Exhibit 10.1
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT, made and entered into as of the _____ day of ____________,
1999, by and between Pinnacle West Capital Corporation, an Arizona corporation
(hereinafter referred to as the "Company") and __________________ (hereinafter
referred to as the "Executive"):
W I T N E S S E T H
WHEREAS, the Executive has been employed by ______________________________
("___"), in an executive capacity, possesses intimate knowledge of the business
and affairs of the Company and [Arizona Public Service Company, a subsidiary of
the Company ("APS")], and has acquired certain confidential information and data
with respect to the Company and APS;
WHEREAS, ___ and the Executive entered into a Key Executive Employment and
Severance Agreement (the "[prior] Agreement") on or about __________, 199__; and
WHEREAS, ___ intends to terminate the [prior] Agreement effective December
31, 1999; and
WHEREAS, however, the Company desires to insure, insofar as possible, that
APS and it will continue to have the benefit of the Executive's services and to
protect the confidential information and goodwill of the Company and APS; and
WHEREAS, the Company recognizes that circumstances may arise in which a
change in the control of the Company or APS through acquisition or otherwise
occurs thereby causing uncertainty of employment without regard to the
Executive's competence or past contributions which uncertainty may result in the
loss of valuable services of the Executive to the detriment of the Company, APS
and their shareholders, and the Company and the Executive wish to provide
reasonable security to the Executive against changes in the Executive's
relationship with the Company and APS in the event of any such change in
control; and
WHEREAS, both the Company and the Executive are desirous that a proposal
for any change of control or acquisition will be considered by the Executive
objectively and with reference only to the business interests of the Company,
APS and their shareholders;
WHEREAS, the Company recognizes that the Executive will be in a better
position to consider the best interests of the Company and APS if the Executive
is afforded reasonable security, as provided in this Agreement, against altered
conditions of employment which could result from any such change in control or
acquisition; and
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
1. Definitions.
(a) "Accrued Benefits" shall mean the benefits payable to the
Executive as described in Section 6(a).
(b) "Act" shall mean the Securities Exchange Act of 1934.
(c) "Affiliate" shall mean (i) a corporation other than the Company
that is a member of a "controlled group of corporations" (within the meaning of
Section 414(b) of the Code as modified by Section 415(h) of the Code) or (ii) a
group of trades or businesses under common control (within the meaning of
Section 414(c) of the Code as modified by Section 415(h) of the Code) that also
includes the Company as a member. For purposes of determining whether a
transaction or event constitutes a Change of Control within the meaning of
Section 1(f), "Affiliate" status shall be determined on the day immediately
preceding the date of the transaction or event.
(d) "Beneficial Owner" shall have the same meaning as given to that
term in Rule 13d-3 of the General Rules and Regulations of the Act, provided
that any pledgee of the voting securities of the Company or APS shall not be
deemed to be the Beneficial Owner thereof prior to its disposition of, or
acquisition of voting rights with respect to, such securities.
(e) "Cause" shall be limited to (i) the engaging by the Executive in
conduct which has caused demonstrable and serious injury to the Employer,
monetary or otherwise, as evidenced by a determination in a binding and final
judgment, order or decree of a court or administrative agency of competent
jurisdiction, in effect after exhaustion or lapse of all rights of appeal, in an
action, suit or proceeding, whether civil, criminal, administrative or
investigative, other than an action, suit or proceeding, brought by the Company
or an Affiliate, the purpose of which is to establish "Cause" under this
Agreement; (ii) conviction of a felony, as evidenced by a binding and final
judgment, order or decree of a court of competent jurisdiction, in effect after
exhaustion or lapse of all rights of appeal, which the Employer determines has a
significant adverse impact on it in the conduct of its business; (iii)
unreasonable neglect or refusal by the Executive to perform the Executive's
duties or responsibilities (unless significantly changed without the Executive's
consent); or (iv) a significant violation by the Executive of the Employer's
established policies and procedures as in effect on the date of the Change of
Control which could subject the Executive to disciplinary action by the
Employer.
