Exhibit 10(D)
CHANGE IN CONTROL AGREEMENT
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THIS AGREEMENT, dated May 21, 2001, is made by and between Sierra
Pacific Resources, a Nevada corporation (the "Company"), and John E. Brown
(the "Executive").
WHEREAS, the Company considers it essential to the best interests of
its stockholders to foster the continued employment of key management
personnel; and
WHEREAS, the Board recognizes that, as is the case with many publicly
held corporations, the possibility of a Change in Control exists and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the management of the Company and its subsidiaries (collectively,
"Sierra"), including the Executive, to their assigned duties without
distraction in the face of potentially dasturbing circumstances arising from
the possibility of a Change in Control;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definitions of capitalized terms used in this
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Agreement are provided in the last Section hereof.
2. Term of Agreement. The term of this Agreement shall commence on
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the date hereof and shall continue in effect through December 31, 2004;
provided, however, that if a Change in Control shall have occurred during the
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Term, the Term shall expire no earlier than twenty-four (24) months beyond the
month in which such Change in Control occurred; and further provided, however,
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that if a Potential Change in Control shall have occurred during the Term, the
Term shall expire no earlier than the later of (a) December 31, 2004, (b) the
date on which such potential Change in Control shall have been terminated, or
(c) 24 months beyond the
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date on which such potential Change in Control shall have resulted in a Change
of Control.
3. Company's Covenants Summarized. In order to induce the Executive
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to remain if the employ of Sierra and in consideration of the Executive's
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the Severance Payments and
the other payments and benefits described herein. Except as provided in Section
9.1 hereof, no Severance Payments shall be payable under this Agreement unless
there shall have been (or, under the terms of the second sentence of Section
6.1 hereof, there shall be deemed to have been) a termination of the
Executive's employment with Sierra following a Change in Control or potential
Change in Control and during the Term. This Agreement shall not be construed as
creating an express or implied contract of employment and, except as otherwise
agreed in writing between the Executive and Sierra, the Executive shall not
have any right to be retained in the employ of Sierra. The obligations of the
Company hereunder shall be deemed satisfied to the extent payments are made by
Sierra Pacific Power, Nevada Power, or any affiliate of the Company or any
successor to the Company or any sucessor to any affiliate of the Company.
4. The Executive's Covenants. The Executive agrees that, subject to
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the terms and conditions of this Agreement, in the event of a Potential Change
in Control during the Term, the Executive will remain in the employ of the
Company until the earliest of (i) a date which is six (6) months from the date
of such Potential Change of Control, (ii) the date of a Change in Control,
(iii) the date of termination by the Executive of the Executive's employment
for Good Reason or by reason of death, Disability or Retirement, or (iv) the
termination by Sierra of the Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
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5.1 Following a Change in Control or potential Change in Control and
during the Term, during any period that the Executive fails to perform the
Executive's full-time duties with Sierra as a result of incapacity due to
physical or mental illness, the Company shall pay the Executive's full salary
to the Executive at the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the Executive under the
terms of any compensation or benefit plan, program or arrangement maintained by
Sierra during such period, until the Executive's employment is terminated by
Sierra for Disabilitq.
5.2 If the Executive's employment shall be terminated for any reason
following a Change in Control or potential Change in Control and during the
Term, the Company shall pay the Executive's full salary to the Executive
through the Date of Termination at the rate in effect immediately prior to the
Date of Termination or, if higher, the rate in effect immediately prior to the
first occurrence of an event or circumstance constituting Good Reason, together
with all compensation and benefits
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payable to the Executive through the Date of Termination under the terms of
Sierra compensation and benefit plans, programs or arrangements as in effect
immediately prior to the Date of Termination or, if more favorable to the
Executive, as in effect immediately prior to the first occurrence of an event
or circumstance constituting Good Reason.
