Exhibit (10)(A) to the 1997 Sierra Pacific Power Company Form 10-K
CHANGE IN CONTROL AGREEMENT
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THIS AGREEMENT, dated February 18, 1997, is made by and between Sierra
Pacific Resources, a Nevada corporation (the "Company"), and Xxxxxx X. Xxxxxxx
(the "Executive").
WHEREAS, the Company considers it essential to the best interests of
its stockholders to xxxxxx the continued employment of key management personnel;
and
WHEREAS, the Board recognizes that, as is the case with many publicly
held corporations, the possibility of a Change in Control exists and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the management of the Company and its subsidiaries (collectively,
"Sierra"), including the Executive, to their assigned duties without distraction
in the face of potentially disturbing circumstances arising from the possibility
of a Change in Control;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
000000001. Defined Terms. The definitions of capitalized terms used
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in this Agreement are provided in the last Section hereof.
2. Term of Agreement. Subject to the provisions of Section 12.2
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hereof, the term of this Agreement shall commence on the date hereof and shall
continue in effect through December 31, 1999; provided, however, that commencing
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on January 1, 1999, and each January 1 thereafter, the Term shall automatically
be extended for one additional year unless, not later than September 30 of the
preceding year, the Company or the Executive shall have given notice not to
extend the Term; and further provided, however, that if a Change in Control
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shall have occurred during the Term, the Term shall expire no earlier than
twenty-four (24) months beyond the month in which such Change in Control
occurred; and further provided, however, that if a Potential Change in Control
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shall have occurred during the Term, the Term shall expire no earlier than a
date six months beyond the month in which such Potential Change in Control
occurred.
3. Company's Covenants Summarized. In order to induce the Executive
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to remain in the employ of Sierra and in consideration of the Executive's
covenants set forth in
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Section 4 hereof, the Company agrees, under the conditions described herein, to
pay the Executive the Severance Payments and the other payments and benefits
described herein. Except as provided in Section 9.1 hereof, no Severance
Payments shall be payable under this Agreement unless there shall have been (or,
under the terms of the second sentence of Section 6.1 hereof, there shall be
deemed to have been) a termination of the Executive's employment with Sierra
following a Change in Control and during the Term. This Agreement shall not be
construed as creating an express or implied contract of employment and, except
as otherwise agreed in writing between the Executive and Sierra, the Executive
shall not have any right to be retained in the employ of Sierra. The obligations
of the Company hereunder shall be deemed satisfied to the extent payments are
made by Sierra Power Company.
4. The Executive's Covenants. The Executive agrees that, subject to
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the terms and conditions of this Agreement, in the event of a Potential Change
in Control during the Term, the Executive will remain in the employ of the
Company until the earliest of (i) a date which is six (6) months from the date
of such Potential Change of Control, (ii) the date of a Change in Control, (iii)
the date of termination by the Executive of the Executive's employment for Good
Reason or by reason of death, Disability or Retirement, or (iv) the termination
by Sierra of the Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
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6.1 Following a Change in Control and during the Term, during any
period that the Executive fails to perform the Executive's full-time duties with
Sierra as a result of incapacity due to physical or mental illness, the Company
shall pay the Executive's full salary to the Executive at the rate in effect at
the commencement of any such period, together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by Sierra during such period, until the
Executive's employment is terminated by Sierra for Disability.
7.2 If the Executive's employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay the
Executive's full salary to the Executive through the Date of Termination at the
rate in effect immediately prior to the Date of Termination or, if higher, the
rate in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, together with all compensation and
benefits payable to the Executive through the Date of Termination under the
terms of Sierra compensation and benefit plans, programs or arrangements as in
effect immediately prior to the Date of Termination or, if more favorable to the
Executive, as in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason.
8.3 If the Executive's employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay to the
Executive the Executive's normal post-termination compensation and benefits as
such payments become due. Such post-termination compensation and benefits shall
be determined under, and paid in accordance with, Sierra's retirement, insurance
and other compensation or benefit plans, programs and arrangements as in effect
immediately prior to the Date of Termination or, if more favorable to
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the Executive, as in effect immediately prior to the occurrence of the first
event or circumstance constituting Good Reason.
