EXHIBIT 10.4ac
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT, made and entered into as of the ______ day of
______________, 199__, by and between Arizona Public Service Company, an
Arizona corporation (hereinafter referred to as the "Company") and
(hereinafter referred to as the "Executive"):
W I T N E S S E T H :
WHEREAS, the Executive has been employed by the Company in various
managerial capacities for a period of years, possesses intimate knowledge of
the business and affairs of the Company, and has acquired certain confiden-
tial information and data with respect to the Company; and
WHEREAS, the Company desires to insure, insofar as possible, that
it will continue to have the benefit of the Executive's services and to
protect its confidential information and goodwill; and
WHEREAS, the Company recognizes that circumstances may arise in
which a change in the control of the Company through acquisition or other-
wise occurs thereby causing uncertainty of employment without regard to the
Executive's competence or past contributions which uncertainty may result in
the loss of valuable services of the Executive to the detriment of the
Company and its shareholders, and the Company and the Executive wish to
provide reasonable security to the Executive against changes in the
Executive's relationship with the Company in the event of any such change in
control; and
WHEREAS, both the Company and the Executive are desirous that a
proposal for any change of control or acquisition will be considered by the
Executive objectively and with reference only to the business interests of
the Company and its shareholders;
WHEREAS, the Executive will be in a better position to consider
the Company's best interests if the Executive is afforded reasonable
security, as provided in this Agreement, against altered conditions of
employment which could result from any such change in control or acquisi-
tion; and
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto
mutually covenant and agree as follows:
1. Definitions.
(a) "Accrued Benefits" shall mean the benefits payable to
the Executive as described in Section 6.
(b) "Act" shall mean the Securities Exchange Act of 1934.
(c) "Base Period Income" shall be an amount equal to the
Executive's "annualized includible compensation" for the "base period"
as defined in Section 280G(d)(1) and (2) of the Code.
(d) "Beneficial Owner" shall have the same meaning as given
to that term in Rule 13d-3 of the General Rules and Regulations of the
Act, provided that any pledgee of Company voting securities shall not
be deemed to be the Beneficial Owner thereof prior to its disposition
of, or acquisition of voting rights with respect to, such securities.
(e) "Cause" shall be limited to (i) the engaging by the
Executive in conduct which has caused demonstrable and serious injury
to the Company, monetary or otherwise, as evidenced by a determination
in a binding and final judgment, order or decree of a court or adminis-
trative agency of competent jurisdiction, in effect after exhaustion or
lapse of all rights of appeal, in an action, suit or proceeding,
whether civil, criminal, administrative or investigative; (ii) con-
viction of a felony, as evidenced by a binding and final judgment,
order or decree of a court of competent jurisdiction, in effect after
exhaustion or lapse of all rights of appeal, which the Company deter-
mines has a significant adverse impact on it in the conduct of its
business; (iii) unreasonable neglect or refusal by the Executive to
perform the Executive's duties or responsibilities (unless significant-
ly changed without the Executive's consent); or (iv) a significant
violation by the Executive of the Company's established policies and
procedures as in effect of the date of the Change of Control which
could subject the Executive to disciplinary action by the Company.
(f) "Change of Control" shall mean a change in ownership or
managerial control of the stock, assets or business of the Company
resulting from one (1) or more of the following circumstances:
(i) A change of control of the Company or Pinnacle West
Capital Corporation, the parent of the Company, of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Act, or any
successor regulation of similar import, regardless of whether the
Company or Pinnacle West Capital Corporation is subject to such
reporting requirement;
(ii) A change of control in ownership of the Company
through a transaction or series of transactions, such that any
Person (other than Pinnacle West Capital Corporation) is or
becomes the Beneficial Owner, directly or indirectly, of securi-
ties of the Company representing twenty percent (20%) or more of
the combined voting power of the Company's then outstanding
securities;
(iii) Any consolidation or merger of the Company or
Pinnacle West Capital Corporation in which neither the Company nor
Pinnacle West Capital Corporation is the continuing or surviving
corporation or pursuant to which shares of the common stock of the
Company or Pinnacle West Capital Corporation would be converted
into cash (other than cash attributable to dissenters' rights),
securities or other property provided by a Person other than the
Company or Pinnacle West Capital Corporation, other than a consol-
idation or merger of either the Company or Pinnacle West Capital
Corporation in which the holders of the common stock of either the
Company or Pinnacle West Capital Corporation immediately prior to
the consolidation or merger have approximately the same propor-
tionate ownership of common stock of the surviving corporation
immediately after the consolidation or merger;
(iv) The shareholders of either the Company or Pinnacle
West Capital Corporation approve a sale, transfer or other dispo-
sition of all or substantially all of the assets of either the
Company or Pinnacle West Capital Corporation to a Person other
than the Company or Pinnacle West Capital Corporation; or
(v) During any period of two (2) consecutive years,
individuals who, at the beginning of such period, constituted the
Board of Directors of the Company or Pinnacle West Capital Corpo-
ration cease, for any reason, to constitute at least a majority
thereof, unless the election or nomination for election of each
new director was approved by the vote of at least two-thirds (2/3)
of the directors then still in office who were directors at the
beginning of the period.