5.3 If the Executive's employment shall be terminated for any
reason following a Change in Control or Potential Change in Control and during
the Term, the Company shall pay to the Executive the Executive's normal
post-termination compensation and benefits (other than any severance payments
forgone under Section 6.1a) as such payments become due, provided that the
Executive is eligible or entitled to such compensation and benefits under the
terms and conditions of any such plan or program in effect and provided further
that the Executive fully complied with all conditions and requirements of any
such plan or program, and provided further that such payments or benefits are
not otherwise precluded under the terms of this Agreement. Such post-termination
compensation and benefits shall be determined under, and paid in accordance
with, Sierra's retirement, insurance and other compensation or benefit plans,
programs and arrangements as in effect immediately prior to the Date of
Termination or, if more favorable to the Executive, as in effect immediately
prior to the occurrence of the first event or circumstance constituting Good
Reason.
6. Severance Payments.
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6.1 Subject to Section 6.2 hereof, and subject to the limitations
specified in Sections 15.G.V, 15.O, in the case of an impacted Executive which
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provisions shall control over the provisions of these Sections 6.1 and 6.2 if
the Executive's employment is terminated following a Change in Control or
Potential Change in Control and during the Term, other than (A) by Sierra for
Cause, (B) by reason of death or Disability, or (C) by the Executive without
Good Reason, then Sierra shall pay the Executive the amounts, and provide the
Executive the benefits, described in this Section 6.1 ("Severance Payments"),
in addition to any payments and benefits to which the Executive is entitled
under Section 5 hereof. For purposes of this Agreement, the Executive's
employment shall be deemed to have been terminated following a Change in
Control by Sierra without Cause or by the Executive with Good Reason, if (i)
the Executive's employment is terminated by Sierra without Cause prior to a
Change in Control (whether or not a Change in Control ever occurs) and such
termination was at the request or direction of a Person who has entered into an
agreement with the Company the consummation of which would constitute a Change
in Control, (ii) the Executive terminates his employment for Good Reason prior
to a Change in Control (whether or not a Change in Control ever occurs) and the
circumstance or event which constitutes Good Reason occurs at the request or
direction of such Person, or (iii) the Executive's employment is terminated by
Sierra without Cause or by the Executive for Good Reason and such termination
or the circumstance or event which constitutes Good Reason is otherwise in
connection with or in anticipation of a
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Change in Control (whether or not a Change in Control ever occurs). For
purposes of any determination regarding the applicability of the immediately
preceding sentence, any position taken by the Executive shall be presumed to be
correct undess the Company establishes to the Board by clear and convincing
evidence that such position is not correct.
(A) In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination and in lieu of any severance
benefit otherwise payable to the Executive under or pursuant to any
contract or plan, except for any severance benefits relating to or
resulting from the Supplemental Executive Retirement Plan (provided the
Executive is a participant in the Plan), whether as a consequence of a
Change in Control or otherwise, and subject to the provisions of Section
6.2(a), the Company shall pay to the Executive a lump sum severance
payment, in cash, equal to two times the sum of (i) the Executive's base
salary as in effect immediately prior to the Date of Termination or, if
higher, in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, and (ii) the target annual cash
incentive award applicable to the Executive pursuant to any annual cash
bonus or annual cash incentive plan maintained by Sierra in respect of the
fiscal year ending immediately prior to the fiscal year in which occurs
the Date of Termination or, if higher, immediately prior to the fiscal
year in which occurs the first event or circumstance constituting Good
Reason.
