Exhibit 10(B)
SEVERANCE AND RELEASE AGREEMENT
PARTIES
The parties to this Severance and Release Agreement ("Agreement") are
Sierra Pacific Resources and its affiliates, Nevada Power Company and Sierra
Pacific Power Company (collectively referred to as "Company"), and William E.
Peterson ("Employee").
RECITALS
a. Employee currently holds the positions of Senior Vice-President,
General Counsel and Corporate Secretary with Company. This Agreement
is not based upon any change in control or in the ownership of a
substantial portion of the Company's assets.
b. Employee has had access to Confidential Information, as
hereinafter defined. Employee has occupied a position of trust
and confidence with respect to such Confidential Information.
c. Employee and Company desire to terminate the employment relationship
presently existing between them and to enter into an independent
contractor attorney client relationship on terms and conditions as
hereinafter set forth.
d. This Agreement provides Employee and Company with rights and
benefits that exceed the rights and benefits contained in the
existing Employment Agreement (as defined below) and is adequate
consideration for this Agreement.
TERMS OF AGREEMENT
1. DEFINED TERMS
1.1 "Competing Organization" means persons or organizations, including
Employee, engaged in, or who may become engaged in, research or
development, production, distribution, marketing, providing or
selling of a Competing Product or Service.
1.2 "Competing Products or Services" means products, processes, or
services of any person or organization, other than Company, in
existence or under development, which are substantially the same as
or which compete with the products, processes, or services being
developed, manufactured, or sold by Company during the time of
Employee's employment with Company, including, but not limited to,
products, processes and services related to the generation,
transmission, or distribution of electric energy and/or the buying,
selling, scheduling of electric energy or capacity, or any risk
management activities associated therewith.
1.3 "Restricted Area" means the State of Nevada and the service
territories of the Company.
1.4 "Confidential Information" means any plan, specification, pattern,
procedure, profile, design, device, list, compilation, data, or
information relating to the present or planned business of Company
which has not been released publicly by authorized representatives
of Company, or which is not common to industry practice, including,
but not limited to trade secrets as defined in NRS 600A.010, et seq.
Confidential Information may include inventions; marketing and sales
plans or programs; customer and supplier information; financial
data; purchasing, pricing, or supply information; product
engineering information; technological know-how; designs, plans or
specifications regarding products and materials; manufacturing
processes and techniques; regulatory approval strategies; computer
programs, data, formulae and compositions; service techniques and
protocols; and new product strategies, plans and designs.
Confidential Information also includes information that if
disclosed, could negatively affect the Company's reputation and it's
relationship with business, governmental agencies and customers.
Confidential Information includes all information received by
Company under an obligation of confidentiality to a third party.
1.5 "Employment Agreement" means all previous agreements, express or
implied, between Company and Employee, including change in control
or letter agreements.
1.6 "STIP" means short-term cash incentive payment.
1.7 "SERP" means Supplemental Executive Retirement Plan.
2. TERMINATION OF PRESENT EMPLOYMENT
2.1 Employee agrees to forego retirement at the present time and remain
with Company and discharge each and every of his present duties and
responsibilities until such time as Company finds a replacement
satisfactory to Company or February 1, 2003, whichever date occurs
sooner ("Termination Date").
2.2 Until the Termination Date, Employee shall receive the compensation
and benefits to which he is presently entitled or may become
entitled
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without change or alteration. Any accrued and unused Paid Time Off
will be included in Employee's final paycheck.
3. SERVICES AS INDEPENDENT CONTRACTOR
3.1 After the Termination Date, Company will retain Employee as outside
counsel. Employee shall be entitled to compensation as follows:
3.1.1 Employee shall perform legal and other services for Company as
directed by managerial level employees of Company for the
first twelve months following the Termination Date ("First
Twelve Month Period") in an amount not less than 1000 hours at
an hourly rate of $300.00 per hour (exclusive of actual
costs). This provision shall be subject to satisfactory and
timely performance by Employee within accepted standards of
professional practice.
3.1.2 Employee shall perform legal and or other services for Company
as directed by managerial level employees of Company for the
twelve-month period following the First Twelve-Month Period
("Second Twelve-Month Period") in an amount not less than 1000
hours at an hourly rate of $325.00 per hour (exclusive of
actual costs). This provision shall be subject to satisfactory
and timely performance by Employee within accepted standards
of professional practice.