Notwithstanding any provision herein to the contrary, the filing of a
proceeding for the reorganization of the Company or Pinnacle West
Capital Corporation under Chapter 11 of the Federal Bankruptcy Code or
any successor or other statute of similar import shall not be deemed to
be a Change of Control for purposes of this Agreement.
(g) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(h) "Disability" shall have the same meaning as given to
that term in the Company's long-term disability plan for employees.
(i) "Employment Period" shall mean a period commencing on
the date of a Change of Control, and ending on the earlier (i) of the
second anniversary of such date, or (ii) the date on which the Execu-
tive attains the age of sixty-five (65) provided that the Executive
meets the criteria of the "bona fide executive" exception to the
requirements of the Age Discrimination in Employment Act, codified at
29 U.S.C. Section 631(c).
(j) "Good Reason" shall mean:
(i) the required relocation of the Executive, without
the Executive's consent, to an employment location which is more
than seventy-five (75) miles from the Executive's employment loca-
tion on the date of the Change of Control;
(ii) a significant reduction by the Company in the
compensation and/or benefits provided to the Executive as in
effect on the date of the Change of Control as the same may be
increased from time to time during the Employment Period which
reduction is not generally effective for all executives employed
by the Company (or its successor) in the Executive's class or
category;
(iii) the removal of the Executive from or any failure
to reelect the Executive to any of the positions held by the
Executive on the date of the Change of Control or any other
positions to which the Executive shall thereafter be elected or
assigned except in the event that such removal or failure to
reelect relates to the termination by the Company of the
Executive's employment for Cause or by reason of death, Disability
or voluntary retirement;
(iv) a significant adverse change, without the
Executive's written consent, in the nature or scope of the
Executive's authority, powers, functions, duties or responsibili-
ties, or a material reduction in the level of support services,
staff, secretarial and other assistance, office space and accou-
trements available to a level below that which was provided to the
Executive on the date of the Change of Control and that which is
necessary to perform any additional duties assigned to the Execu-
tive following the Change of Control, which change or reduction is
not generally effective for all executives employed by the Company
(or its successor) in the Executive's class or category; or
(v) breach of any material provision of this Agreement
by the Company.
(k) "Person" shall mean any individual, partnership, joint
venture, association, trust, corporation or other entity (including a
"group" as defined in Section 13(d)(3) of the Act), other than an
employee benefit plan of the Company or an entity organized, appointed
or established pursuant to the terms of any such benefit plan.
(l) "Termination Date" shall mean, except as otherwise
provided in Section 12, (i) the Executive's date of death; (ii) the
date of the Executive's voluntary early retirement as agreed upon in
writing by the Company and the Executive; (iii) sixty (60) days after
the delivery of the Notice of Termination terminating the Executive's
employment on account of Disability pursuant to Section 9, unless the
Executive returns full-time to the performance of his or her duties
prior to the expiration of such period; (iv) the date of the Notice of
Termination if the Executive's employment is terminated by the Execu-
tive voluntarily other than for Good Reason; and (v) sixty (60) days
after the delivery of the Notice of Termination if the Executive's
employment is terminated by the Company (other than by reason of
Disability) or by the Executive for Good Reason.
(m) "Termination Payment" shall mean the amount described in
Section 6(b)(i).
(n) "Total Payments" shall mean the sum of the Termination
Payment and any other payments to or for the benefit of the Executive
in the nature of compensation, receipt of which is contingent on the
Change of Control and to which Section 280G of the Code applies.