(B) For the twenty-four (24) month period immediately following
the Date of Termination, the Company shall arrange to provide the
Executive and his dependents life, disability, accident and health
insurance benefits substantially similar to those provided to the
Executive and his dependents immediately prior to the Date of Termination
or, if more favorable to the Executive, those provided to the Executive
and his dependents immediately prior to the first occurrence of an event
or circumstance constituting Good Reason, at no greater cost to the
Executive than the cost to the Executive immediately prior to such date or
occurrence; provided, however, that, unless the Executive consents to a
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different method (after taking into account the effect of such method on
the calculation of "parachute payments" pursuant to Section 6.2 hereof),
such health insurance benefits shall be provided through a third-party
insurer. Benefits otherwise receivable by the Executive pursuant to this
Section 6.1(B) shall be reduced to the extent benefits of the same type
are received by or made available to the Executive during the twenty-four
(24) month period following the Executive's termination of employment (and
any such benefits received by or made available to the Executive shall be
reported to the Company by the Executive); provided, however, that the
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Company shall reimburse the Executive for the excess, if any, of the cost
of such benefits to the Executive over such cost immediately prior to the
Date of Termination or, if more favorable to the Executive, the first
occurrence of an event or circumstance constituting Good Reason. If the
Severance Payments
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shall be decreased pursuant to Section 6.2 hereof, and the Section 6.1(B)
benefits which remain payable after the application of Section 6.2 hereof
are thereafter reduced pursuant to the immediately preceding sentence, the
Company shall, no later than five (5) business days following such
reduction, pay to the Executive the least of (a) the amount of the
decrease made in the Severance Payments pursuant to Section 6.2 hereof,
(b) the amount of the subsequent reduction in these Section 6.1(B)
benefits, or (c) the maximum amount which can be paid to the Executive
without being, or causing any other payment to be, nondeductible by reason
of Section 280G of the Code.
(C) Notwithstanding any provision of any annual or long-term
incentive plan to the contrary, the Company shall pay to the Executive a
lump sum amount, in cash, equal to the sum of (i) any unpaid incentive
compensation which has been allocated or awarded to the Executive for a
completed fiscal year or other measuring period preceding the Date of
Termination under any such plan and which, as of the Date of Termination,
is contingent only upon the continued employment of the Executive to a
subsequent date, and (ii) a pro rata portion to the Date of Termination of
the aggregate value of all contingent incentive compensation awards to the
Executive for all then uncompleted periods under any such plan, calculated
as to each such award by multiplying the award that the Executive would
have earned on the last day of the performance award period, assuming the
achievement, at the target level of the individual and corporate
performance goals established with respect to such award, by the fraction
obtained by dividing the number of full months and any fractional portion
of a month during such performance award period through the Date of
Termination by the total number of months contained in such performance
award period.
(D) In addition to the retirement benefits to which the Executive
is entitled under each Pension Plan or any successor plan thereto, the
Company shall pay the Executive a lump sum amount, in cash, equal to the
excess of (i) the actuarial equivalent of the aggregate retirement pension
(taking into account any early retirement subsidies associated therewith
and determined as a straight life annuity commencing at the date (but in
no event earlier than the third anniversary of the Date of Termination) as
of which the actuarial equivalent of such annuity is greatest) which the
Executive would have accrued under the terms of all Pension Plans (without
regard to any amendment to any Pension Plan made subsequent to a Change in
Control and on or prior to the Date of Termination, which amendment
adversely affects in any manner the computation of retirement benefits
thereunder), determined as if the Executive were fully vested thereunder
and had accumulated (after the Date of Termination) twenty-four (24)
additional months of service credit thereunder and had been credited under
each Pension Plan during such period with compensation equal to the
Executive's compensation (as defined in such Pension Plan) during the
twelve (12) months immediately preceding the Date of Termination gr, if
higher, during
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the twelve months immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, over (ii) the actuarial equivalent
of the aggregate retirement pension (taking into account any early
retirement subsidies associated therewith and determined as a straight
life annuity commencing at the date (but in no event earlier than the Date
of Termination) as of which the actuarial equivalent of such annuity is
greatest) which the Executive had accrued pursuant to the provisions of
the Pension Plans as of the Date of Termination. For purposes of this
Section 6.1(D), "actuarial equivalent" shall be determined using the same
assumptions utilized under the Sierra Pacific Power Company Retirement
Plan immediately prior to the Date of Termination. or, if more favorable
to the Executive, immediately prior to the first occurrence of an event or
circumstance constituting Good Reason.