(f) "Change of Control" shall mean one (1) or more of the following
events:
(i) Any Person, other than an Affiliate, through a transaction or
series of transactions, is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company or APS representing twenty percent
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(20%) or more of the combined voting power of the then outstanding
securities of the Company or APS, as the case may be;
(ii) A merger or consolidation of (A) the Company with any other
corporation 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 with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or an Affiliate,
less than sixty percent (60%) 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 (B) APS with
any other corporation which would result in the voting securities of APS
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 with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or an Affiliate,
less than sixty percent (60%) of the combined voting power of the
securities of APS or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation; provided that,
for purposes of this subparagraph (ii), a merger or consolidation effected
to implement a recapitalization of the Company or of APS (or similar
transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company or of APS representing
twenty percent (20%) or more of the combined voting power of the then
outstanding securities of the Company or of APS (excluding any securities
acquired by that Person directly from the Company or an Affiliate) shall
not result in a Change of Control;
(iii) The shareholders of either the Company or APS approve a sale,
transfer or other disposition of all or substantially all of the assets of
either the Company or APS to a Person other than the Company or an
Affiliate; or
(iv) Individuals who, as of July 31, 1999, constitute the board of
directors of the Company (the "Company Incumbent Board") or of APS (the
"APS Incumbent Board") cease for any reason to constitute at least
two-thirds (2/3) of the members of the Company or APS board of directors,
as the case may be; provided, however, that for purposes of this
subparagraph (iv), (A)(1) any person becoming a member of the Company board
of directors after July 31, 1999 whose election, or nomination for election
by the Company's shareholders, was approved by a vote of at least
two-thirds (2/3) of the members then comprising the Company Incumbent Board
will be considered as though such person were a member of the Company
Incumbent Board and (2) the Company Incumbent Board shall not include a
director whose initial assumption of office as a director
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was in connection with an actual or threatened election contest relating to
the election of directors; and (B)(1) any person becoming a member of the
APS board of directors after July 31, 1999 whose election, or nomination
for election by APS' shareholder(s), was approved by a vote of at least
two-thirds (2/3) of the members then comprising the APS Incumbent Board or
by the Company, as a majority shareholder of APS, will be considered as
though such person were a member of the APS Incumbent Board and (2) the APS
Incumbent Board shall not include a director whose initial assumption of
office as a director was in connection with an actual or threatened
election contest relating to the election of directors.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(h) "Disability" shall have the same meaning as given to that term in
the applicable long-term disability plan maintained by the Company or the
Employer for employees.
(i) "Employer" shall mean ___, and upon the transfer of the Executive
to the Company or one of its other Affiliates, "Employer" shall mean the Company
or such other Affiliate.
(j) "Employment Period" shall mean the period commencing on the date
of a Change of Control and ending on the second anniversary of such date.
(k) "Good Reason" shall mean:
(i) the required relocation of the Executive, without the Executive's
consent, to an employment location which is more than seventy-five (75)
miles from the Executive's employment location on the date of the Change of
Control;
(ii) a significant reduction by the Employer in the compensation
and/or benefits provided to the Executive as in effect on the date of the
Change of Control (as the same may have been thereafter adjusted during the
Employment Period), which reduction is not generally effective for all
executives employed by the Employer (or its successor) in the Executive's
class or category;
(iii) the removal of the Executive from or any failure to re-elect the
Executive to any of the positions held by the Executive on the date of the
Change of Control or any other positions to which the Executive shall
thereafter be elected or assigned except in the event that such removal or
failure to re-elect relates to the termination by the Employer of the
Executive's employment for Cause or by reason of death, Disability or
voluntary retirement;
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(iv) a significant adverse change, without the Executive's written
consent, in the nature or scope of the Executive's authority, powers,
functions, duties or responsibilities, or a material reduction in the level
of support services, staff, secretarial and other assistance and office
space available to a level below that which was provided to the Executive
on the date of the Change of Control and that which is necessary to perform
any additional duties assigned to the Executive following the Change of
Control, which change or reduction is not generally effective for all
executives employed by the Employer (or its successor) in the Executive's
class or category; or
(v) breach of any material provision of this Agreement by the Company.