2. Employment Period. The Company and the Executive shall
retain the right to terminate the employment of the Executive at any time
and for any reason prior to a Change of Control. If a Change of Control
occurs when the Executive is employed by the Company, the Company will
continue thereafter to employ the Executive, and the Executive will remain
in the employ of the Company, in accordance with the terms and provisions of
this Agreement, during the Employment Period.
3. Duties. During the Employment Period, the Executive shall,
in the same capacities and positions held by the Executive at the time of
such Change of Control or in such other capacities and positions as may be
agreed to by the Company and the Executive in writing, devote the
Executive's best efforts, attention and skill to the business and affairs of
the Company, as such business and affairs now exist and as they may hereaf-
ter be conducted. The services which are to be performed by the Executive
hereunder are to be rendered at an employment location which is not more
than seventy-five (75) miles from the Executive's employment location of the
date of the Change of Control, or in such other place or places as shall be
mutually agreed upon in writing by the Executive and the Company from time
to time. The Executive shall not be required to be absent from such
employment location for more than forty-five (45) consecutive days in any
fiscal year without the Executive's consent.
4. Compensation. During the Employment Period, the Executive
shall be compensated as follows:
(a) The Executive shall receive, at such intervals and in
accordance with such standard policies as may be in effect on the date
of the Change of Control, an annual salary not less than the
Executive's annual salary as in effect as of the date of the Change of
Control, subject to adjustment as provided in Section 5;
(b) The Executive shall be reimbursed, at such intervals and
in accordance with such standard policies as may be in effect on the
date of the Change of Control, for any and all monies advanced in
connection with the Executive's employment for reasonable and necessary
expenses incurred by the Executive on behalf of the Company, including
travel expenses;
(c) The Executive shall be included to the extent eligible
thereunder in any and all plans providing general benefits for the
Company's employees, including but not limited to, group life insur-
ance, hospitalization, disability, medical, dental, pension, profit
sharing, savings and stock bonus plans and be provided any and all
other benefits and perquisites made available to other employees of
comparable status and position, on the same terms and conditions as
generally provided to employees of comparable status and position;
(d) The Executive shall receive annually not less than the
amount of paid vacation and not fewer than the number of paid holidays
received annually immediately prior to the Change of Control or such
greater amount of paid vacation and number of paid holidays as may be
made available annually to other employees of comparable status and
position with the Company; and
(e) The Executive shall be included in all plans providing
special benefits to other employees of comparable status, including but
not limited to bonus, deferred compensation, incentive compensation,
supplemental pension, stock option, stock appreciation, stock bonus and
similar or comparable plans extended by the Company from time to time
to managers and other employees of comparable status.
5. Annual Compensation Adjustments. During the Employment
Period, the Board of Directors of the Company, an appropriate committee of
the Board or the President of the Company, whichever is appropriate, shall
consider and appraise, at least annually, the Executive's compensation. In
determining such compensation, the Board, the appropriate committee thereof
or the President, whichever is appropriate, shall consider the commensurate
increases given to other corporate officers and key employees generally, the
scope and success of the Company's operations, the expansion of Executive's
duties and the Executive's performance of his duties.
6. Payments Upon Termination.
(a) Accrued Benefits. For purposes of this Agreement, the
Executive's Accrued Benefits shall include the following amounts: (i)
all salary earned or accrued through the Termination Date; (ii) reim-
bursement for any and all monies advanced in connection with the
Executive's employment for reasonable and necessary expenses incurred
by the Executive through the Termination Date; (iii) any and all other
cash benefits previously earned through the Termination Date and
deferred at the election of the Executive or pursuant to any deferred
compensation plans then in effect; (iv) a lump sum payment of the bonus
or incentive compensation otherwise payable to the Executive with
respect to the year in which termination occurs under any bonus or
incentive compensation plan or plans in which the Executive is a
participant; and (v) all other payments and benefits to which the
Executive may be entitled under the terms of any benefit plan of the
Company. Payment of Accrued Benefits shall be made promptly in accor-
dance with the Company's prevailing practice and the terms of any
applicable benefit plans, contracts or arrangements.