(E) If the Executive would have become entitled to benefits under
Sierra's post-retirement health care or life insurance plans, as in effect
immediately prior to the Date of Termination or, if more favorable to the
Executive, as in effect immediately prior to the first occurrence of an
event or circumstance constituting Good Reason, had the Executive's
employment terminated at any time during the period of twenty-four (24)
months after the Date of Termination, the Company shall provide such
post-retirement health care or life insurance benefits to the Executive
and the Executive's dependents commencing on the later of (i) the date on
which such coverage would have first become available and (ii) the date on
which benefits described in subsection (B) of this Section 6.1 terminate.
6.2 (A) Notwithstanding any other provisions of this Agreement, in
the event that any payment or benefit received or to be received by the
Executive in connection with a Change in Control or the termination of the
Executive's employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any Person whose actions
result in a Change in Control or any Person affiliated with the Company or such
Person) (all such payments and benefits, including the Severance Payments,
being hereinafter called "Total Payments") would be subject (in whole or part),
to the Excise Tax, then, after taking into account any reduction in the Total
Payments provided by reason of section 280G of the Code in such other plan,
arrangement or agreement, the cash Severance Payments shall first be reduced,
and the non-cash Severance Payments shall thereafter be reduced, to the extent
necessary so that no portion of the Total Payments is subject to the Excise Tax
but only if (A) the net amount of such Total Payments, as so reduced (and after
subtracting the net amount of federal, state and local income taxes on such
reduced Total Payments) is greater than or equal to (B) the net amount of such
Total Payments without such reduction (but after subtracting the net amount of
federal, state and local income taxes on such Total Payments and the amount of
Excise Tax to which the Executive would be subject in respect of such unreduced
Total Payments); provided, however, that the Executive may elect to have the
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non-cash Severance Payments reduced (or eliminated) prior to any reduction of
the cash Severance Payments.
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(B) For purposes of determining whether and the extent to which
the Total Payments will be subject to the Excise Tax, (i) no portion of the
Total Payments the receipt or enjoyment of which the Executive shall have
waived at such time and in such manner as not to constitute a "payment" within
the meaning of Section 280G(b) gf the Code shall be taken into account, (ii) no
portion of the Total Payments shall be taken into account which, in the opinion
of tax counsel ("Tax Counsel") reasonably acceptable to the Executive and
selected by the accounting firm (the "Auditor") which was, immediately prior to
the Change in Control, the Company's independent auditor, does not constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code
(including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating
the Excise Tax, no portion of such Total Payments shall be taken into account
which, in the opinion of Tax Counsel, constitutes reasonable compensation for
services actually rendered, within the meaning of Section 280G(b)(4)(B) of the
Code, in excess of the Base Amount allocable to such reasonable compensation,
and (iii) the value of any non-cash benefit or any deferred payment or benefit
included in the Total Payments shall be determined by the Auditor in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code.
(C) At the time that payments are made under this Agreement, the
Company shall provide the Executive with a written statement setting forth the
manner in which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other advice the
Company has received from Tax Counsel, the Auditor or other advisors or
consultants (and any such opinions or advice which are in writing shall be
attached to the statement). If the Executive objects to the Company's
calculations, the Company shall pay to the Executive such portion of the
Severance Payments (up to 100% thereof) as the Executive with concurrence of
tax counsel determine are necessary to result in the proper application of
subsection A of this Section 6.2.
6.3 The payments provided in subsections (A), (C) and (D) of Section
6.1 hereof shall be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments, and the
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limitation on such payments set forth in Section 6.2 hereof, cannot be finally
determined on or before such day, the Company shall pay to the Executive on
such day an estimate, as determined in good faith by the Executive of the
minimum amount of such payments to which the Executive is clearly entitled, but
in no event to exceed two times the sum of base pay and target annual cash
incentive, and shall pay the remainder of such payments (together with interest
on the unpaid remainder (or on all such payments to the extent the Company
fails to make such payments when due) at 120% of the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but
in no event later than the thirtieth (30th) day after the Date of Termination.