(l) "Person" shall mean any individual, partnership, joint venture,
association, trust, corporation or other entity (including a "group" as defined
in Section 13(d)(3) of the Act), other than an employee benefit plan of the
Company or an Affiliate or an entity organized, appointed or established
pursuant to the terms of any such benefit plan.
(m) "Termination Date" shall mean, except as otherwise provided in
Section 12, (i) the Executive's date of death; (ii) the date of the Executive's
voluntary early retirement as agreed upon in writing by the Employer and the
Executive; (iii) sixty (60) days after the delivery of the Notice of Termination
terminating the Executive's employment on account of Disability pursuant to
Section 9, unless the Executive returns full-time to the performance of his or
her duties prior to the expiration of such period; (iv) the date of the Notice
of Termination if the Executive's employment is terminated by the Executive
voluntarily other than for Good Reason; and (v) sixty (60) days after the
delivery of the Notice of Termination if the Executive's employment is
terminated by the Employer (other than by reason of Disability) or by the
Executive for Good Reason.
(n) "Termination Payment" shall mean the amount described in Section
6(b).
(o) "Total Payments" shall mean the sum of the Termination Payment and
any other payments or benefits provided to or for the benefit of the Executive
in the nature of compensation, receipt of which is contingent on the Change of
Control and to which Section 280G of the Code applies.
2. IMPACT ON EMPLOYMENT. The Employer and the Executive shall retain the
right to terminate the employment of the Executive at any time and for any
reason prior to a Change of Control. If a Change of Control occurs when the
Executive is employed by the Employer, the Employer will continue thereafter to
employ the Executive, and the Executive will remain in the employ of the
Employer, in accordance with the terms and provisions of this Agreement, during
the Employment Period.
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3. DUTIES. During the Employment Period, the Executive shall, in the same
capacities and positions held by the Executive at the time of such Change of
Control or in such other capacities and positions as may be agreed to by the
Employer and the Executive in writing, devote the Executive's best efforts,
attention and skill to the business and affairs of the Company, as such business
and affairs now exist and as they may hereafter be conducted. The services which
are to be performed by the Executive hereunder are to be rendered at an
employment location which is not more than seventy-five (75) miles from the
Executive's employment location on the date of the Change of Control, or in such
other place or places as shall be mutually agreed upon in writing by the
Executive and the Employer from time to time. The Executive shall not be
required to be absent from such employment location for more than forty-five
(45) consecutive days in any fiscal year without the Executive's consent.
4. COMPENSATION. During the Employment Period, the Executive shall be
compensated as follows:
(a) The Executive shall receive, at such intervals and in accordance with
such standard policies as may be in effect on the date of the Change
of Control, an annual salary not less than the Executive's annual
salary as in effect as of the date of the Change of Control, subject
to adjustment as provided in Section 5;
(b) The Executive shall be reimbursed, at such intervals and in accordance
with such standard policies as may be in effect on the date of the
Change of Control, for any and all monies advanced in connection with
the Executive's employment for reasonable and necessary expenses
incurred by the Executive on behalf of the Employer, including travel
expenses;
(c) The Executive shall be included to the extent eligible thereunder in
any and all plans providing general benefits for the Employer's
employees, including but not limited to, group life insurance,
disability, medical, dental, pension, profit sharing, savings and
stock bonus plans and be provided any and all other benefits and
perquisites made available to other employees of comparable status and
position, on the same terms and conditions as generally provided to
employees of comparable status and position;
(d) The Executive shall receive annually not less than the amount of paid
vacation and not fewer than the number of paid holidays received
annually immediately prior to the Change of Control or such greater
amount of paid vacation and number of paid holidays as may be made
available annually to other employees of comparable status and
position with the Employer; and
(e) The Executive shall be included in all plans providing special
benefits to corporate officers, including but not limited to bonus,
deferred compensation, incentive compensation, supplemental pension,
stock option, stock appreciation, stock bonus and similar or
comparable plans extended by the Company
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or the Employer from time to time to corporate officers, key employees
and other employees of comparable status.
