FORM OF EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT by and between Southwestern Public Service
Company, a New Mexico corporation (the "Company"), and _______
_________ (the "Employee"), dated as of the _____ day of July,
1995.
WHEREAS, the Company recognizes that the current
business environment makes it difficult to attract and retain
highly qualified key employees unless a certain degree of secu-
rity can be offered to such individuals against organizational
and personnel changes which frequently follow Changes of Con-
trol (as defined below) of a corporation; and
WHEREAS, even rumors of acquisitions or mergers may
cause key employees to consider major career changes in an
effort to assure financial security for themselves and their
families; and
WHEREAS, the Company desires to assure fair treatment
of its key employees in the event of a Change of Control and to
allow them to make critical career decisions without undue time
pressure and financial uncertainty, thereby increasing their
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willingness to remain with the Company notwithstanding the outcome
of a
possible Change of Control transaction; and
WHEREAS, the Company recognizes that its key employees
will be
involved in evaluating or negotiating any offers, proposals or
other
transactions which could result in Changes of Control of the
Company and
believes that it is in the best interest of the Company and its
stockholders for such key employees to be in a position, free from
personal
financial and employment considerations, to be able to assess
objectively
and pursue aggressively the interests of the Company's stockholders
in
making these evaluations and carrying on such negotiations; and
WHEREAS, the Board of Directors (the "Board") of the
Company
believes it is essential to provide the Employee with compensation
arrangements upon a Change of Control which provide the Employee
with
individual financial security and which are competitive with those
of other
corporations, and in order to accomplish these objectives, the
Board has
caused the Company to enter into this Agreement.
NOW THEREFORE, the parties, for good and valuable
consideration
and intending to be legally bound, agree as follows:
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1. Operation and Term of Agreement; Certain
Definitions.
(a) This Agreement shall be effective immediately
upon its
execution, but, anything in this Agreement to the contrary
notwithstanding,
neither this Agreement nor any of its provisions shall be operative
unless
and until there has been a Change of Control of the Company, as
such term
is defined below. The term of this Agreement shall end on the
third anni-
versary of the date of execution of this Agreement; provided,
however, that
commencing on the date one year after the date hereof, and on each
annual
anniversary of such date (such date and each annual anniversary
thereof is
hereinafter referred to as the "Renewal Date"), the term of this
Agreement
shall be automatically extended so as to terminate three years from
such
Renewal Date, unless at least 60 days prior to the Renewal Date the
Company
shall give written notice that the term of the Agreement shall not
be so
extended; and provided, further, that after a Change of Control of
the
Company during the term of this Agreement, this Agreement shall
remain in
effect until all of the obligations of the parties hereunder are
satisfied.
(b) The "Effective Date" shall be the first date
during the
term of this Agreement on which a Change of Control
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occurs. Anything in this Agreement to the contrary
notwithstanding, if the
Employee's employment with the Company is terminated prior to the
date on
which a Change of Control occurs, and it is reasonably demonstrated
that
such termination (i) was at the request of a third party who has
taken
steps reasonably calculated to effect a Change of Control or (ii)
otherwise
arose in connection with or anticipation of a Change of Control,
then for
all purposes of this Agreement the "Effective Date" shall mean the
date
immediately prior to the date of such termination.
(c) A reference herein to a section of the Internal
Revenue
Code of 1986, as amended (the "Code") or a subdivision thereof
shall be
construed to incorporate reference to any section or subdivision of
the
Code enacted as a successor thereto, any applicable proposed,
temporary or
final regulations promulgated pursuant to such sections and any
applicable
interpretation thereof by the Internal Revenue Service.
(d) A reference herein to a section of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any rule
or
regulation promulgated thereunder shall be construed to incorporate
reference to any section of the Exchange
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Act or any rule or regulation enacted or promulgated as a successor
thereto.
(e) "Subsidiary(ies)" means a company 50% or more of
the
voting securities of which are owned by the Company.
(f) "Employee Benefit Plan" means any written plan
providing
benefits for employees of the Company or any Subsidiary.
2. Change of Control. For the purpose of this
Agreement, a
"Change of Control" shall be deemed to have occurred upon the
happening of
any of the following:
(a) The acquisition (other than from the Company) by
any
person, entity or "group", within the meaning of Section 13(d)(3)
or
14(d)(2) of the Exchange Act, (excluding, for this purpose, the
Company or
it Subsidiaries, or any Employee Benefit Plan which acquires
beneficial
ownership of voting securities of the Company) of beneficial
ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of
20% or more of either the then outstanding shares of the Company's
common
stock or the combined voting power of the Company's then
outstanding voting
securities entitled to vote generally in the election of directors;
or
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(b) Individuals who, as of the date hereof,
constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a
majority of the Board, provided that any person who first becomes
a
director subsequent to the date hereof whose recommendation,
election or
nomination for election by the Company's stockholders was approved
by a
vote of at least a majority of the directors then comprising the
Incumbent
Board (other than an election or nomination of an individual whose
initial
assumption of office is in connection with an actual or threatened
election
contest relating to the election of the directors of the Company,
as
described in Rule 14a-11 of Regulation 14A promulgated under the
Exchange
Act) shall be, for purposes of this Agreement, considered as though
such
person were a member of the Incumbent Board; or
(c) Approval by the stockholders of the Company of a
reorganization, share exchange, merger or consolidation with
respect to
which, in any such case, the persons who were the stockholders of
the
Company immediately prior to such reorganization, share exchange,
merger or
consolidation do not, immediately thereafter, own more than 60% of
the
combined voting power entitled to vote in the election of directors
of the
reorganized, merged or consolidated company; or
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(d) Liquidation or dissolution of the Company or a
sale of
all or substantially all the assets of the Company.