In the eveft that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a loan
by the Company to the Executive, payable
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on the fifth (5th) business day after demand by the Company (together with
interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code).
6.4 The Company also shall pay to the Executive all legal fees and
expenses incurred by the Executive in disputing in good faith any issue
hereunder relating to the termination of the Executive's employment, in seeking
in good faith to obtain or enforce any benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code to any payment or
benefit provided hereunder. Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
6.5 Notwithstanding any other provision of this agreement, except as
otherwise permitted by this Agreement, if the Executive is entitled to and
claims benefits under or pursuant to any other change in control agreement
entered into between Company or Sierra and the executive, or any terms or
conditions thereunder, the executive shall not be entitled to any of the
severance benefits or any other benefits under this agreement or terms or
conditions of this agreement.
7. Termination Procedures and Compensation During Dispute.
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7.1 Notice of Termination. After a Change in Control or potential
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Change in Control and during the Term, any purported termination of the
Executive's employment (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party hereto
in accordance with Section 10 hereof. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
Further, a Notice of Termination for Cause is required to include a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive was guilty of
conduct set forth in clause (i) or (ii) of the definition of Cause herein, and
specifying the particulars thereof in detail.
7.2 Date of Termination. "Date of Termination," with respect to any
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purported termination of the Executive's employment after a Change in Control
or potential Change in Control and during the Term, shall mean (i) if the
Executive's employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Executive shall not have
returned to the full-time performance of the Executive's duties during such
thirty (30) day period), and (ii) if
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the Executive's employment is terminated for any other reason, the date
specified in the Notice of Termination (which, in the case of a termination by
Sierra, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, from the date such Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15) days after
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any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be extended
until the earlier of (i) the date on which the Term ends or (ii) the date on
which the dispute is finally resolved, either by mutual written agreement of
the parties or by a final judgment, order or decree of an arbitrator or a court
of competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended for a period
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not to exceed six months by a notice of dispute given by the Executive and then
only if such notice is given in good faith and the Executive pursues the
resolution of such dispute with reasonable diligence and agrees to reimburse
the Company for all compensation received from and after the date of
termination specified in Section 7.2 in the event the dispute is not resolved
in the Executive's favor.
7.4 Compensation During Dispute. If a purported termination occurs
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following a Change in Control or potential Change in Control and during the
Term and the Date of Termination is extended in accordance with Section 7.3
hereof, the Company shall continue to pay the Executive the full compensation
in effect when the notice giving rise to the dispute was given (including, but
not limited to, salary) and continue the Executive as a participant in all
compensation, benefit and insurance plans in which the Executive was
participating when the notice giving rise to the dispute was given, until the
Date of Termination, as determined in accordance with Section 7.3 hereof.
Amounts paid under this Section 7.4 are in addition to all other amounts due
under this Agreement (other than those due under Section 5.2 hereof) and shall
not be offset against or reduce any other amounts due under this Agreement,
except that if the notice of dispute is given by the Executive and the term is
extended pursuant to Section 7.3 beyond the date specified in accordance with
Section 7.2 and the Executive does not prevail in his dispute, Executive shall
reimburse to and refund to the Company all compensation paid after the
termination date specified in Section 7.2.
8. No Mitigation. The Company agrees that, if the Executive's
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employment with Sierra terminates during the Term, the Executive is not
required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6 hereof or
Section 7.4 hereof. Further, the amount of any payment or benefit provided for
in this Agreement (other
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than Section 6.1(B) hereof) shall not be reduced by any compensation earned by
the Executive as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by the Executive to
the Company, or otherwise.