90. Severance Payments.
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10.1 Subject to Section 6.2 hereof, if the Executive's employment is
terminated following a Change in Control and during the Term, other than (A) by
Sierra for Cause, (B) by reason of death or Disability, or (C) by the Executive
without Good Reason, then Sierra shall pay the Executive the amounts, and
provide the Executive the benefits, described in this Section 6.1 ("Severance
Payments"), in addition to any payments and benefits to which the Executive is
entitled under Section 5 hereof. For purposes of this Agreement, the
Executive's employment shall be deemed to have been terminated following a
Change in Control by Sierra without Cause or by the Executive with Good Reason,
if (i) the Executive's employment is terminated by Sierra without Cause prior to
a Change in Control (whether or not a Change in Control ever occurs) and such
termination was at the request or direction of a Person who has entered into an
agreement with the Company the consummation of which would constitute a Change
in Control, (ii) the Executive terminates his employment for Good Reason prior
to a Change in Control (whether or not a Change in Control ever occurs) and the
circumstance or event which constitutes Good Reason occurs at the request or
direction of such Person, or (iii) the Executive's employment is terminated by
Sierra without Cause or by the Executive for Good Reason and such termination or
the circumstance or event which constitutes Good Reason is otherwise in
connection with or in anticipation of a Change in Control (whether or not a
Change in Control ever occurs). For purposes of any determination regarding the
applicability of the immediately preceding sentence, any position taken by the
Executive shall be presumed to be correct unless the Company establishes to the
Board by clear and convincing evidence that such position is not correct.
(1) In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination and in lieu of any severance
benefit otherwise payable to the Executive, the Company shall pay to the
Executive a lump sum severance payment, in cash, equal to three times the
sum of (i) the Executive's base salary as in effect immediately prior to
the Date of Termination or, if higher, in effect immediately prior to the
first occurrence of an event or circumstance constituting Good Reason, and
(ii) the target annual incentive award applicable to the Executive pursuant
to any annual bonus or incentive plan maintained by Sierra in respect of
the fiscal year ending immediately prior to the fiscal year in which occurs
the Date of Termination or, if higher, immediately prior to the fiscal year
in which occurs the first event or circumstance constituting Good Reason.
(2) For the thirty-six (36) month period immediately following
the Date of Termination, the Company shall arrange to provide the Executive
and his dependents life, disability, accident and health insurance benefits
substantially similar to those provided to the Executive and his dependents
immediately prior to the Date of Termination or, if more favorable to the
Executive, those provided to the Executive and his dependents immediately
prior to the first occurrence of an event or circumstance constituting Good
Reason, at no greater cost to the Executive than the cost to the Executive
immediately prior to such date or occurrence; provided, however, that,
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unless
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the Executive consents to a different method (after taking into account the
effect of such method on the calculation of "parachute payments" pursuant
to Section 6.2 hereof), such health insurance benefits shall be provided
through a third-party insurer. Benefits otherwise receivable by the
Executive pursuant to this Section 6.1(B) shall be reduced to the extent
benefits of the same type are received by or made available to the
Executive during the thirty-six (36) month period following the Executive's
termination of employment (and any such benefits received by or made
available to the Executive shall be reported to the Company by the
Executive); provided, however, that the Company shall reimburse the
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Executive for the excess, if any, of the cost of such benefits to the
Executive over such cost immediately prior to the Date of Termination or,
if more favorable to the Executive, the first occurrence of an event or
circumstance constituting Good Reason. If the Severance Payments shall be
decreased pursuant to Section 6.2 hereof, and the Section 6.1(B) benefits
which remain payable after the application of Section 6.2 hereof are
thereafter reduced pursuant to the immediately preceding sentence, the
Company shall, no later than five (5) business days following such
reduction, pay to the Executive the least of (a) the amount of the decrease
made in the Severance Payments pursuant to Section 6.2 hereof, (b) the
amount of the subsequent reduction in these Section 6.1(B) benefits, or (c)
the maximum amount which can be paid to the Executive without being, or
causing any other payment to be, nondeductible by reason of Section 280G of
the Code.