(b) Termination Payment. (i) For purposes of this Agreement
and subject to the limits set forth in Section 6(b)(ii) hereof, the
Executive's Termination Payment shall be an amount equal to (A) plus
(B), multiplied by (C), where
(A) Equals the Executive's rate of annual salary, as in
effect on the date of the Change of Control and as adjusted
thereafter from time to time pursuant to Section 5;
(B) Equals the amount of the average annual dollar
award paid to the Executive pursuant to the Company's regular
bonus plan or arrangement with respect to the four (4) years
(or the number of years of the Executive's employment if less
than four (4) years) preceding the Termination Date which
shall be determined by dividing the total dollar amount paid
to the Executive under such plan or arrangement with respect
to such number of years by four (4) (or the number of years
of the Executive's employment if less than four (4) years);
and
(C) Equals one (1).
The Termination Payment shall be payable in a lump sum on the
Executive's Termination Date. Such lump sum payment shall not be reduced by
any present value or similar factor. The Executive shall not be required to
mitigate the amount of such payment by securing other employment or other-
wise and such payment shall not be reduced by reason of the Executive secur-
ing other employment or for any other reason.
(ii) It is the intention of the Company and the Executive
that no portion of the Termination Payment and any other payment under
this Agreement, or payments to or for the benefit of the Executive
under any other agreement, plan or arrangement be deemed to be an
"excess parachute payment" as defined in Section 280G of the Code. It
is agreed that the present value of the Total Payments shall not exceed
an amount equal to two and ninety-nine hundredths (2.99) times the
Executive's Base Period Income, which is the maximum amount which the
Executive may receive without becoming subject to the tax imposed by
Section 4999 of the Code or which the Company may pay without loss of
deduction under Section 280G(a) of the Code. Present value for purpos-
es of this Agreement shall be calculated in accordance with the regula-
tions issued under Section 280G of the Code. Within sixty (60) days
following delivery of the Notice of Termination or notice by the
Company to the Executive of its belief that there is a payment or bene-
fit due the Executive which will result in an excess parachute payment
as defined in Section 280G of the Code, the Executive and the Company
shall, at the Company's expense, obtain the opinions, which need not be
unqualified, of legal counsel and certified public accountants or a
firm of recognized executive compensation consultants. The Executive
shall select said legal counsel, certified public accountants and
executive compensation consultants; provided that if the Company does
not accept one (1) or more of the parties selected by the Executive,
the Company shall provide the Executive with the names of such legal
counsel, certified public accountants and/or executive compensation
consultants as the Company may select; if the Executive does not accept
the party or parties selected by the Company, the legal counsel,
certified public accountants and/or executive compensation consultants
selected by the Executive and the Company, respectively, shall select
the legal counsel, certified public accountants and/or executive
compensation consultants, whichever is applicable, who shall provide
the opinions required by this Section 6(b)(ii). The opinions required
hereunder shall set forth (a) the amount of the Base Period Income of
the Executive, (b) the present value of Total Payments and (c) the
amount and present value of any excess parachute payments. In the
event that such opinions determine that there would be an excess
parachute payment, the Termination Payment or any other payment deter-
mined by such counsel to be includible in Total Payments shall be
reduced or eliminated as specified by the Executive in writing deliv-
ered to the Company within thirty (30) days of his or her receipt of
such opinions or, if the Executive fails to so notify the Company, then
as the Company shall reasonably determine, so that under the bases of
calculation set forth in such opinions there will be no excess para-
chute payment. The provisions of this Section 6(b)(ii), including the
calculations, notices and opinions provided for herein shall be based
upon the conclusive presumption that the compensation and benefits
provided for in Section 4 hereof and any other compensation, including
but not limited to the Accrued Benefits, earned on or after the date of
Change of Control by the Executive pursuant to the Company's compensa-
tion programs if such payments would have been made in the future in
any event, even though the timing of such payment is triggered by the
Change of Control, are reasonable compensation for services rendered
prior to the Change of Control; provided, however, that in the event
legal counsel so requests in connection with the opinion required by
this Section 6(b)(ii), a firm of recognized executive compensation con-
sultants, selected by the Executive and the Company pursuant to the
procedures set forth above, shall provide an opinion, upon which such
legal counsel may rely, as to the reasonableness of any item of compen-
sation as reasonable compensation for services rendered prior to the
Change of Control by the Executive. In the event that the provisions
of Sections 280G and 4999 of the Code are repealed without succession,
this Section 6(b)(ii) shall be of no further force or effect.