3.1.3 Employee shall perform legal and or other services for Company
as directed by managerial level employees of Company for the
twelve-month period following the Second Twelve-Month Period
("Third Twelve-Month Period") in an amount not less than 1000
hours at an hourly rate of $350.00 per hour (exclusive of
actual costs). This provision shall be subject to satisfactory
and timely performance by Employee within accepted standards
of professional practice.
3.1.4 Billings shall occur monthly and payment shall be made 30 days
after billing.
3.1.5 Hours above 1000 hours for the First Twelve Month Period shall
not be credited against the 1000 minimum hours for the Second
or Third Twelve-Month Periods and hours above the minimum for
the Second Twelve-Month Period shall not be credited against
the 1,000 minimum hours for the Third Twelve-Month Period.
Should the minimum hours not be billed after the First
Twelve-Month Period or the Second Twelve-Month Period or the
Third Twelve-Month Period, then Employee shall remit a bill
for the full amount of any deficiency in the first month
following
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the end of the First and Second or Third Twelve-Month Periods,
respectively.
4. BENEFITS TO EMPLOYEE
Commencing on the Termination Date, Employee shall be entitled to the
following benefits:
4.1 Employee shall be entitled to whatever qualified pension benefits
Employee may be entitled under the terms and conditions of the
existing qualified retirement plan without change, modification or
enhancement.
4.2 Employee shall be entitled to withdraw in a lump sum and be paid
within 30 days of the Termination Date all nonqualified retirement
benefits to which he may be entitled calculated in accordance with
the existing terms and conditions of said unqualified plans but
altered, changed and or modified so as to treat Employee for
purposes of said calculations as though Employee were 62 years of
age on the day prior to the Termination Date and as though Employee
had completed 10 years of actual service with respect to all such
plans and also with respect to his existing Employment Contract
which provides Employee with one and one half year of service credit
for each year of actual service performed for the first ten years of
service.
4.3 Employee shall be entitled to whatever health and welfare benefits,
including, but not limited to, medical, prescriptive drugs, dental,
vision and EAP benefits, are available to retirees at Employee's age
and their dependents, and on the same terms and conditions except
that such benefits shall be calculated and made available without
any actuarial deduction or other penalty resulting from having
retired before age 65 or age 62, and, in addition, had completed ten
years of actual service with respect to all of such plans as well as
with respect to the extra credit earned under his existing
Employment Contract which gives Employee one and one-half year of
service for each year of service performed for the first ten years
of employment.
4.4 If ever in the future any of the Company's existing, retired, or
separated officers are paid a STIP for the year 2000 ("2000 STIP")
then the Employee shall be paid the 2000 STIP at the same time and
in the form and manner paid to the other officer recipient(s). The
2000 STIP shall be subject to withholding, deductions, assessments,
and taxes, if applicable. If ever any of the Company's existing,
retired or separated officers are paid a STIP for the year 2001
("2001 STIP"), then the Employee shall be paid the 2001 STIP at the
same time and in the
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form and manner paid to the other officer recipients(s). The 2001
STIP shall be subject to withholding, deductions, assessments, and
taxes, if applicable. If ever any of the Company's existing, retired
or separated officers are paid a STIP for the year 2002 ("2002
STIP"), then the Employee shall be paid a prorated portion of the
2002 STIP at the same time and in the form and manner paid to the
other officer recipient(s). Employee's prorated portion of the 2002
STIP shall be calculated by dividing the actual number of hours
worked by Employee during 2002 (1/1/02 through Termination Date) by
2080, and Employee shall be entitled to receive the resulting
percentage of the 2002 STIP. The 2002 STIP shall be subject to
withholding, deductions, assessments, and taxes, if applicable.
4.5 Employee shall be entitled to withdraw all accumulated deferred
compensation under the terms and conditions of the existing deferred
compensation plan except that, on the Termination Date, Company
agrees that Employee shall be deemed and considered a terminated
employee and shall have the right to withdraw such compensation.
4.6 Employee is covered under Supplemental Executive Life insurance.
Employee shall continue to be covered under such insurance until
July 31, 2003, with all premiums paid by Company until July 31,
2003, at which time Employee shall have the option of converting
such insurance in strict accordance with the terms of such policy
and paying any and all premiums due thereon as required by any SERP,
restoration, life insurance, or other plan maintained by Company as
though employee had completed 10 years of service under his
Employment Contract at age 55.