(3) Notwithstanding any provision of any annual or long-term
incentive plan to the contrary, the Company shall pay to the Executive a
lump sum amount, in cash, equal to the sum of (i) any unpaid incentive
compensation which has been allocated or awarded to the Executive for a
completed fiscal year or other measuring period preceding the Date of
Termination under any such plan and which, as of the Date of Termination,
is contingent only upon the continued employment of the Executive to a
subsequent date, and (ii) a pro rata portion to the Date of Termination of
the aggregate value of all contingent incentive compensation awards to the
Executive for all then uncompleted periods under any such plan, calculated
as to each such award by multiplying the award that the Executive would
have earned on the last day of the performance award period, assuming the
achievement, at the target level of the individual and corporate
performance goals established with respect to such award, by the fraction
obtained by dividing the number of full months and any fractional portion
of a month during such performance award period through the Date of
Termination by the total number of months contained in such performance
award period.
(4) In addition to the retirement benefits to which the
Executive is entitled under each Pension Plan or any successor plan
thereto, the Company shall pay the Executive a lump sum amount, in cash,
equal to the excess of (i) the actuarial equivalent of the aggregate
retirement pension (taking into account any early retirement subsidies
associated therewith and determined as a straight life annuity commencing
at the date (but in no event earlier than the third anniversary of the Date
of Termination) as of which the actuarial equivalent of such annuity is
greatest) which the Executive would have accrued under the terms of all
Pension Plans (without regard to any amendment to any Pension Plan made
subsequent to a Change in Control and on or prior to the Date of
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Termination, which amendment adversely affects in any manner the
computation of retirement benefits thereunder), determined as if the
Executive were fully vested thereunder and had accumulated (after the Date
of Termination) thirty-six (36) (or, with respect to the Sierra Pacific
Power Company Supplemental Executive Retirement Plan only, the higher of
thirty-six (36) or the number of months remaining from the Date of
Termination until the Executive's Early Retirement Date, as defined in such
plan) additional months of service credit thereunder and had been credited
under each Pension Plan during such period with compensation equal to the
Executive's compensation (as defined in such Pension Plan) during the
twelve (12) months immediately preceding the Date of Termination or, if
higher, during the twelve months immediately prior to the first occurrence
of an event or circumstance constituting Good Reason, over (ii) the
actuarial equivalent of the aggregate retirement pension (taking into
account any early retirement subsidies associated therewith and determined
as a straight life annuity commencing at the date (but in no event earlier
than the Date of Termination) as of which the actuarial equivalent of such
annuity is greatest) which the Executive had accrued pursuant to the
provisions of the Pension Plans as of the Date of Termination. For
purposes of this Section 6.1(D), "actuarial equivalent" shall be determined
using the same assumptions utilized under the Sierra Pacific Power Company
Retirement Plan immediately prior to the Date of Termination. or, if more
favorable to the Executive, immediately prior to the first occurrence of an
event or circumstance constituting Good Reason.
(5) If the Executive would have become entitled to benefits under
Sierra's post-retirement health care or life insurance plans, as in effect
immediately prior to the Date of Termination or, if more favorable to the
Executive, as in effect immediately prior to the first occurrence of an
event or circumstance constituting Good Reason, had the Executive's
employment terminated at any time during the period of thirty-six (36)
months after the Date of Termination, the Company shall provide such post-
retirement health care or life insurance benefits to the Executive and the
Executive's dependents commencing on the later of (i) the date on which
such coverage would have first become available and (ii) the date on which
benefits described in subsection (B) of this Section 6.1 terminate.