5. ANNUAL COMPENSATION ADJUSTMENTS. During the Employment Period, the Board
of Directors of the Employer, an appropriate committee of the Board or the
President of the Employer, whichever is appropriate, shall consider and
appraise, at least annually, the Executive's compensation. In determining such
compensation, the Board, the appropriate committee thereof or the President,
whichever is appropriate, shall consider the commensurate increases given to
other corporate officers and key employees generally, the scope and success of
the Employer's operations, the expansion of Executive's duties and the
Executive's performance of his duties.
6. PAYMENTS UPON TERMINATION.
(a) ACCRUED BENEFITS. For purposes of this Agreement, the Executive's
Accrued Benefits shall include the following amounts: (i) all salary earned
or accrued through the Termination Date; (ii) reimbursement for any and all
monies advanced in connection with the Executive's employment for
reasonable and necessary expenses incurred by the Executive through the
Termination Date; (iii) any and all other cash benefits previously earned
through the Termination Date and deferred at the election of the Executive
or pursuant to any deferred compensation plans then in effect; (iv) a lump
sum payment of the bonus or incentive compensation otherwise payable to the
Executive under the terms of any bonus or incentive compensation plan or
plans for the year in which termination occurs; and (v) all other payments
and benefits to which the Executive may be entitled under the terms of any
benefit plan of the Company or the Employer. Payment of Accrued Benefits
shall be made promptly in accordance with the Employer's prevailing
practice and the terms of any applicable benefit plans, contracts or
arrangements.
(b) TERMINATION PAYMENT. For purposes of this Agreement, the
Executive's Termination Payment shall be an amount equal to (i) plus (ii),
multiplied by (iii), where
(i) Equals the Executive's rate of annual salary, as in effect on
the date of the Change of Control and as increased thereafter from
time to time pursuant to Section 5;
(ii) Equals the amount of the average annual dollar award paid to
the Executive pursuant to the Employer's regular bonus plan or
arrangement with respect to the four (4) years (or the number of years
of the Executive's employment if less than four (4) years) preceding
the Termination Date which shall be determined by dividing the total
dollar amount paid to the Executive under such plan or arrangement
with respect to such number of years by four (4) (or the number of
years of the Executive's employment if less than four (4) years); and
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(iii) Equals three (3).
The Termination Payment shall be payable in a lump sum on the
Executive's Termination Date. Such lump sum payment shall not be reduced by
any present value or similar factor. The Executive shall not be required to
mitigate the amount of such payment by securing other employment or
otherwise and such payment shall not be reduced by reason of the Executive
securing other employment or for any other reason, except as expressly
provided in Section 16.
7. DEATH. If the Executive shall die during the Employment Period, but
after delivery of a Notice of Termination by the Company (for reasons other than
Cause or Disability) or by the Executive for Good Reason, the Executive's
employment shall terminate on his or her date of death and the Executive's
estate shall be entitled to receive the Executive's Accrued Benefits as of the
Termination Date and, subject to the provisions of this Agreement, to such
Termination Payment as the Executive would have been entitled to had the
Executive survived. All benefits payable on account of the Executive's
employment or death under the Company's or Employer's employee benefits plans,
programs or arrangements shall be paid or distributed in accordance with the
terms of such plans, programs or arrangements. The Executive's death following
delivery of the Notice of Termination shall not affect his or her Termination
Date which shall be determined without regard to the Executive's death, subject
to the provisions of Section 12.
If the Executive shall die during the Employment Period, but prior to the
delivery of a Notice of Termination, the Executive's employment shall terminate
and the Executive's estate, heirs and beneficiaries shall receive all the
Executive's Accrued Benefits through the Termination Date and all benefits
available to them under the Company's benefit plans as in effect on the
Termination Date on account of the Executive's death.
8. RETIREMENT. If, during the Employment Period, the Executive and the
Employer shall execute an agreement providing for the voluntary retirement of
the Executive from the Employer, the Executive shall receive only his or her
Accrued Benefits through the Termination Date.
9. TERMINATION FOR DISABILITY. If the Executive has been absent from his or
her duties hereunder on a full-time basis for five (5) consecutive months during
the Employment Period on account of a Disability, the Employer may provide a
Notice of Termination, which satisfies the requirements of Section 12, and the
Executive's employment shall, for purposes of this Agreement, terminate sixty
(60) days thereafter, unless the Executive returns to the performance of his or
her duties on a full-time basis prior to the end of the sixty (60) day period.