9. Successors; Binding Agreement.
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9.1 In addition to any obligations imposed by law upon any successor
to the Company, the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for
Good Reason after a Change in Control, except that, for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.2 This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death
of the Executive) if the Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the executors, personal representatives or administrators of
the Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
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communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed, if to
the Executive, to the address inserted below the Executive's signature on the
final page hereof and, if to the Company, to the address set forth below, or to
such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be
effective only upon actual receipt:
To the Company:
Sierra Power Resources
6226 West Sahara Avenue
Las Vegas, Nevada 89146
Attention: General Counsel
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11. Miscellaneous. No provision of this Agreement may be modified,
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waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company, acting through such
officer as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or of any
lack of compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. This
Agreement supersedes any other agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof which
have been made by either party; provided, however, that this Agreement shall
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supersede any agreement setting forth the terms and conditions of the
Executive's employment with Sierra only in the event that the Executive's
employment with Sierra is terminated on or following a Change in Control or
potential Change in Control, by Sierra other than for Cause or by the Executive
other than for Good Reason. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Nevada. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law and any additional withholding to which the
Executive has agreed. The obligations of the Company and the Executive under
this Agreement which by their nature may require either partial or total
performance after the expiration of the Term (including, without limitation,
those under Sections 6 and 7 hereof) shall survive such expiration.
12. Validity.
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12.1 The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in several
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counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. Settlement of Dispute; Arbitration.
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14.1 All claims by the Executive for benefits under this Agreement
shall be directed to and determined by the Board and shall be in writing. Any
denial by the Board of a claim for benefits under this Agreement shall be
delivered to the Executive in writing and shall set forth the specific reasons
for the denial and the specific provisions of this Agreement relied upon. The
Board shall afford a reasonable opportunity to the Executive for a review of
the decision denying a claim and shall further allow the Executive to appeal to
the Board a decision of the Board
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within sixty (60) days after notification by the Board that the Executive's
claim has been denied.
14.2 Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Las Vegas, Nevada in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the evidentiary standards
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set forth in this Agreement shall apply. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Notwithstanding any
provision of this Agreement to the contrary, the Executive shall be entitled to
seek specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
15. Definitions. For purposes of this Agreement, the following terms
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shall have the meanings indicated below:
(A) "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act or any successor replacement
rule.
(B) "Auditor" shall have the meaning set forth in Section 6.2 hereof.
(C) "Base Amount" shall have the meaning set forth in Section
280G(b)(3) of the Code.
(D) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
(E) "Board" shall mean the Board of Directors of the Company.
(F) "Cause" for termination by Sierra of the Executive's employment
shall mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with Sierra (other than any such
failure resulting from the Executive's incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of a
Notice of Termination for Good Reason by the Executive pursuant to Section 7.1
hereof) after a written demand for substantial performance is delivered to the
Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed the
Executive's duties, or (ii) the willful engaging by the Executive in conduct
which is demonstrably and materially injurious to Sierra, monetarily or
otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act,
or failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive not in good faith and without
reasonable belief that the Executive's act, or failure to act, was in the best
interest of Sierra and (y) in the event of a dispute concerning the application
of this provision, no claim by Sierra
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that Cause exists shall be given effect unless Sierra establishes to the Board
by clear and convincing evidence that Cause exists.
(G) A "Change in Control" shall be deemed to have occurred if the
event set forth in any one of the following paragraphs shall have occurred:
(I) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its affiliates) representing 30% or more
of the combined voting power of the Company's then outstanding
securities, excluding any Person who becomes such a Beneficial Owner
in connection with a transaction described in clause (i) of paragraph
(III) below; or
(II) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is
in connection with an actual or threatened election coftest,
including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or election
by the Board or nomination for election by the Company's stockholders
was approved or recommended by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors on the
date hereof or whose appointment, election or nomination for election
was previously so approved or recommended; or
(III) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any
other corporation, other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or
any subsidiary of the Company, at least 66.66% of the combined voting
power of the securities of the Company or such surviving entity or
any parent thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired
directly from the Company or its Affiliates other than in connection
with the acquisition by the Company
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or its Affiliates of a business) representing 30% or more of the
combined voting power of the Company's then outstanding securities;
or
(IV) the stockholders of the Company or a court or regulatory
agency having jurisdiction over the matter approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for or a court or regulatory agency having jurisdiction
over the matter approves the sale or disposition by the Company of
all or substantially all of the Company's assets, other than a sale
or disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 66.66% of the combined voting
power of the voting securities of which are owned by stockholders of
the Company in substantially the same proportions as their ownership
of the Company immediately prior to such sale.