6.2 (A) Notwithstanding any other provisions of this Agreement,
in the event that any payment or benefit received or to be received by the
Executive in connection with a Change in Control or the termination of the
Executive's employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any Person whose actions
result in a Change in Control or any Person affiliated with the Company or such
Person) (all such payments and benefits, including the Severance Payments, being
hereinafter called "Total Payments") would be subject (in whole or part), to the
Excise Tax, then, after taking into account any reduction in the Total Payments
provided by reason of section 280G of the Code in such other plan, arrangement
or agreement, the cash Severance Payments shall first be reduced, and the non-
cash Severance Payments shall thereafter be reduced, to the extent necessary so
that no portion of the Total Payments is subject to the Excise Tax but only if
(A) the net amount of such Total Payments, as so reduced (and after subtracting
the net amount of federal, state and local income taxes on such reduced Total
Payments) is greater than or equal to (B) the net amount of such Total Payments
without such reduction (but
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after subtracting the net amount of federal, state and local income taxes on
such Total Payments and the amount of Excise Tax to which the Executive would be
subject in respect of such unreduced Total Payments); provided, however, that
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the Executive may elect to have the non-cash Severance Payments reduced (or
eliminated) prior to any reduction of the cash Severance Payments.
(B) For purposes of determining whether and the extent to which the
Total Payments will be subject to the Excise Tax, (i) no portion of the Total
Payments the receipt or enjoyment of which the Executive shall have waived at
such time and in such manner as not to constitute a "payment" within the meaning
of Section 280G(b) of the Code shall be taken into account, (ii) no portion of
the Total Payments shall be taken into account which, in the opinion of tax
counsel ("Tax Counsel") reasonably acceptable to the Executive and selected by
the accounting firm (the "Auditor") which was, immediately prior to the Change
in Control, the Company's independent auditor, does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code (including by
reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax,
no portion of such Total Payments shall be taken into account which, in the
opinion of Tax Counsel, constitutes reasonable compensation for services
actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in
excess of the Base Amount allocable to such reasonable compensation, and (iii)
the value of any non-cash benefit or any deferred payment or benefit included in
the Total Payments shall be determined by the Auditor in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
(C) At the time that payments are made under this Agreement, the
Company shall provide the Executive with a written statement setting forth the
manner in which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other advice the
Company has received from Tax Counsel, the Auditor or other advisors or
consultants (and any such opinions or advice which are in writing shall be
attached to the statement). If the Executive objects to the Company's
calculations, the Company shall pay to the Executive such portion of the
Severance Payments (up to 100% thereof) as the Executive determines is necessary
to result in the proper application of subsection A of this Section 6.2.
11.3 The payments provided in subsections (A), (C) and (D) of Section
6.1 hereof shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments, and the
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limitation on such payments set forth in Section 6.2 hereof, cannot be finally
determined on or before such day, the Company shall pay to the Executive on such
day an estimate, as determined in good faith by the Executive of the minimum
amount of such payments to which the Executive is clearly entitled and shall pay
the remainder of such payments (together with interest on the unpaid remainder
(or on all such payments to the extent the Company fails to make such payments
when due) at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of
the Code).
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12.4 The Company also shall pay to the Executive all legal fees and
expenses incurred by the Executive in disputing in good faith any issue
hereunder relating to the termination of the Executive's employment, in seeking
in good faith to obtain or enforce any benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code to any payment or
benefit provided hereunder. Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
130. Termination Procedures and Compensation During Dispute.
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14.1 Notice of Termination. After a Change in Control and during the
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Term, any purported termination of the Executive's employment (other than by
reason of death) shall be communicated by written Notice of Termination from one
party hereto to the other party hereto in accordance with Section 10 hereof.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated. Further, a Notice of Termination for Cause is
required to include a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board which was called and held for the purpose of considering
such termination (after reasonable notice to the Executive and an opportunity
for the Executive, together with the Executive's counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, the Executive was
guilty of conduct set forth in clause (i) or (ii) of the definition of Cause
herein, and specifying the particulars thereof in detail.