3. Employment Period. The Company hereby agrees to
continue
the Employee in the Company's employ, and the Employee hereby
agrees to
remain in the employ of the Company, for the period commencing on
the
Effective Date and ending on the third anniversary of such date
(the
"Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Employee's
position
(including status, offices, titles and reporting requirements),
authority,
duties and responsibilities shall be at least commensurate in all
material
respects with the most significant of those held, exercised and
assigned at
any time during the 90-day period immediately preceding the
Effective Date
and (B) the Employee's services shall be performed at the location
where
the Employee was employed immediately preceding the Effective Date
or any
office or location less than 25 miles from such location.
(ii) During the Employment Period, and excluding any
periods
of vacation and sick leave to which the Employee is
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entitled, the Employee agrees to devote reasonable attention and
time
during normal business hours to the business and affairs of the
Company
and, to the extent necessary to discharge the responsibilities
assigned to
the Employee hereunder, to use the Employee's reasonable best
efforts to
perform faithfully and efficiently such responsibilities. During
the
employment period it shall not be a violation of this Agreement for
the
Employee to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or
teach at
educational institutions and (C) manage personal investments, so
long as
such activities do not significantly interfere with the performance
of the
Employee's responsibilities as an employee of the Company in
accordance
with this Agreement. It is expressly understood and agreed that to
the
extent that any such activities have been conducted by the Employee
prior
to the Effective Date, the continued conduct of such activities (or
the
conduct of activities similar in nature and scope thereto)
subsequent to
the Effective Date shall not thereafter be deemed to interfere with
the
performance of the Employee's responsibilities to the Company. The
preceding sentence shall in no way be construed as a limitation on
the
non-business activities listed previously in this paragraph of
Section
4(a)(ii). Activities of the Employee
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consistent with this paragraph shall not permit the Company to
terminate
the Employee's employment for Cause, as defined below.
(b) Compensation.
(i) Base Salary. During the Employment Period, the
Employee
shall receive a base salary ("Base Salary") at a monthly rate at
least
equal to the highest monthly base salary paid or payable to the
Employee by
the Company during the 12 month period immediately preceding the
month in
which the Effective Date occurs. During the Employment Period, the
Base
Salary shall be reviewed at least annually and shall be increased
at any
time and from time to time as shall be substantially consistent
with
increases in base salary awarded in the ordinary course of business
to
other key employees of the Company and its Subsidiaries. Any
increase in
Base Salary shall not serve to limit or reduce any other obligation
to the
Employee under this Agreement. Base Salary shall not be reduced
after any
such increase.
(ii) Annual Bonus. In addition to Base Salary, the
Employee
shall be awarded, for each fiscal year ending during the Employment
Period,
an annual bonus (an "Annual Bonus") in cash at least equal to the
average
annual bonus payable to the
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Employee from the Company and its Subsidiaries in respect of the
two of the
last three fiscal years immediately preceding the Effective Date in
which
the bonuses paid were higher.
(iii) Incentive, Savings and Retirement Plans. In
addition to
Base Salary and Annual Bonus payable as hereinabove provided, the
Employee
shall be entitled to participate during the Employment Period in
all
incentive, savings and retirement plans, practices, policies and
programs
in which the Employee was participating prior to the Effective Date
and
which are applicable to other key employees of the Company and its
Sub-
sidiaries (including, without limitation, the Company's 1989 Stock
Incentive Plan, its EPS Performance Unit Plan, its Employee
Investment
Plan, its Retirement Plan for Employees, its Supplemental
Retirement Income
Plan and any successor plans), in each case providing benefits
which are
the economic equivalent to those currently in effect or as
subsequently
amended prior to the Effective Date. The compensation, benefits
and reward
opportunities provided to the Employee pursuant to such plans,
practices,
policies and programs, in the aggregate, shall be at least as
favorable as
the most favorable of such compensation, benefits and reward
opportunities,
in the aggregate, provided by the Company for the Employee under
such
plans, practices, policies and programs as in effect at any
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time during the 90-day period immediately preceding the Effective
Date or,
if more favorable to the Employee, as provided at any time
thereafter with
respect to other key employees of the Company and its Subsidiaries.
(iv) Welfare Benefit Plans. During the Employment
Period, the
Employee and/or the Employee's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under
welfare
benefit plans, practices, policies and programs provided by the
Company and
its Subsidiaries (including, without limitation, medical,
prescription,
dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs),
in each
case providing benefits which are the economic equivalent to those
currently in effect or as subsequently amended prior to the
Effective Date.
The benefits provided to the Employee and/or the Employee's family
pursuant
to such plans, practices, policies and programs in accordance with
this
Section 4(b)(iv) shall at all times be at least as favorable as the
most
favorable of such plans, practices, policies and programs in effect
at any
time during the 90-day period immediately preceding the Effective
Date or,
if more favorable to the Employee and/or the Employee's family, as
in
effect at
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any time thereafter with respect to other key employees of the
Company and
its Subsidiaries.