5. CONFIDENTIALITY
5.1 Employee shall preserve as confidential all Confidential
Information. Employee shall not use Confidential Information for the
benefit of Employee or any third party. Employee shall not disclose
to others any Confidential Information or any copy or notes made
from any Item embodying Confidential Information. If Employee is
required to disclose Confidential Information pursuant to a valid
order of a court or other governmental entity or any political
subdivision thereof; then Employee shall first give notice to
Company so that Company shall have a reasonable opportunity to
interpose an objection or obtain a protective order requiring that
the Confidential Information and/or documents so disclosed be used
only for the purposes for which the order was issued. The
confidentiality provisions herein shall expire 36 months from the
date of this agreement.
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6. NON-COMPETITION
6.1 Without express consent of the Company's CEO for a period of one
year after Employee's Termination Date or last serving as outside
counsel under the terms and provisions of this Agreement and as
otherwise governed by applicable rules of professional conduct,
Employee shall not, directly or indirectly, assist, provide services
or consultation to, enter into, engage in or acquire any ownership
interest in, or become employed by or associated with, any Competing
Organization doing business or seeking to commence doing business in
the Restricted Area. This includes, but is not limited to, services
rendered to such Competing Organization in an executive, managerial,
administrative, legal or consulting capacity in connection with
Competing Products or Services in support of actual competition in
geographic areas other than where the services are performed and
thus may fall within the prohibition of the Agreement, regardless of
where such services physically are rendered. This limitation
includes, but is not limited to, any contact or solicitation, either
for Employee's benefit or for the benefit of any other person or
entity, and Employee will not in any manner assist any person or
entity in making any such contact or solicitation.
6.2 Employee shall not solicit any employee of Company to terminate his
or her employment or relationship with Company or to perform any
service for employee or for any Competing Organization.
6.3 Employee agrees that the restrictions set forth in paragraphs 6.1
and are fair and reasonable and are reasonably required for the
protection of the interests of the Company and compliance with those
provisions will not cause Employee undue hardship nor unreasonably
interfere with Employee's ability to earn a livelihood.
7. RELEASE
7.1 Except for rights and benefits under any existing or future
insurance policy of Company and/or Employee and rights of
indemnification under any such policies or rights of indemnification
under the articles or by-laws of Company or under statutory or
common law, or under any agreement, and/or any claims for benefits
reserved under this Agreement or claims arising under any breach of
this Agreement, all of which are expressly reserved, Employee hereby
waives and releases Company and its officers, directors, agents, and
employees (collectively referred to as "Company Agents") from any
claims, rights, contracts or causes of action existing or accrued as
of the effective date of this Agreement that Employee may have
against Company or Company Agents (collectively referred to as
"Claims") which arise out
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of or are related to Employee's employment with Company
(collectively referred to as "Release") or the termination of the
Employment Agreement. This Release includes, but is not limited to,
the following:
7.1.1 Claims which are known or unknown as of the effective date
of this Agreement;
7.1.2 Claims which arise under any state or federal laws, including,
but not limited to, the Civil Rights Act of 1964, as amended,
and the Age Discrimination in Employment Act of 1967, as
amended, which have arisen on or before the effective date of
this Agreement; and
7.1.3 Claims based upon any contract of employment, including but
not limited to, the Change in Control Agreement, except as set
forth herein.
7.2 Employee shall not commence any action against Company or Company
Agents in violation of this Release.
7.3 Employee does not waive any Claim which arises after the effective
date of this Agreement.
7.4 Employee further expressly acknowledges and agrees that:
7.4.1 Employee has been advised to consult with an attorney
before signing this Agreement;
7.4.2 This Agreement is being offered only to Employee at this
time.
7.4.3 Employee was given a copy of the Agreement on or about August
__, 2002. Employee was informed that Employee had 21 days
within which to consider the Agreement. If Employee fails to
execute this Agreement within said 21-day period, then the
terms and conditions contained in this Agreement are
automatically withdrawn without further action or notice by
Company.
7.4.4 Employee was informed and understands that Employee has seven
days following the date Employee executes this Agreement in
which to revoke this Agreement. Any revocation of the
Agreement must be in writing and delivered to the Vice
President of Human Resources of Company during the revocation
period. This Agreement will become effective and enforceable
seven days following execution by Employee, unless it is
revoked during the seven-day period.