15.2 Date of Termination. "Date of Termination," with respect to any
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purported termination of the Executive's employment after a Change in Control
and during the Term, shall mean (i) if the Executive's employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (ii) if the
Executive's employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a termination by Sierra, shall
not be less than thirty (30) days (except in the case of a termination for
Cause) and, in the case of a termination by the Executive, shall not be less
than fifteen (15) days nor more than sixty (60) days, respectively, from the
date such Notice of Termination is given).
16.3 Dispute Concerning Termination. If within fifteen (15) days
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after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be extended
until the earlier of (i) the date on which the Term ends or (ii) the date on
which the dispute is finally resolved, either by mutual written agreement of the
parties or by a final judgment, order or decree of an arbitrator or a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice
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of dispute given by the Executive only if such notice is given in good faith and
the Executive pursues the resolution of such dispute with reasonable diligence.
17.4 Compensation During Dispute. If a purported termination occurs
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following a Change in Control and during the Term and the Date of Termination is
extended in accordance with Section 7.3 hereof, the Company shall continue to
pay the Executive the full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, salary) and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the dispute
was given, until the Date of Termination, as determined in accordance with
Section 7.3 hereof. Amounts paid under this Section 7.4 are in addition to all
other amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement.
180. No Mitigation. The Company agrees that, if the Executive's
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employment with Sierra terminates during the Term, the Executive is not required
to seek other employment or to attempt in any way to reduce any amounts payable
to the Executive by the Company pursuant to Section 6 hereof or Section 7.4
hereof. Further, the amount of any payment or benefit provided for in this
Agreement (other than Section 6.1(B) hereof) shall not be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.
19. Successors; Binding Agreement.
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20.1 In addition to any obligations imposed by law upon any successor
to the Company, the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
21.2 This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amount would still be payable to the Executive hereunder (other
than amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the Executive's
estate.
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220. Notices. For the purpose of this Agreement, notices and all
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other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed, if to the
Executive, to the address inserted below the Executive's signature on the final
page hereof and, if to the Company, to the address set forth below, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon actual receipt:
To the Company:
Sierra Power Resources
0000 Xxxx Xxxx
Xxxx, Xxxxxx 00000-0000
Attention: General Counsel
23. Miscellaneous. No provision of this Agreement may be modified,
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waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or of any lack of compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. This Agreement supersedes any
other agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof which have been made by either party;
provided, however, that this Agreement shall supersede any agreement setting
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forth the terms and conditions of the Executive's employment with Sierra only in
the event that the Executive's employment with Sierra is terminated on or
following a Change in Control, by Sierra other than for Cause or by the
Executive other than for Good Reason. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Nevada. All references to sections of the Exchange Act or the Code
shall be deemed also to refer to any successor provisions to such sections. Any
payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law and any additional withholding to
which the Executive has agreed. The obligations of the Company and the
Executive under this Agreement which by their nature may require either partial
or total performance after the expiration of the Term (including, without
limitation, those under Sections 6 and 7 hereof) shall survive such expiration.
24. Validity; Pooling.
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12.1 The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
12.2 In the event that the Company is party to a transaction which is
otherwise intended to qualify for "pooling of interests" accounting treatment
then (A) this Agreement shall, to the extent practicable, be interpreted so as
to permit such accounting treatment, and (B) to the
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extent that the application of clause (A) of this Section 12.2 does not preserve
the availability of such accounting treatment, then, to the extent that any
provision of the Agreement disqualifies the transaction as a "pooling"
transaction (including, if applicable, the entire Agreement), such provision
shall be null and void as of the date hereof. All determinations under this
Section 12.2 shall be made by the accounting firm whose opinion with respect to
"pooling of interests" is required as a condition to the consummation of such
transaction.
25. Counterparts. This Agreement may be executed in several
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counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
26. Settlement of Dispute; Arbitration.
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14.1 All claims by the Executive for benefits under this Agreement
shall be directed to and determined by the Board and shall be in writing. Any
denial by the Board of a claim for benefits under this Agreement shall be
delivered to the Executive in writing and shall set forth the specific reasons
for the denial and the specific provisions of this Agreement relied upon. The
Board shall afford a reasonable opportunity to the Executive for a review of the
decision denying a claim and shall further allow the Executive to appeal to the
Board a decision of the Board within sixty (60) days after notification by the
Board that the Executive's claim has been denied.