(c) Additional Rights of the Employee and
Obligations of the Company.
(i) Expenses. During the Employment Period, the
Employee
shall be entitled to receive prompt reimbursement for all
reasonable
expenses incurred by the Employee in accordance with the most
favorable
policies, practices and procedures of the Company and its
Subsidiaries in
effect at any time during the 90-day period immediately preceding
the
Effective Date or, if more favorable to the Employee, as in effect
at any
time thereafter with respect to other key employees of the Company
and its
Subsidiaries.
(ii) Fringe Benefits. During the Employment Period,
the
Employee shall be entitled to fringe benefits, including but not
limited to
the use of an automobile and payment of related expenses, in
accordance
with the most favorable plans, practices, policies and programs of
the
Company and its Subsidiaries in effect at any time during the
90-day period
immediately preceding the Effective Date or, if more favorable to
the
Employee, as in effect at any time thereafter with respect to other
key
employees of the Company and its Subsidiaries.
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(iii) Office and Support Staff. During the Employment
Period,
the Employee shall be entitled to an office or offices of a size
and with
furnishings and other appointments, and to secretarial and other
assistance, at least equal to the most favorable of the foregoing
provided
to the Employee by the Company and its Subsidiaries at any time
during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Employee, as provided at any time thereafter with
respect
to other key employees of the Company and its Subsidiaries.
(iv) Vacation. During the Employment Period, the
Employee
shall be entitled to paid vacation in accordance with the most
favorable
plans, practices, policies and programs of the Company and its
Subsidiaries
as in effect at any time during the 90-day period immediately
preceding the
Effective Date or, if more favorable to the Employee, as in effect
at any
time thereafter with respect to other key employees of the Company
and its
Subsidiaries.
(v) Indemnification. The Employee shall be entitled
during
the Employment Period, and thereafter with respect to occurrences
during
the Employment Period, to the benefit of the indemnification
provisions
contained in the Articles of
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Incorporation or By-Laws of the Company and in any contract entered
into
pursuant thereto as in effect on the date hereof or, if more
favorable to
the Employee, as in effect at any time thereafter, to the extent
permitted
by applicable law at the time of the assertion of any liability
against the
Employee.
5. Termination.
(a) Death or Disability. The Employee's employment
under
this Agreement shall terminate automatically upon the Employee's
death. If
the Company determines in good faith that the Employee has become
Disabled
(pursuant to the definition of "Disabled" set forth below), it may
give to
the Employee written notice of its intention to terminate the
Employee's
employment. In such event, the Employee's employment with the
Company
shall terminate effective on the 30th day after receipt of such
notice by
the Employee (the "Disability Effective Date"), provided that,
within the
30 days after such receipt, the Employee shall not have returned to
full-time performance of the Employee's duties. For purposes of
this
Agreement, an Employee shall be regarded "Disabled" if he applies
for and
is determined to be eligible to receive disability benefits under
the
Company's Long-Term Disability Plan.
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(b) Cause. During the Employment Period, the Company
may
only terminate the Employee's employment under Section 5(a) or for
"Cause."
For purposes of this Agreement, "Cause" means (i) an act or acts of
personal dishonesty engaged in by the Employee and intended to
result in
substantial personal enrichment of the Employee at the expense of
the
Company, (ii) repeated violations by the Employee of the Employee's
obligations under Section 4(a)(ii) of this Agreement which are
demonstrably
willful and deliberate on the Employee's part and which are not
remedied in
a reasonable period of time after receipt of written notice from
the
Company or (iii) the conviction of the Employee of a felony.
(c) Good Reason. Notwithstanding anything to the
contrary
contained herein, during the Employment Period, the Employee's
employment
may be terminated by the Employee for Good Reason and such
termination
shall be deemed a constructive discharge of the Employee by the
Company.
For purposes of this Agreement, "Good Reason" means:
(i) the assignment to the Employee of any duties
inconsistent
in any respect with the Employee's position (included status,
offices,
titles and reporting requirements), authority, duties or
responsibilities
as contemplated by
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Section 4(a)(i) of this Agreement, or any other action by the
Company which
results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated,
insubstantial and
inadvertent action not taken in bad faith and which is remedied by
the
Company promptly after receipt of notice thereof given by the
Employee;
(ii) any failure by the Company to comply with any of
the
provisions of Section 4 of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith
and which
is remedied by the Company promptly after receipt of notice thereof
given
by the Employee;
(iii) the Company's requiring the Employee to be based
at any
office or location other than that described in Section 4(a)(i)(B)
hereof,
except for travel reasonably required in the performance of the
Employee's
responsibilities;
(iv) any purported termination by the Company of the
Employee's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and
satisfy
Section 11(c) of this Agreement.
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For purposes of this Section 5(c), any good faith
determination
of "Good Reason" made by the Employee shall be conclusive.
Anything in
this Agreement to the contrary notwithstanding, a termination by
the
Employee for any reason during the 30-day period immediately
following the
first anniversary of a Change of Control described in Section 2(a),
(b) or
(d) hereof or the consummation of a transaction described in
Section 2(c)
hereof shall be deemed to be a termination for Good Reason for all
purposes
of this Agreement.