7. Death. If the Executive shall die during the Employment
Period, but after delivery of a Notice of Termination by the Company for
reasons other than Cause or disability or by the Executive for Good Reason,
the Executive's employment shall terminate on his or her date of death and
the Executive's estate, heirs and beneficiaries shall be entitled to the
Executive's Accrued Benefits as of the Termination Date, all benefits avail-
able to them under the Company's benefits plans as in effect on the Termina-
tion Date on account of the Executive's death, and, subject to the provi-
sions of this Agreement, to such Termination Payment as the Executive would
have been entitled to had the Executive survived. In such event, the
Termination Date shall be sixty (60) days following delivery of the Notice
of Termination subject to the provisions of Section 12.
If the Executive shall die during the Employment Period, but prior
to the delivery of a Notice of Termination, the Executive's employment shall
terminate and the Executive's estate, heirs and beneficiaries shall receive
all the Executive's Accrued Benefits through the Termination Date and all
benefits available to them under the Company's benefit plans as in effect on
the Termination Date on account of the Executive's death.
8. Retirement. If, during the Employment Period, the Executive
and the Company shall execute an agreement providing for the voluntary
retirement of the Executive from the Company, the Executive shall receive
only his or her Accrued Benefits through the Termination Date.
9. Termination for Disability. If, as a result of the
Executive's Disability, the Executive shall have been absent from the
Executive's duties hereunder on a full-time basis for five (5) consecutive
months during the Employment Period, and within sixty (60) days after the
Company notifies the Executive in writing that it intends to terminate the
Executive's employment, the Executive shall not have returned to the per-
formance of his or her duties on a full-time basis, the Company may termi-
nate the Executive's employment, subject to Section 12. During the term of
the Executive's Disability prior to termination, the Executive shall
continue to receive all salary and benefits payable under Sections 4 and 5,
including participation in all employee benefit plans, programs and arrange-
ments in which the Executive was entitled to participate immediately prior
to the disability provided that the Executive's continued participation is
permitted under the terms and provisions of such plans, programs and
arrangements. In the event that the Executive's participation in any such
plan, program or arrangement is barred as the result of such Disability, the
Executive shall be entitled to receive an amount equal to the annual con-
tributions, payments, credits or allocations which would have been paid by
the Company to the Executive, to the Executive's account or on the Execu-
tive's behalf under such plans, programs and arrangements. In the event the
Executive's employment is terminated on account of the Executive's Disabili-
ty in accordance with this Section 9, the Executive shall receive his or her
Accrued Benefits in accordance with Section 6(a) hereof and shall remain
eligible for all benefits provided by any long-term disability programs of
the Company in effect at the time of such termination.
10. Termination Not Giving Rise to a Termination Payment. If,
during the Employment Period, the Executive's employment is terminated for
Cause, or if the Executive voluntarily terminates his or her employment
other than for Good Reason, subject to the procedures set forth in Section
12, the Executive shall be entitled to receive only his or her Accrued
Benefits in accordance with Section 6(a).
