company or a Subsidiary and that is not publicly available or generally known to
persons engaged in businesses similar or related to those of the Company or a
Subsidiary. Confidential information will include, without limitation, the
Company's or a Subsidiary's financial matters, customers, employees, industry
contracts, and all other secrets and all other information of a confidential or
proprietary nature. The foregoing obligations imposed by this Section 9.2 will
cease if such confidential or proprietary information will have become, through
no fault of the Executive, generally known to the public or the Executive is
required by law to make disclosure (after giving the Company notice and an
opportunity to contest such requirement).
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9.3 Subject to Section 6.1(i), the Executive hereby covenants and
agrees that during the Employment Term and for one year thereafter the Executive
will not attempt to influence, persuade or induce, or assist any other person in
so persuading or inducing, any employee of the Company or a Subsidiary to give
up, or to not commence, employment or a business relationship with the Company
or a Subsidiary.
10. POST-TERMINATION ASSISTANCE. Subject to Section 6.1(i), the Executive
agrees that after the Executive's employment with the Company has terminated the
Executive will provide, upon reasonable notice, such information and assistance
to the Company as may reasonably be requested by the Company in connection with
any litigation in which it or any of its affiliates is or may become a party;
provided, however, that the Company agrees to reimburse the Executive for any
related out-of-pocket expenses, including travel expenses.
11. SURVIVAL. The expiration or termination of the Employment Term will
not impair the rights or obligations of any party hereto that accrue hereunder
prior to such expiration or termination, except to the extent specifically
stated herein. In addition to the foregoing, the Executive's covenants
contained in Sections 9.1, 9.2, 9.3 and 10 and the Company's obligations under
Sections 5, 7 and 12.1 will survive the expiration or termination of this
Agreement or the termination of the Executive's employment for any reason
whatsoever.
12. MISCELLANEOUS PROVISIONS.
12.1 LEGAL FEES AND EXPENSES. It is the intent of the Company that the
Executive not be required to incur legal fees and the related expenses
associated with the interpretation, enforcement or defense of Executive's rights
under this Agreement by litigation or otherwise because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Executive hereunder. Accordingly, if it should appear to the Executive that
the Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes or
threatens to take any action to declare this Agreement void or unenforceable, or
institutes any litigation or other action or proceeding designed to deny, or to
recover from, the Executive the benefits provided or intended to be provided to
the Executive hereunder, the Company irrevocably authorizes the Executive from
time to time to retain counsel of Executive's choice, at the expense of the
-24-
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other legal
action, whether by or against the Company or any director, officer, stockholder
or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to the Executive's
entering into an attorney-client relationship with such counsel, and in that
connection the Company and the Executive agree that a confidential relationship
shall exist between the Executive and such counsel. Without respect to whether
the Executive prevails, in whole or in part, in connection with any of the
foregoing, the Company will pay and be solely financially responsible for any
and all attorneys' and related fees and expenses incurred by the Executive in
connection with any of the foregoing.
12.2 SUCCESSORS AND BINDING AGREEMENT. (i) The Company will require
any successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization, operation of law or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. This Agreement will
be binding upon and inure to the benefit of the Company and any successor to the
Company, including without limitation any persons acquiring directly or
indirectly all or substantially all of the business or assets of the Company
whether by purchase, merger, consolidation, reorganization, operation of law or
otherwise (and such successor shall thereafter be deemed the "Company" for the
purposes of this Agreement), but will not otherwise be assignable, transferable
or delegable by the Company.
(ii) This Agreement will inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees and legatees.
(iii) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in Sections 12.2(i) and 12.2(ii). Without limiting the generality
-25-
or effect of the foregoing, the Executive's right to receive payments hereunder
will not be assignable, transferable or delegable, whether by pledge, creation
of a security interest, or otherwise, other than by a transfer by Executive's
will or by the laws of descent and distribution and, in the event of any
attempted assignment or transfer contrary to this Section 12.2(iii), the Company
shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
12.3 GOVERNING LAW. This Agreement will be governed, construed,
interpreted and enforced in accordance with the substantive laws of the State of
Nevada, without regard to conflicts of law principles.
12.4 WITHHOLDING OF TAXES. The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as the
Company is required to withhold pursuant to any law or government regulation or
ruling.