(d) Notice of Termination. Any termination of the
Employee's
employment by the Company for Cause or by the Employee for Good
Reason
shall be communicated by Notice of Termination to the other party
hereto
given in accordance with Section 12(b) of this Agreement. For
purposes of
this Agreement, a "Notice of Termination" means a written notice
which
(i) indicates the specific termination provision in this Agreement
relied
upon, (ii) sets forth in reasonable detail the facts and
circumstances
claimed to provide a basis for termination of the Employee's
employment
under the provision so indicated and (iii) if the Date of
Termination (as
defined below) is other than the date of receipt of such notice,
specifies
the termination date (which date shall be not more than 15 days
after the
giving of such notice). The failure by the Employee to set forth
in the
Notice of Termination any fact or circumstance which contributes to
a
showing of Good Reason shall not
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waive any right of the Employee hereunder or preclude the Employee
from
asserting such fact or circumstance in enforcing his rights
hereunder.
(e) Date of Termination. "Date of Termination" means
the
date of receipt of the Notice of Termination or any later date
specified
therein, as the case may be; provided, however, that (i) if the
Employee's
employment is terminated by the Company other than for Cause or
Disability
or by reason of death, the Date of Termination shall be the date on
which
the Company notifies the Employee of such termination and (ii) if
the
Employee's employment is terminated by reason of death or
Disability, the
Date of Termination shall be the date of death of the Employee or
the
Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
(a) Termination Because of Death. If the Employee's
employment is terminated by reason of the Employee's death, such
employment
shall terminate without further obligations under this Agreement to
the
Employee's representatives, other than those obligations accrued or
earned
and vested (if applicable) by the Employee as of the Date of
Termination,
including, for this purpose (i) the Employee's full Base Salary
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accrued but unpaid through the Date of Termination at the rate in
effect on
the Date of Termination, (ii) the product of the Annual Bonus paid
to the
Employee for the last full fiscal year and a fraction, the
numerator of
which is the number of days in the current fiscal year through the
Date of
Termination, and the denominator of which is 365, (iii) any
compensation
previously deferred by the Employee (together with any accrued
earnings
thereon) and not yet paid by the Company and any accrued vacation
pay not
yet paid by the Company and (iv) all amounts payable to the estate
or
designated beneficiaries of the Employee under any pension,
savings, life
insurance or other plans, practices, policies and programs of the
Company,
and/or all other amounts payable pursuant to Section 4(b)(iii)
hereof (such
amounts specified in clauses (i), (ii), (iii) and (iv) are
hereinafter
referred to as "Accrued Obligations"). The Accrued Obligations
specified in
clauses (i), (ii) and (iii) hereof shall be paid to the Employee's
estate
or beneficiary, as applicable, in a lump sum in cash within 30 days
of the
Date of Termination, and the other Accrued Obligations shall be
paid in
accordance with the Employee's specific elections pursuant to, and
otherwise in accordance with the terms of, any such plan, practice,
policy
or program. Anything in this Agreement to the contrary
notwithstanding,
the Employee's family shall be entitled to receive benefits at
least equal
to the most
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favorable benefits provided by the Company and any of its
Subsidiaries to
surviving families of key employees of the Company and such
Subsidiaries
under such plans, practices, policies or programs relating to
family death
benefits, if any, in accordance with the most favorable plans,
practices,
policies and programs of the Company and its Subsidiaries in effect
at any
time during the 90-day period immediately preceding the Effective
Date or,
if more favorable to the Employee and/or the Employee's family, as
in
effect on the date of the Employee's death, with respect to other
key
employees of the Company and its Subsidiaries and their families.
(b) Termination Because of Disability. If the
Employee's
employment is terminated by reason of the Employee's Disability,
such
employment shall terminate without further obligations to the
Employee,
other than those obligations accrued or earned and vested (if
applicable)
by the Employee as of the Date of Termination, including for this
purpose,
all Accrued Obligations. The Accrued Obligations specified in
clauses (i),
(ii) and (iii) of Section 6(a) hereof shall be paid to the Employee
in a
lump sum in cash within 30 days of the Date of Termination, and the
other
Accrued Obligations shall be paid in accordance with the Employee's
specific elections pursuant to, and otherwise in accordance with
the terms
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of, any plan, practice, policy or program providing benefits
forming a part
of the Accrued Obligations. Anything in this Agreement to the
contrary
notwithstanding, the Employee shall be entitled after the
Disability
Effective Date to receive disability and other benefits at least
equal to
the most favorable of those provided by the Company and any of its
Subsidiaries to disabled employees and/or their families in
accordance with
such plans, practices, policies and programs relating to
disability, if
any, of the Company and its Subsidiaries in effect at any time
during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Employee and/or the Employee's family, as in
effect at any
time thereafter with respect to other key employees of the Company
and its
Subsidiaries and their families.
(c) Termination For Cause by the Company or For Other
Than
Good Reason by the Employee. If the Employee's employment shall be
terminated for Cause, or if the Employee terminates his employment
other
than for Good Reason, the Employee's employment under this
Agreement shall
terminate without further obligations to the Employee, other than
those
obligations accrued or earned and vested (if applicable) by the
Employee
through the Date of Termination, including for this purpose, all
Accrued
Obligations. The Accrued Obligations
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specified in clauses (i), (ii) and (iii) of Section 6(a) hereof
shall be
paid to the Employee in a lump sum in cash within 30 days of the
Date of
Termination, and the other Accrued Obligations shall be paid in
accordance
with the Employee's specific elections pursuant to, and otherwise
in
accordance with the terms of, any plan, practice, policy or program
providing benefits forming a part of the Accrued Obligations.