11. Termination Giving Rise to a Termination Payment. If, during
the Employment Period, the Executive's employment is terminated by the
Executive for Good Reason or by the Company other than by reason of death,
Disability pursuant to Section 9 or Cause, subject to the procedures set
forth in Section 12,
(a) the Executive shall be entitled to receive and the
Company shall pay the Executive's Accrued Benefits in accordance with
Section 6(a) and, in lieu of further salary payments for periods
following the Termination Date, as severance pay, a Termination Pay-
ment;
(b) the Executive and his or her dependents shall continue
to be covered for one (1) year, under the same terms and conditions, by
the medical plan and/or dental plan maintained by the Company which
covered that Executive and his or her dependents prior to the
Executive's Termination Date. The Executive and the Company shall
share the cost of such continued coverage in the same proportions as
they shared the cost of such coverage prior to the Executive's Termina-
tion Date. For purposes of satisfying the Company's obligation under
the Consolidated Omnibus Budget Reconciliation Act ("COBRA") to con-
tinue group health care coverage to the Executive and his or her
dependents as a result of the Executive's termination of employment,
the period during which the Executive is permitted to continue to
participate in the Company's medical plans and/ or dental plans under
this Section 11(b) shall be taken into account and treated as part of
the period during which the Executive and his or her dependents are
entitled to continued coverage under the Company's group health plans
under COBRA. Following the end of the continuation period specified in
this Section 11(b), the Executive and his or her dependents shall be
covered under such plans and arrangements only as required under the
provisions of COBRA;
(c) the Executive's termination shall be treated as a
"Normal Termination" as defined in the Pinnacle West Capital Corpora-
tion Stock Option and Incentive Plan, which shall entitle the Executive
to exercise any outstanding stock options during the three (3) month
period beginning on the Executive's Termination Date, and any restric-
tions remaining on any "Restricted Stock" (as defined in such Stock
Option and Incentive Plan) awarded to the Executive shall lapse on his
or her Termination Date; and
(d) "out-placement" services will be provided by the Company
to the Executive for a period beginning on the Executive's Termination
Date. Such services shall be provided for a period equal to one (1)
week per year of service with the Company or an affiliate, plus one (1)
week for each two (2) years by which the Executive's age exceeds age
forty (40), plus one (1) week for each Ten Thousand Dollars ($10,000)
of compensation, but in no event less than six (6) months. Notwith-
standing the foregoing, the Executive's right to out-placement services
shall terminate on the earlier of the date on which the Executive
becomes employed in a position commensurate with his or her current
salary and responsibilities or on the last day of the period determined
pursuant to the formula set forth in this Section 11(d). The "out-
placement" services shall be provided by an out-placement company
selected by the Company.
12. Termination Notice and Procedure. Any termination by the
Company or the Executive of the Executive's employment during the Employment
Period shall be communicated by written Notice of Termination to the
Executive if such Notice is delivered by the Company and to the Company if
such Notice is delivered by the Executive, all in accordance with the fol-
lowing procedures:
(a) The Notice of Termination shall indicate the specific
termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances alleged to provide a
basis for termination.
(b) Any Notice of Termination by the Company shall be
approved by a resolution duly adopted by a majority of the directors of
the Company then in office, specifying in detail the basis for such
termination.
(c) If the Company shall give a Notice of Termination for
Cause or by reason of Disability and the Executive in good faith
notifies the Company that a dispute exists concerning such termination
within the fifteen (15) day period following the Executive's receipt of
such notice, the Executive may elect to continue his or her employment
during such dispute. If it is thereafter determined that (i) the
reason given by the Company for termination did exist, the Executive's
Termination Date shall be the earlier of (A) the date on which the
dispute is finally determined, either by mutual written agreement of
the parties or pursuant to Section 14, (B) the date of the Company's
Notice of Termination for Cause, (C) the date of the Executive's death,
or (D) one day prior to the end of the Employment Period, and the
Executive shall not be entitled to a Termination Payment based on
events occurring after the Company delivered its Notice of Termination;
or (ii) the reason given by the Company for termination did not exist,
the employment of the Executive shall continue as if the Company had
not delivered its Notice of Termination and there shall be no Termina-
tion Date arising out of such notice.
(d) If the Executive shall in good faith give a Notice of
Termination for Good Reason and the Company notifies the Executive that
a dispute exists concerning the termination within the fifteen (15) day
period following the Company's receipt of such notice, the Executive
may elect to continue his or her employment during such dispute. If it
is thereafter determined that (i) Good Reason did exist, the
Executive's Termination Date shall be the earlier of (A) the date on
which the dispute is finally determined, either by mutual written
agreement of the parties or by a court of competent jurisdiction, (B)
the date of the Executive's death, or (C) one day prior to the end of
the Employment Period, and the Executive's Termination Payment shall
reflect events occurring after the Executive delivered his or her
Notice of Termination; or (ii) Good Reason did not exist, the employ-
ment of the Executive shall continue after such determination as if the
Executive had not delivered the Notice of Termination asserting Good
Reason.
(e) If the Executive does not elect to continue employment
pending resolution of a dispute regarding a Notice of Termination under
Sections 12(c) and (d), and it is finally determined that the reason
for termination set forth in such Notice of Termination did not exist,
if such notice was delivered by the Executive, the Executive will be
deemed to have voluntarily terminated his or her employment and if
delivered by the Company, the Company will be deemed to have terminated
the Executive other than by reason of death, disability or Cause.