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8. MISCELLANEOUS PROVISIONS
8.1. Confidentiality of Agreement: Unless and until the terms of this
Agreement, and the amount of any payment eligible to be paid or
actually paid under this Agreement, are disclosed in writing to the
public by Company pursuant to any applicable legal duty to disclose
such information, it shall be a condition of eligibility to receive
or retain any payment pursuant to this Agreement that Employee hold
the terms of this Agreement and the amount of any payment hereunder
in strict confidence. Employee may disclose such information on a
confidential basis to Employee's family and to any financial
counselor, tax advisor or legal counsel retained by Employee.
8.2 Assignment by Company: The obligations of Company hereunder shall be
the obligations of any and all successors and assigns of Company.
Company may assign this Agreement without Employee's consent to any
affiliate or subsidiary of Company, provided that such assignment
does not relieve the Company's obligations hereunder. Company may
assign this Agreement without Employee's consent to any company that
acquires all or substantially all of the stock or assets of Company,
or into which or with which Company is merged or consolidated. The
Employee may not assign the Agreement, and no person other than
Employee or Employee's estate may enforce the rights of Employee
under this Agreement.
8.3 Waiver: The waiver by Employee or Company of a violation or breach
respectively by Company or by Employee of any provision of this
Agreement shall not be construed as a waiver of any subsequent
violation or breach.
8.4 Severability: The provisions of this Agreement shall be severable,
and in the event that any portion or provision of it is found by any
court to be unenforceable, in whole or in part, the remainder of
this Agreement shall nevertheless be enforceable and binding on the
parties. In the event that any restriction set forth in this
Agreement shall be declared by a court of competent jurisdiction to
exceed the maximum restriction such court deems reasonable and
enforceable, the restriction deemed reasonable and enforceable by
the court shall become and thereafter be the maximum restriction
hereunder.
8.5 Review of Agreement: Employee acknowledges that Employee had
sufficient opportunity to review this Agreement with an attorney or,
if Employee did not do so, it is because Employee read and
understood this Agreement and did not believe that legal advice was
necessary.
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Employee agrees that any restrictions contained in this Agreement
are fair and appropriate under the circumstances.
8.6 Dispute Resolution: Any dispute between the parties which is covered
by, arises out of, or is based upon this Agreement shall be settled
by final and binding arbitration. Any award or determination
rendered by the arbitrator may be entered as a judgment in any court
having jurisdiction thereof. The arbitration is subject to the
following:
8.6.1 The arbitration shall be administered by the American
Arbitration Association ("AAA") in accordance with its
Employment Dispute Resolution Rules ("Rules") in effect at the
time of the arbitration.
8.6.2 The arbitration shall be heard by one neutral arbitrator. The
arbitrator shall be an attorney admitted to the practice of
law in at least one state.
8.6.3 The arbitrator shall have the authority to award any remedy or
relief that a state or federal court having jurisdiction over
the persons and subject matter is authorized to grant.
8.6.4 The Company shall pay all of the costs and/or fees charged by
AAA and the arbitrator. The arbitrator shall have the
authority to award attorney's fees and costs pursuant to
sub-section 8.6.3 above.
8.7 Jurisdiction: This Agreement shall be construed under the laws of
the State of Nevada except where Federal laws are applicable. Venue
for any arbitration or action to enforce the arbitration provisions
of this Agreement shall be in the State of Nevada.
8.8 Effective Date: This Agreement will become effective and enforceable
seven days following execution by Employee, unless it is revoked
during the seven-day period in accordance with the provisions of
7.4.4 above.
8.9 Final Agreement: This Agreement supercedes all prior understandings,
statements or agreements concerning the subject matter of this
Agreement, including the Employment Agreement or Change in Control
Agreement. Any amendment to this Agreement shall be in writing and
signed by both parties. This Agreement contains all of the terms and
conditions agreed upon by the parties. There are no understandings
or agreements which conflict or modify the terms of this Agreement.
Company has made no representations or promises upon which Employee
relies in signing this Agreement except the
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terms set forth herein. Company has made no representations upon
which Employee relies concerning the tax characteristics or status
of the benefits described in this Agreement.
8.10 Cooperation. Company and Employee agree to cooperate fully and
execute any and all supplementary documents and to take all
additional actions which may be necessary or appropriate to give
full force and effect to the terms and intent of this Agreement
8.11 Binding Obligation. Company represents and warrants to Employee that
Company has taken all requisite corporate action to approve this
Agreement and that this Agreement constitutes a valid, binding and
enforceable obligation of the Company.
COMPANY WILLIAM E. PETERSON
By:___________________________ _____________________________
Date: September ____, 2002 Date: September ____, 2002
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