(d) Termination For Good Reason by the Employee or
For Other
Than Cause or Disability by the Company or Other Than As a Result
of Death.
If, during the Employment Period, the Employee's employment shall
be
terminated by the Company other than for Cause or Disability or
other than
as a result of the Employee's death or if the Employee shall
terminate his
employment for Good Reason, the Company shall pay to the Employee
in a lump
sum in cash within 30 days after the Date of Termination (or in
accordance
with the Employee's specific elections pursuant to, and otherwise
in
accordance with the terms of, any plan, practice, policy or program
providing benefits forming a part of the Accrued Obligations
specified in
clause (iv) of Section 6(a) hereof) the aggregate of the following
amounts
and shall provide the following benefits:
(i) The Employee's full Base Salary and vacation pay
(for
vacation not taken) accrued but unpaid through the Date of
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Termination at the rate in effect at the time of the Notice of
Termination
plus an amount equal to the product of the Annual Bonus paid to the
Employee for the last full fiscal year and a fraction, the
numerator of
which is the number of days in the current fiscal year through the
Date of
Termination and the denominator of which is 365, plus all other
amounts to
which the Employee is entitled under any compensation plan,
practice,
policy or program of the Company in effect at the time such
payments are
due; and
(ii) In the event any compensation has been previously
deferred by the Employee, all amounts previously deferred (together
with
any accrued earnings thereon) and not yet paid by the Company; and
(iii) A lump sum severance payment in an amount equal to
300%
of the sum of (x) the Employee's Base Salary (on an annualized
basis) for
the year which includes the Date of Termination and (y) the highest
Annual
Bonus earned (whether or not deferred) by the Employee during the
three years immediately preceding the year which includes the Date
of
Termination; and
(iv) Following the Employee's termination of
employment, the
Company shall continue to cover the Employee and his
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family under, or provide the Employee and his family with insurance
coverage no less favorable than, the Company's life, disability,
health,
dental or other employee welfare benefit plans or programs (as in
effect on
the Effective Date or, at the option of the Employee, on the Date
of
Termination) for a period equal to the lesser of (x) three years
following
the Date of Termination or (y) until the Employee is provided by
another
employer with benefits substantially comparable to the benefits
provided by
such plans or programs; and
(v) Following the Employee's termination of
employment, the
Company shall treat the Employee as if he had continued
participation and
benefit accruals under the Company's Supplemental Retirement Income
Plan or
a successor plan (as in effect on the Effective Date) for three
years
following the Date of Termination, or the Company shall provide an
equivalent benefit outside such plan with the result that an
additional
three years of age and service shall be granted to the Employee.
(e) Successor in Interest. The Employee may
designate a
Successor (or Successors) in Interest to receive any and all
amounts due
the Employee in accordance with this Agreement should the Employee
be
deceased at any time of payment. Such designation of Successor(s)
in
Interest shall be made in
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writing and signed by the Employee, and delivered to the Company
pursuant
to Section 12(b) hereof. Any such designation may be made to any
legal
person, persons, trust or the Employee's estate as he shall
determine in
his sole discretion. In the event any designation shall be
incomplete, or
in the event the Employee shall fail to designate a Successor in
Interest,
his estate shall be deemed to be his Successor in Interest to
receive such
portion of all of the payments due hereunder. The Employee may
amend,
change or revoke any such designation at any time and from time to
time, in
the same manner. This Section 6(e) shall not supersede any
designation of
beneficiary or successor in interest made by the Employee, or
separately
covered, under any other plan, practice, policy or program of the
Company.
7. Non-exclusivity of Rights. Nothing in this
Agreement
shall prevent or limit the Employee's continuing or future
participation in
any benefit, bonus, incentive or other plans, practices, policies
or
programs provided by the Company or any of its Subsidiaries and for
which
the Employee may qualify, nor shall anything herein limit or
otherwise
affect such rights as the Employee may have under any stock option
or other
agreements with the Company or any of its Subsidiaries. Amounts
which are
vested benefits or which the Employee is
-26-
otherwise entitled to receive under any plan, practice, policy or
program
of the Company or any of its Subsidiaries at or subsequent to the
Date of
Termination shall be payable in accordance with such plan,
practice, policy
or program.
8. Full Settlement; Legal Expenses. The Company's
obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be
affected by any
set-off, counterclaim, recoupment, defense or other claim, right or
action
which the Company may have against the Employee or others. In no
event
shall the Employee be obligated to seek other employment or take
any other
action by way of mitigation of the amounts payable to the Employee
under
any of the provisions of this Agreement. The Company agrees to
pay, upon
written demand therefor by the Employee, all legal fees and
expenses which
the Employee may reasonably incur as a result of any dispute or
contest
(regardless of the outcome thereof) by or with the Company or
others
regarding the validity or enforceability of, or liability under,
any
provision of this Agreement (including as a result of any contest
by the
Employee about the amount of any payment pursuant to Sections 6 or
9 of
this Agreement), plus in each case interest at the applicable
Federal rate
provided for in Section 7872(f)(2) of the Code. In any such action
brought
by the Employee for
-27-
damages or to enforce any provisions of this Agreement, he shall be
entitled to seek both legal and equitable relief and remedies,
including,
without limitation, specific performance of the Company's
obligations
hereunder, in his sole discretion. If the parties hereto so agree
in
writing, any disputes under this Agreement may be settled by
arbitration.