12.5 SEVERABILITY. Any provision of this Agreement that is deemed
invalid, illegal or unenforceable in any jurisdiction will, as to that
jurisdiction be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provisions of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction. If any covenant
should be deemed invalid, illegal or unenforceable because its scope is
considered excessive, such covenant will be modified so that the scope of the
covenant is reduced only to the minimum extent necessary to render the modified
covenant valid, legal and enforceable.
12.6 NOTICES. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof confirmed), or five business days after
having been mailed by United States registered or certified mail, return receipt
requested, postage prepaid, or three business days after having been sent by a
nationally recognized overnight courier service such as Federal Express, UPS, or
Purolator, addressed to the Company (to the attention of the Secretary of the
Company) at its principal executive offices and to the Executive at his
principal residence, or to such other address as any party may have furnished to
the other in writing
-26-
and in accordance herewith, except that notices of changes of address will be
effective only upon receipt.
(i) TO THE COMPANY. If to the Company, addressed to the
attention of the Secretary at 0000 Xxxx Xxxx, Xxxx, Xxxxxx 00000.
(ii) TO THE EXECUTIVE. If to the Executive, to him at 0000 Xxx
Xxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000.
12.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same Agreement.
12.8 EFFECTIVENESS; PRIOR AGREEMENT; ENTIRE AGREEMENT. This Agreement
shall become effective at the Effective Time and shall have no force or effect
prior thereto. At the Effective Time, the terms of this Agreement are intended
by the parties to be the final expression of their agreement with respect to the
Executive's employment by the Company, may not be contradicted by evidence of
any prior or contemporaneous agreement, and shall supersede in all respects any
prior or other agreement or understanding between the Company, any Subsidiary or
Nevada Power and the Executive, including, but not limited to, the Employment
Agreement dated as of February 2, 1998 (the "Prior Agreement") between Nevada
Power and the Executive, which Prior Agreement will terminate and be without
further effect immediately prior to the Effective Time (and upon the
effectiveness of this Agreement) without further action of Nevada Power,
Surviving Company or the Executive or liability to Nevada Power or Surviving
Company or the Executive thereunder. The parties further intend that this
Agreement will constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative or other legal proceeding to vary the terms of this Agreement.
In the event that (i) the Merger Agreement is terminated for any reason prior to
the Effective Time or (ii) the Executive's employment with Nevada Power is
terminated prior to the Effective Time, this Agreement shall be null and void,
and the Prior Agreement will continue in effect as though this Agreement had not
been entered into.
12.9 AMENDMENTS; WAIVERS. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by the
Executive and the Company. Failure on
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the part of either party to complain of any action or omission, breach or
default on the part of the other party, no matter how long the same may
continue, will never be deemed to be a waiver of any rights or remedies
hereunder, at law or in equity. The Executive or the Company may waive
compliance by the other party with any provision of this Agreement that such
other party was or is obligated to comply with or perform only through an
executed writing; provided, however, that such waiver will not operate as a
waiver of, or estoppel with respect to, any other or subsequent failure.
12.10 NO INCONSISTENT ACTIONS. The parties will not voluntarily
undertake or fail to undertake any action or course of action that is
inconsistent with the provisions or essential intent of this Agreement.
Furthermore, it is the intent of the parties hereto to act in a fair and
reasonable manner with respect to the interpretation and application of the
provisions of this Agreement.
12.11 HEADINGS AND SECTION REFERENCES. The headings used in this
Agreement are intended for convenience or reference only and will not in any
manner amplify, limit, modify or otherwise be used in the construction or
interpretation of any provision of this Agreement. All section references are
to sections of this Agreement, unless otherwise noted.
12.12 INTEREST. Without limiting the rights of the Executive at law
or in equity, if the Company fails to make any payment or provide any benefit
required to be made or provided hereunder on a timely basis, the Company will
pay interest on the amount or value thereof at an annualized rate of interest
equal to the so-called composite "prime rate" as quoted from time to time during
the relevant period in the Northeast Edition of THE WALL STREET JOURNAL. Such
interest will be payable as it accrues on demand. Any change in such prime rate
will be effective on and as of the date of such change.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written, but effective as provided in Section 1.2.
/s/ Xxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxx X. Xxxxxx
Sierra Pacific Resources,
a Nevada corporation
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxx
-------------------------------
Title: PRESIDENT, CHAIRMAN, CEO
------------------------
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