(f) If the opinion required to be delivered pursuant to
Section 6(b)(ii) shall not have been delivered on or before the date
that would otherwise constitute the Termination Date, the Termination
Date shall be delayed to the earlier of the date on which such opinion
is delivered or one (1) day prior to the end of the Employment Period.
13. Obligations of the Executive.
(a) The Executive agrees that if, during the Employment
Period, the Executive's employment is terminated in a manner entitling
the Executive to a Termination Payment or the Executive has voluntarily
terminated his or her employment, the Executive shall not, for a period
commencing on the Termination Date and ending after one (1) year, (i)
act in a similar capacity for any electric utility company which
competes to a substantial degree with the Company in the State of
Arizona or (ii) engage in any activity involving substantial competi-
tion with the Company in the electric utility industry in the State of
Arizona, without the prior written approval of the Company's Board of
Directors; provided, however, that nothing in this Section 13(a) shall
prohibit the Executive from owning stock or other securities of a
competitor amounting to less than twenty percent (20%) of the stated
capital of such competitor.
(b) The Executive covenants and agrees, during the
Executive's employment by the Company and following his or her Termina-
tion Date, to hold in strict confidence any and all information in the
Executive's possession as a result of the Executive's employment with
the Company; provided that nothing in this Agreement shall be construed
as prohibiting the Executive from reporting any suspected instance of
illegal activity of any nature, any nuclear safety concern, any
workplace safety concern or any public safety concern to the United
States Nuclear Regulatory Commission, United States Department of Labor
or any federal or state governmental agency or prohibiting the Execu-
tive from participating in any way in any state or federal administra-
tive, judicial or legislative proceeding or investigation with respect
to any such claims and matters.
14. Arbitration. All claims, disputes and other matters in
question between the parties arising under this Agreement, other than
Section 13 which may be enforced by the Company through injunctive relief,
shall be decided by arbitration in accordance with the rules of the American
Arbitration Association, unless the parties mutually agree otherwise. Any
arbitration required under this Agreement shall be held in Phoenix, Arizona,
unless the parties mutually agree otherwise. The Company shall pay the
costs of any such arbitration. The award by the arbitrator shall be final,
and judgment may be entered upon it in accordance with applicable law in any
state or Federal court having jurisdiction thereof.
15. Expenses and Interest. If, after a Change of Control a good
faith dispute arises with respect to the enforcement of the Executive's
rights under this Agreement or if any arbitration or legal proceeding shall
be brought in good faith to enforce or interpret any provision contained
herein, or to recover damages for breach hereof and the Executive is the
prevailing party, the Executive shall recover from the Company any reason-
able attorney's fees and necessary costs and disbursements incurred as a
result of such dispute or legal proceeding, and prejudgment interest on any
money judgment obtained by the Executive calculated at the rate of interest
announced by The Valley National Bank of Arizona from time to time as its
prime rate from the date that payments to the Executive should have been
made under this Agreement.
16. Payment Obligations Absolute. The Company's obligation
during and after the Employment Period to pay the Executive the compensation
and to make the arrangements provided herein shall be absolute and uncondi-
tional and shall not be affected by any circumstances, provided that the
Company may apply amounts payable under this Agreement to any debts owed to
the Company by the Executive on his or her Termination Date, and provided
further that the amount payable under this Agreement shall be offset by any
amounts payable to the Executive under a separate severance plan, agreement
or arrangement established by the Company so that in no event shall the
total amount received by the Executive be more than the amount permitted
under Section 6(b)(ii). All amounts payable by the Company under this
Agreement shall be paid without notice or demand. Each and every payment
made under this Agreement by the Company shall be final. Notwithstanding
the foregoing, in the event that the Company has paid an Executive more than
the amount to which the Executive is entitled under this Agreement, the
Company shall have the right to recover all or any part of such overpayment
from the Executive or from whomsoever has received such amount.
17. Successors. (a) If all or substantially all of the Company's
business and assets are sold, assigned or transferred to any Person, or if
the Company merges into or consolidates or otherwise combines with any
Person which is a continuing or successor entity, then the Company shall
assign all of its right, title and interest in this Agreement as of the date
of such event to the Person which is either the acquiring or successor
corporation, and such Person shall assume and perform from and after the
date of such assignment the terms, conditions and provisions imposed by this
Agreement upon the Company. Failure of the Company to obtain such assign-
ment shall be a breach of this Agreement. In case of such assignment by the
Company and of assumption and agreement by such Person, all further rights
as well as all other obligations of the Company under this Agreement
thenceforth shall cease and terminate and thereafter the expression "the
Company" wherever used herein shall be deemed to mean such Person(s).