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary not-
withstanding, in the event it shall be determined that any payment
or
distribution made, or benefit provided (including, without
limitation, the
acceleration of any payment, distribution or benefit), by the
Company to or
for the benefit of the Employee (whether paid or payable or
distributed or
distributable pursuant to the terms of this Agreement or otherwise,
but
determined without regard to any additional payments required under
this
Section 9) (a "Payment") would be subject to the excise tax imposed
by
Section 4999 of the Code (or any similar excise tax) or any
interest or
penalties are incurred by the Employee with respect to such excise
tax
(such excise tax, together with any such interest and penalties,
are
hereinafter collectively referred to as the "Excise Tax"), then the
Employee shall be entitled to receive an additional payment (a
"Gross-Up
Payment") in an amount such that after payment by the
-28-
Employee of all taxes (including any Excise Tax) imposed upon the
Gross-Up
Payment and any interest or penalties imposed with respect to such
taxes,
the Employee retains from the Gross-Up Payment an amount equal to
the
Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
determination of whether a Gross-Up Payment is required and of the
amount
of any such Gross-Up Payment, shall be made by Deloitte & Touche
(the
"Accounting Firm") which shall provide detailed supporting
calculations
both to the Company and the Employee within 15 business days of the
Date of
Termination, if applicable, or such earlier time as is requested by
the
Company, provided that any determination that an Excise Tax is
payable by
the Employee shall be made on the basis of substantial authority.
The
initial Gross-Up Payment, if any, as determined pursuant to this
Section 9(b), shall be paid to the Employee within five business
days of
the receipt of the Accounting Firm's determination. If the
Accounting Firm
determines that no Excise Tax is payable by the Employee, it shall
furnish
the Employee with a written opinion that he has substantial
authority not
to report any Excise Tax on his Federal income tax return. Any
determination by the Accounting
-29-
Firm meeting the requirements of this Section 9(b) shall be binding
upon
the Company and the Employee; subject only to payments pursuant to
the
following sentence based on a determination that additional
Gross-Up
Payments should have been made, consistent with the calculations
required
to be made hereunder (the amount of such additional payments are
referred
to herein as the "Gross-Up Underpayment"). In the event that the
Company
exhausts its remedies pursuant to Section 9(c) and the Employee
thereafter
is required to make a payment of any Excise Tax, the Accounting
Firm shall
determine the amount of the Gross-Up Underpayment that has occurred
and any
such Gross-Up Underpayment shall be promptly paid by the Company to
or for
the benefit of the Employee. The fees and disbursements of the
Accounting
Firm shall be paid by the Company.
(c) The Employee shall notify the Company in writing
of any
claim by the Internal Revenue Service that, if successful, would
require
the payment by the Company of a Gross-Up Payment. Such
notification shall
be given as soon as practicable but not later than ten business
days after
the Employee receives written notice of such claim and shall
apprise the
Company of the nature of such claim and the date on which such
claim is
requested to be paid. The Employee shall not pay such claim prior
to the
expiration of the 30-day period following
-30-
the date on which it gives such notice to the Company (or such
shorter
period ending on the date that any payment of taxes with respect to
such
claim is due). If the Company notifies the Employee in writing
prior to
the expiration of such period that it desires to contest such claim
and
that it will bear the costs and provide the indemnification as
required by
this sentence, the Employee shall:
(i) give the Company any information reasonably
requested by
the Company relating to such claim,
(ii) take such action in connection with contesting
such claim
as the Company shall reasonably request in writing from time to
time,
including, without limitation, accepting legal representation with
respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs
and expenses (including additional interest and penalties) incurred
in
connection with such contest and shall
-31-
indemnify and hold the Employee harmless, on an after-tax basis,
for any
Excise Tax or income tax, including interest and penalties with
respect
thereto, imposed as a result of such representation and payment of
costs
and expenses. Without limitation on the foregoing provisions of
this
Section 9(c), the Company shall control all proceedings taken in
connection
with such contest and, at its sole option, may pursue or forgo any
and all
administrative appeals, proceedings, hearings and conferences with
the
taxing authority in respect of such claim and may, at its sole
option,
either direct the Employee to pay the tax claimed and sue for a
refund or
contest the claim in any permissible manner, and the Employee
agrees to
prosecute such contest to a determination before any administrative
tri-
bunal, in a court of initial jurisdiction and in one or more
appellate
courts, as the Company shall determine; provided, however, that if
the
Company directs the Employee to pay such claim and sue for a
refund, the
Company shall advance the amount of such payment to the Employee,
on an
interest-free basis and shall indemnify and hold the Employee
harmless, on
an after-tax basis, from any Excise Tax or income tax, including
interest
or penalties with respect thereto, imposed with respect to such
advance or
with respect to any imputed income with respect to such advance;
and
further provided that any extension of the statute of limitations
relating
to the payment
-32-
of taxes for the taxable year of the Employee with respect to which
such
contested amount is claimed to be due is limited solely to such
contested
amount. Furthermore, the Company's control of the contest shall be
limited
to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Employee shall be entitled to settle or contest,
as the
case may be, any other issue raised by the Internal Revenue Service
or any
other taxing authority.