During the term of the Executive's Disability prior to his or her Termination
Date, the Executive shall continue to participate in all compensation and
benefit plans, programs and arrangements in which the Executive was entitled to
participate immediately prior to his or her Disability in accordance with the
terms and provisions of such plans, programs and arrangements. If the
Executive's employment is terminated on account of the Executive's Disability,
the Executive shall
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receive his or her Accrued Benefits in accordance with Section 6(a) hereof,
provided that the Executive's termination for purposes of this Agreement under
this Section 9 shall not affect his or her entitlement to benefits on account of
his or her Disability under any long-term disability programs of the Company or
the Employer in effect at the time of such termination and in which the
Executive participated immediately prior to his or her Disability.
10. TERMINATION NOT GIVING RISE TO A TERMINATION PAYMENT. If, during the
Employment Period, the Executive's employment is terminated for Cause, or if the
Executive voluntarily terminates his or her employment other than for Good
Reason, subject to the procedures set forth in Section 12, the Executive shall
be entitled to receive only his or her Accrued Benefits in accordance with
Section 6(a).
11. TERMINATION GIVING RISE TO A TERMINATION PAYMENT. If, during the
Employment Period, the Executive's employment is terminated by the Executive for
Good Reason or by the Employer other than by reason of death, Disability
pursuant to Section 9 or Cause, subject to the procedures set forth in Section
12,
(a) the Executive shall be entitled to receive and the Company or the
Employer, as applicable, shall pay the Executive's Accrued Benefits in
accordance with Section 6(a) and, in lieu of further salary payments for
periods following the Termination Date, as severance pay, a Termination
Payment;
(b) the Executive and his eligible dependents shall continue to be
covered for three (3) years, under the same terms and conditions, by the
medical plan, dental plan and/or group life insurance plan maintained by
the Company or the Employer which covered that Executive and his eligible
dependents prior to the Executive's Termination Date. Notwithstanding the
foregoing, if the Company's or Employer's medical plan, dental plan and/or
group life insurance plan covering the Executive on his or her Termination
Date was amended, replaced or terminated on or after the Change of Control
and such action would constitute Good Reason within the meaning of Section
1(k), the Executive and his or her eligible dependents shall be entitled to
continued coverage for purposes of this Section 11(b) under the terms of
the medical plan, dental plan and/or group life insurance plan which they
participated in immediately prior to the Change of Control. If the affected
plan is no longer available, the Company shall make arrangements to provide
equivalent coverage to the Executive and his or her eligible dependents.
For this purpose, "equivalent coverage" shall mean medical, dental and/or
life insurance coverage, which, when added to the coverage provided to the
Executive and his or her eligible dependents under the Company's or
Employer's medical plan, dental plan and/or group life insurance plan in
effect on the Executive's Termination Date, equals or exceeds the level of
benefits provided under the medical plan, dental plan and/or group life
insurance plan to the Executive and his or her eligible dependents on the
day immediately preceding the Change of Control. The Executive and the
Employer shall share the cost of the continued coverage under this Section
11(b) in the same proportions as the Employer and similarly situated active
employees shared the cost of such cover-
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age on the day preceding the Executive's Termination Date. For purposes of
satisfying the Company's or Employer's obligation under the Consolidated
Omnibus Budget Reconciliation Act ("COBRA") to continue group health care
coverage to the Executive and his eligible dependents as a result of the
Executive's termination of employment, the period during which the
Executive is permitted to continue to participate in the Company's or
Employer's medical plans and/or dental plans under this Section 11(b) shall
not be taken into account and treated as part of the period during which
the Executive and his eligible dependents are entitled to continued
coverage under the Company's or Employer's group health plans under COBRA.