(a) This Agreement and all rights of the Executive shall
inure to the benefit of and be enforceable by the Executive's personal
or legal representatives, estates, executors, administrators, heirs and
beneficiaries. In the event of the Executive's death, all amounts
payable to the Executive under this Agreement shall be paid to the
Executive's estate, heirs and representatives. This Agreement shall
inure to the benefit of, be binding upon and be enforceable by, any
successor, surviving or resulting corporation or other entity to which
all or substantially all of the Company's business and assets shall be
transferred whether by merger, consolidation, transfer or sale. This
Agreement shall not be terminated by the voluntary or involuntary
dissolution of the Company.
18. Enforcement. The provisions of this Agreement shall be
regarded as divisible, and if any of said provisions or any part hereof are
declared invalid or unenforceable by a court of competent jurisdiction, the
validity and enforceability of the remainder of such provisions or parts
hereof and the applicability thereof shall not be affected thereby.
19. Amendment or Termination. The term of this Agreement shall
run until December 31, 199__, and shall continue for additional one (1) year
periods thereafter, unless the Company notifies the Executive in writing six
(6) months prior to December 31, 199__ (or the anniversary of that date in
the event the Agreement continues beyond that date pursuant to the provi-
sions of this Section 19) that it does not intend to continue the Agreement.
Notwithstanding the foregoing, (i) if a Change of Control has occurred on or
before the date on which the Agreement has been terminated by the Company in
accordance with this Section 19, the Agreement shall not terminate with
respect to that Change of Control until the end of the Employment Period,
and (ii) this Agreement shall terminate if, prior to a Change in Control,
the Executive ceases to be employed by the Company as a manager or execu-
tive.
This Agreement sets forth the entire agreement between the
Executive and the Company with respect to the subject matter hereof, and
supersedes all prior oral or written negotiations, commitments, understand-
ing and writing with respect thereto.
This Agreement may not be terminated, amended or modified during
its term as specified above except by written instrument executed by the
Company and the Executive.
20. Withholding. The Company shall be entitled to withhold from
amounts to be paid to the Executive under this Agreement any federal, state
or local withholding or other taxes or charges which it is from time to time
required to withhold. The Company shall be entitled to rely on an opinion
of counsel if any question as to the amount or requirement of any such with-
holding shall arise.
21. Venue; Governing Law. This Agreement and the Executive's and
Company's respective rights and obligations hereunder shall be governed by
and construed in accordance with the laws of the State of Arizona. Any
action concerning this Agreement shall be brought in the Federal or state
courts located in the County of Maricopa, Arizona, and each party consents
to the venue and jurisdiction of such courts.
22. Notice. Notices given pursuant to this Agreement shall be in
writing and shall be deemed given when received, and if mailed, shall be
mailed by United States registered or certified mail, return receipt
requested, addressee only, postage prepaid, if to the Company, to
Board of Directors
Arizona Public Service Company
400 North 5th Street
Phoenix, Arizona 85004
Attention: Corporate Secretary
or if to the Executive, to
or to such other address as the party to be notified shall have given to the
other.
23. Funding. Benefits payable under this Agreement shall
constitute an unfunded general obligation of the Company payable from its
general assets, and the Company shall not be required to establish any
special fund or trust for purposes of paying benefits under this Agreement.
The Executive shall not have any vested right to any particular assets of
the Company as a result of execution of this Agreement and shall be a gen-
eral creditor of the Company.
24. No Waiver. No waiver by either party at any time of any
breach by the other party of, or compliance with, any condition or provision
of this Agreement to be performed by the other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same time or
any prior or subsequent time.
25. Headings. The headings herein contained are for reference
only and shall not affect the meaning or interpretation of any provision of
this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Executive has executed this
Agreement, on the date and year first above written.
ARIZONA PUBLIC SERVICE COMPANY
By_______________________________________
Its____________________________________
ATTEST:
By________________________________
Its_____________________________
_________________________________________
Executive