14.2 Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Reno, Nevada in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the evidentiary standards
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set forth in this Agreement shall apply. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Notwithstanding any
provision of this Agreement to the contrary, the Executive shall be entitled to
seek specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
01444444415. Definitions. For purposes of this Agreement, the
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following terms shall have the meanings indicated below:
(5) "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
(6) "Auditor" shall have the meaning set forth in Section 6.2
hereof.
(7) "Base Amount" shall have the meaning set forth in Section
280G(b)(3) of the Code.
(8) "Beneficial Owner" shall have the meaning set forth in Rule
13d-3 under the Exchange Act.
(9) "Board" shall mean the Board of Directors of the Company.
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(10) "Cause" for termination by Sierra of the Executive's
employment shall mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with Sierra (other than any such
failure resulting from the Executive's incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of a Notice
of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof)
after a written demand for substantial performance is delivered to the Executive
by the Board, which demand specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the Executive's
duties, or (ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to Sierra, monetarily or otherwise. For
purposes of clauses (i) and (ii) of this definition, (x) no act, or failure to
act, on the Executive's part shall be deemed "willful" unless done, or omitted
to be done, by the Executive not in good faith and without reasonable belief
that the Executive's act, or failure to act, was in the best interest of Sierra
and (y) in the event of a dispute concerning the application of this provision,
no claim by Sierra that Cause exists shall be given effect unless Sierra
establishes to the Board by clear and convincing evidence that Cause exists.
(11) A "Change in Control" shall be deemed to have occurred if the
event set forth in any one of the following paragraphs shall have occurred:
(5) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its affiliates) representing 30% or more
of the combined voting power of the Company's then outstanding
securities, excluding any Person who becomes such a Beneficial Owner
in connection with a transaction described in clause (i) of paragraph
(III) below; or
(6) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is
in connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board
or nomination for election by the Company's stockholders was approved
or recommended by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on the date hereof or
whose appointment, election or nomination for election was previously
so approved or recommended; or
(7) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any
other corporation, other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination
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with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any
subsidiary of the Company, at least 66.66% of the combined voting
power of the securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities
Beneficially Owned by such Person any securities acquired directly
from the Company or its Affiliates other than in connection with the
acquisition by the Company or its Affiliates of a business)
representing 30% or more of the combined voting power of the Company's
then outstanding securities; or
(IV) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 66.66% of the combined voting
power of the voting securities of which are owned by stockholders of
the Company in substantially the same proportions as their ownership
of the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
(12)4 "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(13) "Company" shall mean Sierra Pacific Resources and, except in
determining under Section 15(G) hereof whether or not any Change in Control of
the Company has occurred, shall include any successor to its business and/or
assets which assumes and agrees to perform this Agreement by operation of law,
or otherwise.
(14) "Date of Termination" shall have the meaning set forth in
Section 7.2 hereof.
(15) "Disability" shall be deemed the reason for the termination by
Sierra of the Executive's employment, if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with Sierra for
a period of six (6) consecutive months, Sierra shall have given the Executive a
Notice of Termination for Disability, and, within thirty (30) days after such
Notice of Termination is given, the Executive shall not have returned to the
full-time performance of the Executive's duties.