Following the end of the continuation period specified in this Section
11(b), the Executive and his eligible dependents shall be covered under
such plans and arrangements only as required under the provisions of COBRA;
(c) the Executive's termination shall be treated as a "Normal
Termination" as defined in the Pinnacle West Capital Corporation Stock
Option and Incentive Plan, as amended from time to time, and in any
successor plan thereto, which shall entitle the Executive to exercise any
outstanding stock options during the three (3) month period beginning on
the Executive's Termination Date, and any restrictions remaining on any
"Restricted Stock" (as defined in such plan) awarded to the Executive shall
lapse on his or her Termination Date;
(d) "out-placement" services will be provided by the Company to the
Executive for a period beginning on the Executive's Termination Date. Such
services shall be provided for a period beginning on the Executive's
Termination Date and ending on the earlier of the date on which the
Executive becomes employed in a position commensurate with his or her
current salary and responsibilities or the last day of the twelve (12)
month period which began on the Executive's Termination Date. The
"out-placement" services shall be provided by an out-placement company
selected by the Company; and
(e) if all or any part of the Total Payments made to the Executive
would be subject to the excise tax imposed by Section 4999 of the Code and
if any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and
penalties, being collectively referred to hereinafter as the "Excise Tax"),
the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the Executive
of all taxes (including, without limitation, any income taxes and the
Excise Tax, and any interest or penalties imposed with respect to such
taxes), on the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments.
All determinations required to be made under this Section 11(e), including
whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment, shall be made by a nationally recognized independent accounting
firm selected by the Company (the "Accounting Firm") which shall provide
detailed supporting calculations to the Company and the Executive within
fifteen (15) business days following the Termination Date, if applicable,
or such
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earlier time as the Company may request. All fees and expenses of the
Accounting Firm shall be borne by the Company. The Gross-Up Payment, if
any, as determined pursuant to this Section 11(e) shall be paid to the
Executive within five (5) days following receipt by the Company of the
Accounting Firm's determination. If the Accounting Firm shall determine
that the Total Payments are not subject to the Excise Tax and, therefore no
Gross-Up Payment is required, it shall furnish the Executive with an
opinion that failure to report the Excise Tax on the Executive's applicable
Federal income tax return would not result in the imposition of a
negligence or similar penalty. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive.
12. TERMINATION NOTICE AND PROCEDURE. Any termination by the Employer or
the Executive of the Executive's employment during the Employment Period shall
be communicated by written Notice of Termination to the Executive if such Notice
is delivered by the Company and to the Company if such Notice is delivered by
the Executive, all in accordance with the following procedures:
(a) The Notice of Termination shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances alleged to provide a basis for
termination.
(b) Any Notice of Termination by the Company shall be approved by a
resolution duly adopted by a majority of the members of the Company's board
of directors then in office.
(c) If the Company shall give a Notice of Termination for Cause or by
reason of Disability and the Executive in good faith notifies the Company
that a dispute exists concerning such termination within the fifteen (15)
day period following the Executive's receipt of such notice, the Executive
may elect to continue his or her employment during such dispute. If it is
thereafter determined that (i) the reason given by the Company for
termination did exist, the Executive's Termination Date shall be the
earlier of (A) the date on which the dispute is finally determined, either
by mutual written agreement of the parties or pursuant to Section 14, (B)
the date of the Company's Notice of Termination for Cause, (C) the date of
the Executive's death, or (D) one day prior to the end of the Employment
Period, and the Executive shall not be entitled to a Termination Payment
based on events occurring after the Company delivered its Notice of
Termination; or (ii) the reason given by the Company for termination did
not exist, the employment of the Executive shall continue as if the Company
had not delivered its Notice of Termination and there shall be no
Termination Date arising out of such notice.
(d) If the Executive shall in good faith give a Notice of Termination
for Good Reason and the Company notifies the Executive that a dispute
exists concerning the termination within the fifteen (15) day period
following the Company's receipt of such notice, the Executive may elect to
continue his or her employment during such dispute. If it is thereafter
determined that (i) Good Reason did exist, the Executive's Termination Date
shall be the earlier of (A) the date on which the
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dispute is finally determined, either by mutual written agreement of the
parties or pursuant to Section 14, (B) the date of the Executive's death,
or (C) one day prior to the end of the Employment Period, and the
Executive's Termination Payment shall reflect events occurring after the
Executive delivered his or her Notice of Termination; or (ii) Good Reason
did not exist, the employment of the Executive shall continue after such
determination as if the Executive had not delivered the Notice of
Termination asserting Good Reason.