(d) If, after the receipt by the Employee of an
amount
advanced by the Company pursuant to Section 9(c), the Employee
becomes
entitled to receive any refund with respect to such claim, the
Employee
shall (subject to the Company's complying with the requirements of
Section 9(c)) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes
applicable
thereto). If, after the receipt by the Employee of an amount
advanced by
the Company pursuant to Section 9(c), a determination is made that
the
Employee shall not be entitled to any refund with respect to such
claim and
the Company does not notify the Employee in writing of its intent
to
contest such denial of refund prior to the expiration of 30 days
after such
determination, then any obligation of the Employee to repay such
advance
shall be forgiven and the amount of such advance shall offset,
-33-
to the extent thereof, the amount of Gross-Up Payment required to
be paid.
10. Confidential Information. The Employee shall
hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company
or any
of its Subsidiaries, and their respective businesses, which shall
have been
obtained by the Employee during the Employee's employment by the
Company or
any of its Subsidiaries and which shall not be or become public
knowledge
(other than by acts of the Employee or his representatives in
violation of
this Agreement). After the Date of Termination of the Employee's
employment with the Company, the Employee shall not, without the
prior
written consent of the Company, communicate or divulge any such
information, knowledge or data to anyone other than the Company and
those
designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Employee under
this
Agreement.
11. Successors.
(a) This Agreement is personal to the Employee and
without
the prior written consent of the Company shall not be assignable by
the
Employee otherwise than by will or the laws
-34-
of descent and distribution. This Agreement shall inure to the
benefit of
and be enforceable by the Employee's legal representatives or
Successor(s)
in Interest.
(b) This Agreement shall inure to the benefit of and
be
binding upon the Company and its successors and assigns.
(c) 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
assume
expressly 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. As used in this Agreement, "Company"
shall
mean the Company as hereinbefore defined and any successor to its
business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed
in
accordance with the laws of the State of Texas, without reference
to
principles of conflict of laws. The captions of this Agreement are
not
part of the provisions hereof and shall have no force or effect.
This
Agreement may not be
-35-
amended or modified otherwise than by a written agreement executed
by the
parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder
shall be
in writing and shall be given by hand delivery to the other party
or by
registered or certified mail, return receipt requested, postage
prepaid,
addressed as follows:
If to the Employee:
[Name and Address]
If to the Company:
Southwestern Public Service Company
SPS Tower
Tyler at 6th Street
Amarillo, Texas 79170
Attention: Vice President Human Resources/Personnel
or to such other address as either party shall have furnished to
the other
in writing in accordance herewith. Notice and communications shall
be
effective when actually received by the addressee.
(c) Whenever reference is made herein to any specific
plan or
program of the Company, to the extent that the Employee is not a
participant therein or has no benefit accrued
-36-
thereunder, whether vested or contingent, as of the Effective Date,
then
such reference herein shall be null and void and of no effect, and
the
Employee shall acquire no additional benefit as a result of such
reference.
(d) The invalidity or unenforceability of any
provision of
this Agreement shall not affect the validity or enforceability of
any other
provision of this Agreement.
(e) The Company may withhold from any amounts payable
under
this Agreement such Federal, state or local taxes as shall be
required to
be withheld pursuant to any applicable law or regulation.
(f) The Employee's failure to insist upon strict
compliance
with any provision hereof shall not be deemed to be a waiver of
such
provision or any other provision thereof.
(g) This Agreement contains the entire understanding
of the
Company and the Employee with respect to the subject matter hereof
but does
not supersede or override the provisions of any stock option,
employee
benefit or other plan, program, policy or practice in which
Employee is a
participant or under which Employee is a beneficiary.
-37-
(h) The Employee and the Company acknowledge that the
employment of the Employee by the Company prior to the Effective
Date is
"at will", and, prior to the Effective Date, may be terminated by
either
the Employee or the Company at any time. Upon a termination of the
Employee's employment or upon the Employee's ceasing to be an
officer of
the Company if the Employee was an officer when this Agreement was
executed, in each case, prior to the Effective Date, there shall be
no fur-
ther rights under this Agreement.
-38-
IN WITNESS WHEREOF, the Employee has hereunto set his
hand and,
pursuant to the authorization from its Board of Directors, the
Company has
caused these presents to be executed as of the day and year first
above
written.
_________________________________________
Name:
SOUTHWESTERN PUBLIC SERVICE COMPANY
By:_____________________________________
Attest:
___________________________
FORM OF
AMENDMENT TO EMPLOYMENT AGREEMENT
AGREEMENT, by and between Southwestern Public Service
Company, a New Mexico Corporation (the "Company"), and
_____________ (the "Employee"), dated as of the 21st day of
August 1995.