(V) As to and with respect only to Impacted Executives as
defined in Section 15.O, there is (a) consummated a sale of a
majority of the issued and outstanding stock of Sierra Pacific Power
Company or Nevada Power Company, and/or there is consummated an
agreement for the sale or disposition by Sierra Pacific Power Company
or Nevada Power Company of all or substantially all of either of
their assets, or a plan of complete liquidation or dissolution or
sale or disposition of all or substantially all of the assets of
either Sierra Pacific Power Company or Nevada Power Company is
approved or adopted by the stockholders or any court or agency having
jurisdiction over the matter, and (b) in addition the event is not an
event which is also described in or otherwise satisfies the
requirements of Sections G(I) through (IV).
Notwithstanding the foregoing, except for Section G(IV) or (V) described
above, a "Change in Control" shall not be deemed to have occurred by virtue of
the consummation of any transaction or series of integrated transactions
immediately following which the record holders of the common stock of the
Company immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions.
(H) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(I) "Company" shall mean Sierra Pacific Resources and, except in
determining under Section 15(G) hereof whether or not any Change in Control of
the Company has occurred, shall include any successor to its business and/or
assets
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which assumes and agrees to perform this Agreement by operation of law, or
otherwise.
(J) "Date of Termination" shall have the meaning set forth in Section
7.2 hereof.
(K) "Disability" shall be deemed the reason for the termination by
Sierra of the Executive's employment, if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with Sierra for
a period of six (6) consecutive months, Sierra shall have given the Executive a
Notice of Termination for Disability, and, within thirty (30) days after such
Notice of Termination is given, the Executive shall not have returned to the
full-time performance of the Executive's duties.
(L) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
(M) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(N) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express written
consent) after any Change in Control, or prior to a Change in Control under the
circumstances described in clauses (ii) and (iii) of the second sentence of
Section 6.1 hereof (treating all references in paragraphs (I) through (VII)
below to a "Change in Control" as references to a "Potential Change in
Control"), of any one of the following acts by Sierra, or failures by Sierra to
act, unless, in the case of any act or failure to act described in paragraphs
(I), (IV), (V) or (VI) below, such act or failure to act is corrected prior to
the Date of Termination specified in the Notice of Termination given in respect
thereof:
(I) the assignment to the Executive of any duties substantially
below the Executive's status as a senior executive officer of Sierra
or a substantial adverse reduction in the nature or status of the
Executive's responsibilities from those in effect immediately prior
to the Change in Control other than any such alteration primarily
attributable to the fact that the Company may no longer be a public
company;
(II) a reduction by Sierra in the Executive's annual base salary
as in effect on the date hereof or as the same may be increased from
time to time except for across-the-board salary reductions similarly
affecting all senior executives of Sierra and all senior executives
of any Person in control of Sierra;
(III) the failure by Sierra to pay to the Executive any portion
of the Executive's current compensation except pursuant to an
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across-the-board compensation deferral or good faith reduction in
compensation necessitated by unfavorable exigent business conditions
or circumstances similarly affecting all senior executives of Sierra
and all senior executives of any Person in control of Sierra, or to
pay to the Executive any portion of an installment of deferred
compensation under any deferred compensation program of Sierra,
within thirty (30) days of the date such compensation as due;
(IV) the failure by Sierra to continue in effect any
compensation plan in which the Executive participates immediately
prior to the Change in Control which is material to the Executive's
total compensation, including but not limited to the Company's
Officer and Senior Managers Annual Incentive Plan, Executive
Long-Term Incentive Plan, Long-Term Performance Share Program and
Stock Option Plan or any substitute plans adopted prior to the Change
in Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such
plan, or the failure by Sierra to continue the Executive's
participation therein (or in such substitute or alternative plan) on
a basis not materially less favorable, both in terms of the amount or
timing of payment of benefits provided and the level of the
Executive's participation relative to other participants, as existed
immediately prior to the Change in Control;
(V) the failure by Sierra to continue to provide the Executive
with benefits substantially similar tg those enjoyed by the Executive
under any of Sierra's pension, savings, life insurance, medical,
health and accident, or disability plans in which the Executive was
participating immediately prior to the Change in Control (except for
across the board changes similarly affecting all senior executives of
Sierra and all senior executives of any Person in control of Sierra),
the taking of any other action by Sierra which would directly or
indirectly materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the Executive at
the time of the Change in Control, or the failure by Sierra to
provide the Executive with substantially the same number of paid
vacation days to which the Executive is entitled on the basis of
years of service with Sierra in accordance with Sierra's normal
vacation policy in effect at the time of the Change in Control; or
(VI) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 7.1 hereof; for purposes of this
Agreement, no such purported termination shall be effective.