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(16) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
(17) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(18) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
express written consent) after any Change in Control, or prior to a Change in
Control under the circumstances described in clauses (ii) and (iii) of the
second sentence of Section 6.1 hereof (treating all references in paragraphs (I)
through (VII) below to a "Change in Control" as references to a "Potential
Change in Control"), of any one of the following acts by Sierra, or failures by
Sierra to act, unless, in the case of any act or failure to act described in
paragraphs (I), (IV), (V) or (VI) below, such act or failure to act is corrected
prior to the Date of Termination specified in the Notice of Termination given in
respect thereof:
(5) the assignment to the Executive of any duties
substantially below the Executive's status as a senior executive
officer of Sierra or a substantial adverse reduction in the nature or
status of the Executive's responsibilities from those in effect
immediately prior to the Change in Control other than any such
alteration primarily attributable to the fact that the Company may no
longer be a public company;
(6) a reduction by Sierra in the Executive's annual base
salary as in effect on the date hereof or as the same may be increased
from time to time except for across-the-board salary reductions
similarly affecting all senior executives of Sierra and all senior
executives of any Person in control of Sierra;
(7) the failure by Sierra to pay to the Executive any
portion of the Executive's current compensation except pursuant to an
across-the-board compensation deferral similarly affecting all senior
executives of Sierra and all senior executives of any Person in
control of Sierra, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of Sierra, within thirty (30) days of the date such
compensation is due;
(8) the failure by Sierra to continue in effect any
compensation plan in which the Executive participates immediately
prior to the Change in Control which is material to the Executive's
total compensation, including but not limited to the Company's Officer
and Senior Managers Annual Incentive Plan, Executive Long-Term
Incentive Plan, Long-Term Performance Share Program and Stock Option
Plan or any substitute plans adopted prior to the Change in Control,
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the
failure by Sierra to continue the Executive's participation therein
(or in such substitute or alternative plan) on a
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basis not materially less favorable, both in terms of the amount or
timing of payment of benefits provided and the level of the
Executive's participation relative to other participants, as existed
immediately prior to the Change in Control;
(9) the failure by Sierra to continue to provide the
Executive with benefits substantially similar to those enjoyed by the
Executive under any of Sierra's pension, savings, life insurance,
medical, health and accident, or disability plans in which the
Executive was participating immediately prior to the Change in Control
(except for across the board changes similarly affecting all senior
executives of Sierra and all senior executives of any Person in
control of Sierra), the taking of any other action by Sierra which
would directly or indirectly materially reduce any of such benefits or
deprive the Executive of any material fringe benefit enjoyed by the
Executive at the time of the Change in Control, or the failure by
Sierra to provide the Executive with substantially the same number of
paid vacation days to which the Executive is entitled on the basis of
years of service with Sierra in accordance with Sierra's normal
vacation policy in effect at the time of the Change in Control; or
(10) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 7.1 hereof; for purposes of
this Agreement, no such purported termination shall be effective.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
For purposes of any determination regarding the existence of Good
Reason, any claim by the Executive that Good Reason exists shall be presumed to
be correct unless the Company establishes to the Board by clear and convincing
evidence that Good Reason does not exist.
(19)4 "Notice of Termination" shall have the meaning set forth in
Section 7.1 hereof.
(20) "Pension Plan" shall mean any tax-qualified, supplemental or
excess benefit pension plan maintained by Sierra and any other plan or agreement
entered into between the Executive and Sierra which is designed to provide the
Executive with supplemental retirement benefits.
(21) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its Affiliates, (iii) an
106
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
(22) "Potential Change in Control" shall be deemed to have occurred
if the event set forth in any one of the following paragraphs shall have
occurred:
(5) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(6) the Company or any Person publicly announces an
intention to take or to consider taking actions which, if consummated,
would constitute a Change in Control;
(7) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 15% or more of
either the then outstanding shares of common stock of the Company or
the combined voting power of the Company's then outstanding securities
(not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its affiliates); or
(8) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has
occurred.
(23)4 "Retirement" shall be deemed the reason for the termination by
the Executive of the Executive's employment if such employment is terminated in
accordance with Sierra's retirement policy, including early retirement,
generally applicable to its salaried employees.
(24) "Severance Payments" shall have the meaning set forth in Section
6.1 hereof.
(25) "Tax Counsel" shall have the meaning set forth in Section 6.2
hereof.
(26) "Term" shall mean the period of time described in Section 2
hereof (including any extension, continuation or termination described therein).
(27) "Total Payments" shall mean those payments so described in
Section 6.2 hereof.
Sierra Pacific Resources
By:
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Name:
Title:
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