(e) If the Executive does not elect to continue employment pending
resolution of a dispute regarding a Notice of Termination under Sections
12(c) and (d), and it is finally determined that the reason for termination
set forth in such Notice of Termination did not exist, if such notice was
delivered by the Executive, the Executive will be deemed to have
voluntarily terminated his or her employment and if delivered by the
Company, the Company will be deemed to have terminated the Executive other
than by reason of death, Disability or Cause.
13. OBLIGATIONS OF THE EXECUTIVE. The Executive covenants and agrees,
during the Executive's employment with the Employer and following his or her
Termination Date, to hold in strict confidence any and all information in the
Executive's possession as a result of the Executive's employment with the
Employer; provided that nothing in this Agreement shall be construed as
prohibiting the Executive from reporting any suspected instance of illegal
activity of any nature, any nuclear safety concern, any workplace safety concern
or any public safety concern to the United States Nuclear Regulatory Commission,
United States Department of Labor or any federal or state governmental agency or
prohibiting the Executive from participating in any way in any state or federal
administrative, judicial or legislative proceeding or investigation with respect
to any such claims and matters.
14. ARBITRATION. All claims, disputes and other matters in question between
the parties arising under this Agreement, other than Section 13, shall be
decided by arbitration in accordance with the commercial arbitration rules of
the American Arbitration Association, unless the parties mutually agree
otherwise. Any arbitration required under this Agreement shall be held in
Phoenix, Arizona, unless the parties mutually agree otherwise. The Company shall
pay the costs of any such arbitration. The award by the arbitrator shall be
final, and judgment may be entered upon it in accordance with applicable law in
any state or Federal court having jurisdiction thereof.
The Company shall not be required to arbitrate claims arising under Section
13. The Company shall have the right to judicial enforcement of its rights under
Section 13, including, but not limited to, injunctive relief.
15. EXPENSES AND INTEREST. If, after a Change of Control a good faith
dispute arises with respect to the enforcement of the Executive's rights under
this Agreement or if any arbitration or legal proceeding shall be brought in
good faith to enforce or interpret any provision contained herein, or to recover
damages for breach hereof and the Executive is the prevailing party, the
Executive shall recover from the Company any reasonable attorney's fees and
necessary costs and disbursements in-
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curred as a result of such dispute or legal proceeding, and prejudgment interest
on any money judgment obtained by the Executive calculated at the rate of
interest announced by Bank One of Arizona (or any successor thereto) from time
to time as its prime rate from the date that payments to the Executive should
have been made under this Agreement.
16. PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation during and after
the Employment Period to insure that the compensation and arrangements provided
herein are provided to the Executive shall be absolute and unconditional and
shall not be affected by any circumstances, provided that the Company may apply
amounts payable under this Agreement to any loans or other debts then owed to
the Company or an Affiliate by the Executive, the terms of which are reflected
in a written document signed by the Executive. The amounts payable under this
Agreement shall be in lieu of any amounts payable to the Executive under a
separate severance plan, agreement or arrangement established by the Company.
All amounts payable by the Company under this Agreement shall be paid without
notice or demand. Each and every payment made under this Agreement by the
Company shall be final. Notwithstanding the foregoing, in the event that the
Company has paid an Executive more than the amount to which the Executive is
entitled under this Agreement, the Company shall have the right to recover all
or any part of such overpayment from the Executive or from whomsoever has
received such amount.
17. SUCCESSORS.
(a) If all or substantially all of the Company's business and assets
are sold, assigned or transferred to any Person, or if the Company merges
into or consolidates or otherwise combines with any Person which is a
continuing or successor entity, then the Company shall assign all of its
right, title and interest in this Agreement as of the date of such event to
the Person which is either the acquiring or successor corporation, and such
Person shall assume and perform from and after the date of such assignment
the terms, conditions and, provisions imposed by this Agreement upon the
Company. Failure of the Company to obtain such assignment shall be a breach
of this Agreement. In case of such assignment by the Company and of
assumption and agreement by such Person, all further rights as well as all
other obligations of the Company under this Agreement thenceforth shall
cease and terminate and thereafter the expression "the Company" wherever
used herein shall be deemed to mean such Person(s).