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The Executive's right to terminate the Executive's employment for
Good Reason shall not be affected by the Executive's incapacity due to physical
or mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
For purposes of any determination regarding the existence of Good
Reason, any claim by the Executive that Good Reason exists shall be presumed to
be correct unless the Company establishes to the Board by clear and convincing
evidence that Good Reason does not exist.
(O) "Impacted Executive" shall mean (1) an Executive other than an
Executive defined in Section O(2) whose employment is terminated within the
term for reasons other than cause, following an Event described in Section
15.G.(V), or (2) an Executive who following an Event described in Section
15.G(V) accepts or refuses to accept offered employment with the successor to
the entity, business, or assets of Sierra Pacific Power Company or Nevada Power
Company. An Impacted Executive is entitled to receive Impacted Executive
Compensation.
(P) "Impacted Executive Compensation." If the Executive is an
Impacted Executive as defined in Section O(1), he shall receive the
compensation specified in Sections 5 and 6 in strict accordance with their
terms and conditions. If the Executive is an Impacted Executive as defined in
Section (2), then the lump sum severance payment specified in Section 6.1(a)
shall be limited to two times the difference between (a) the sum of the
Executive's base salary as in effect immediately prior to the date the
Executive became an Impacted Executive and the target annual tax bonus or
incentive applicable to the Executive in respect of the fiscal year immediately
prior to the fiscal year in which the Executive became an Impacted Executive,
and (b) the sum of the Executive's base salary and target annual cash incentive
offered by the successor.
(Q) "Notice of Termination" shall have the meaning set forth in
Section 7.1 hereof.
(R) "Pension Plan" shall mean any tax-qualified, supplemental or
excess benefit pension plan maintained by Sierra and any other plan or
agreement entered into between the Executive and Sierra which is designed to
provide the Executive with supplemental or additional retirement benefits or
credits.
(S) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affilaates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
17
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
(T) "Potential Change in Control" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have occurred:
(I) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;
(II) the Company or any Person publicly announces an intention
to take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(III) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 15% or more of
either the then outstanding shares of common stock of the Company or
the combined voting power of the Company's then outstanding
securities (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or its
affiliates); or
(IV) any of the items in R(I) through (III) occurs which is
connected with, arises out of, is caused by, or results from another
Potential Change in Control.
(U) "Retirement" shall be deemed the reason for the termination by
the Executive of the Executive's employment if such employment is terminated in
accordance with Sierra's retirement policy, including early retirement,
generally applicable to its salaried employees.
(V) "Severance Payments" shall have the meaning set forth in Section
6.1 hereof.
(W) "Tax Counsel" shall have the meaning set forth in Section 6.2
hereof.
(X) "Term" shall mean the period of time described in Section 2
hereof (including any extension, continuation or termination described
therein).
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(Y) "Total Payments" shall mean those payments so described in
Section 6.2 hereof.
Sierra Pacific Resources
By:__________________________________
Walter M. Higgins
Chairman, President & CEO
______________________________________
John E. Brown
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