WHEREAS, the Company and the Employee have entered
into an employment agreement, dated as of July 28, 1995 (the
"Employment Agreement"), in order to assure fair treatment of
the Employee in a position, free from personal, financial and
employment considerations, to be able to assess objectively and
pursue aggressively the interests of the Company's stockholders
in making evaluations and carrying on negotiations regarding
offers, proposals or other transactions which could result in a
Change of Control; and
WHEREAS, the Company is considering entering into an
agreement and plan of reorganization with Public Service Com-
pany Colorado (the "Merger Agreement") providing for a "merger
of equals," after which the work locations, titles and report-
ing responsibilities may be altered for executives of both par-
ties in order to integrate the Company and Public Service Com-
pany Colorado into one business organization structured legally
in the form of a holding company with several subsidiary com-
panies; and
WHEREAS, in order to reflect the particular circum-
stances of the transaction provided for in the Merger Agree-
ment, the Company and the Employee wish to modify the Employ-
ment Agreement, as set forth in this Agreement, only to the
extent the Employment Agreement applies to a Change of Control
resulting from the Merger Agreement.
NOW, THEREFORE, the parties, in consideration of the
continued employment of the Employee, and for other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, intending to be legally bound, agree as
follows:
1. The following amendments are made to the Employ-
ment Agreement, but only to the extent the Employment Agreement
applies to a Change of Control resulting from approval by the
stockholders of the Company of the transaction contemplated in
the Merger Agreement Agreement or the closing of such merger
under the terms of the Merger Agreement.
a. Section 4(a)(i) of the Employment Agreement is
amended to read as follows:
-2-
"During the Employment Period, (A) the Employee
will
continue to be a corporate officer of the holding
company
resulting from the transactions contemplated in the
Merger
Agreement or one of its direct or indirect
principal
subsidiaries, with authority, duties and
responsibilities
which are at least commensurate in all material
respects
with the most significant of those held, exercised
and
assigned at any time during the 90-day period
immediately
preceding the Effective Date, and (B) the
Employee's
services shall be performed at either Amarillo,
Texas, or
Denver, Colorado, or their environs."
b. Section 4(c)(iii) of the Employment Agreement is
amended
to read as follows:
"Office and Support Staff. During the Employment
Period,
the Employee shall be entitled to an office or
offices and
to secretarial and other assistance commensurate
with his
position as a corporate officer of the holding
company
formed as a result of the Merger Agreement or one
of its
direct or indirect principal subsidiaries."
c. Section 5(c)(i) of the Employment Agreement is
amended to
read as follows:
"the assignment to the Employee of any duties
inconsistent
in any respect with the Employee's position as a
corporate
officer, authority, duties or responsibilities as
contemplated by Section 4(a)(i) of this Agreement,
or any
other action by the Company which results in a
diminution
in such position, authority, duties or
responsibilities,
excluding for this purpose an isolated,
insubstantial and
inadvertent action not taken in bad faith and which
is
remedied by the Company promptly after receipt of
notice
thereof given by the Employee;"
2. During the Employment Period, the Employee shall be
entitled to relocation assistance under the terms of the Company's
relocation assistance policy as in effect on the date hereof.
-3-
3. Except to the extent expressly modified in this
Agreement,
the terms of the Employment Agreement shall remain in full force
and
effect. The Agreement shall not amend or otherwise affect the
application
of the Employment Agreement with respect to any Change of Control
other
than a Change of Control referred to in paragraph 1 hereof.
4. Capitalized terms used herein and not defined shall
have
the meaning given to them in the Employment Agreement.
5. This Agreement together with the Employment
Agreement,
contains the entire understanding of the Company and the Employee
with
respect to the subject matter hereof, but does not supersede or
override
the provisions of any stock options, employee benefit or other
plan,
program, policy or practice in which the Employee is a participant
or under
which the Employee is a beneficiary.
6. This Agreement shall be governed by and construed
in
accordance with the laws of the State of Texas, without reference
to
principles of conflict of laws.
IN WITNESS WHEREOF, the Employee has hereunto set his
hand and,
pursuant to the authorization from its Board of Directors, the
Company has
caused this Agreement to be executed as of the day and year first
above
written.
________________________________
Name:
SOUTHWESTERN PUBLIC SERVICE
COMPANY
By:
_______________________________
Name:
Title:
Attest:
By: _______________________
SOUTHWESTERN PUBLIC SERVICE COMPANY
FORM OF AMENDMENT NO. 2 TO
EMPLOYMENT AGREEMENT
The Employment Agreement made on July 28, 1995 (the
"Employment Agreement"), between Southwestern Public Service
Company, a New Mexico corporation (the "Company"), and
_______________, an employee of the Company (the "Employee")
for good and valuable consideration, is hereby amended effec-
tive as of October 19, 1995, as follows:
A. The last full paragraph of Section 5(c) of the
Employment Agreement is deleted in its entirety, and the fol-
lowing paragraph is substituted therefor:
"For purposes of this Section 5(c), any
good-faith determination of "Good Reason" made by the
Employee shall be conclusive. Anything in this
Agreement to the contrary notwithstanding, a termina-
tion by the Employee for any reason during the 30-day
period immediately following the first anniversary of
a Change of Control described in Section 2(a), (b),
or (d) hereof or the consummation of a transaction
approved by the Stockholders as described in Section
2(c) hereof shall be deemed to be a termination for
Good Reason for all purposes of this Agreement."
B. Except as amended hereby, the provisions of the
Employment Agreement shall remain in full force and effect.
In witness whereof, the Company has caused this
Amendment No. 2 to the Employment Agreement to be duly executed
by its officers thereunto duly authorized, and the Employee has
hereunto set his or her hand as of October 19, 1995.
Corporate Seal Southwestern Public Service
Company
Attest: By:_________________________
Name:
Title:
____________________
_________________________
Employee