(b) This Agreement and all rights of the Executive shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, estates, executors, administrators, heirs and
beneficiaries. In the event of the Executive's death, all amounts payable
to the Executive under this Agreement shall be paid to the Executive's
estate. This Agreement shall inure to the benefit of, be binding upon and
be enforceable by, any successor, surviving or resulting corporation or
other entity to which all or substantially all of the Company's business
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and assets shall be transferred whether by merger, consolida- tion,
transfer or sale. This Agreement shall not be terminated by the voluntary
or involuntary dissolution of the Company.
18. ENFORCEMENT. The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part hereof are declared invalid
or unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts hereof and the
applicability thereof shall not be affected thereby.
19. AMENDMENT OR TERMINATION. The term of this Agreement shall run until
December 31, 2001, and shall continue for additional one (1) year periods
thereafter, unless the Company notifies the Executive in writing six (6) months
prior to December 31, 2001 (or the anniversary of that date in the event the
Agreement continues beyond that date pursuant to the provisions of this Section
19) that it does not intend to continue the Agreement. Notwithstanding the
foregoing, (i) if a Change of Control has occurred on or before the date on
which the Agreement would be terminated by the Company in accordance with this
Section 19, the Agreement shall not terminate with respect to that Change of
Control until the end of the Employment Period, and (ii) this Agreement shall
terminate if, prior to a Change in Control, the Executive ceases to be employed
by the Employer as a corporate officer.
This Agreement sets forth the entire agreement between the Executive and
the Company and any of its Affiliates with respect to the subject matter hereof,
and supersedes all prior oral or written negotiations, commitments,
understandings and writings with respect thereto, including, but not limited to,
the Key Executive Employment and Severance Agreement by and between the Employer
and the Executive executed on or about __________, 19__.
This Agreement may not be terminated, amended or modified during its term
as specified above except by written instrument executed by the Company and the
Executive.
20. WITHHOLDING. The Company and the Employer shall be entitled to withhold
from amounts to be paid to the Executive under this Agreement any federal, state
or local withholding or other taxes or charges which it is from time to time
required to withhold. The Company and the Employer shall be entitled to rely on
an opinion of counsel if any question as to the amount or requirement of any
such withholding shall arise.
21. VENUE; GOVERNING LAW. This Agreement and the Executive's and Company's
respective rights and obligations hereunder shall be governed by and construed
in accordance with the laws of the State of Arizona. Any action concerning this
Agreement shall be brought in the Federal or state courts located in the County
of Maricopa, Arizona, and each party consents to the venue and jurisdiction of
such courts.
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22. NOTICE. Notices given pursuant to this Agreement shall be in writing
and (a) if hand delivered, shall be deemed given when delivered, and (b) if
mailed, shall be deemed delivered when placed in the United States mail, postage
prepaid, addressed,
if to the Company, to
Board of Directors
Pinnacle West Capital Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Law Department
or if to the Executive, to
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or to such other addresses as the parties may provide written notice of to each
other, from time to time, in accordance with this Section 22.
23. FUNDING. Benefits payable under this Agreement shall constitute an
unfunded general obligation of the Company payable from its general assets, and
the Company shall not be required to establish any special fund or trust for
purposes of paying benefits under this Agreement. The Executive shall not have
any vested right to any particular assets of the Company as a result of
execution of this Agreement and shall be a general creditor of the Company.
24. NO WAIVER. No waiver by either party at any time of any breach by the
other party of, or compliance with, any condition or provision of this Agreement
to be performed by the other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same time or any prior or subsequent
time.
25. HEADINGS. The headings contained are for reference only and shall not
affect the meaning or interpretation of any provision of this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer, and the Executive has executed this Agreement, on
the date and year first above written.
Pinnacle West Capital Corporation
By
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Its
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ATTEST:
By
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Its
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