EXHIBIT 10.5ac
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT, made and entered into as of the _____ day of
_______________, 1994, 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 and executive capacities for a period of years, possesses
intimate knowledge of the business and affairs of the Company, and has
acquired certain confidential information and data with respect to the
Company;
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)(l) 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 administrative agency of competent jurisdiction, in
effect after exhaustion or lapse of all rights of appeal, in an
action, suit or proceeding, whether civil, criminal, administra-
tive or investigative; (ii) conviction of a felony, as evidenced
by a binding and final judgment, order or decree of a court of
competent jurisdiction, in effect after exhaustion or lapse of all
rights of appeal, which the Company determines has a significant
adverse impact on it in the conduct of its business; (iii) unrea-
sonable neglect or refusal by the Executive to perform the
Executive's duties or responsibilities (unless significantly
changed without the Executive's consent); or (iv) a significant
violation by the Executive of the 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, regard-
less of whether the Company or Pinnacle West Capital Corpora-
tion 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
securities 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 Compa-
ny 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 Corpora-
tion would be converted into cash (other than cash attribut-
able to dissenters' rights), securities or other property
provided by a Person other than the Company or Pinnacle West
Capital Corporation, other than a consolidation 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 corpora-
tion immediately after the consolidation or merger;
(iv) The shareholders of either the Company or Pinnacle
West Capital Corporation approve a sale, transfer or other
disposition 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 Corpo-
ration; 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 Capi-
tal Corporation 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 Bankrupt-
cy 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 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 employ-
ees.
(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
Executive attains the age of sixty-five (65) provided that the
Executive meets the criteria of the "bona fide executive" excep-
tion 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 em-
ployment location 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 responsi-
bilities, or a material reduction in the level of support
services, staff, secretarial and other assistance, office
space and accoutrements available to a level below that which
was provided to the Executive on the date of the Change of
Control and that which is necessary to perform any additional
duties assigned to the Executive following the Change of
Control, which change or reduction is not generally effective
for all executives employed by the 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 (includ-
ing a "group" as defined in Section 13(d)(3) of the Act), other
than an employee benefit plan of the Company or an entity orga-
nized, 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 perfor-
mance of his or her duties prior to the expiration of such period;
(iv) the date of the Notice of Termination if the Executive's
employment is terminated by the Executive voluntarily other than
for Good Reason; and (v) sixty (60) days after the delivery of the
Notice of Termination if the Executive's employment is terminated
by the 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 insurance, hospitaliza-
tion, 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 Com-
pany; and
(e) The Executive shall be included in all plans providing
special benefits to senior executives, 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 senior corporate officers, key
employees 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) reimbursement
for any and all monies advanced in connection with the Executive's employ-
ment 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 accordance
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 three (3).
The Termination Payment shall be payable in a lump sum on the
Executive's Termination Date. Such lump sum payment shall not be reduced by
any present value or similar factor. The Executive shall not be required to
mitigate the amount of such payment by securing other employment or 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 Agree-
ment, 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 purposes of this Agreement shall be calculated in accordance with the
regulations 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 benefit 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 consul-
tants; 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 determined by such counsel to be includible in Total
Payments shall be reduced or eliminated as specified by the Executive in
writing delivered 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
parachute 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 compensation 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 consultants, 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 compensation
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 Termi-
nation 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
performance of his or her duties on a full-time basis, the Company may
terminate 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 Termina-
tion Date, as severance pay, a Termination Payment;
(b) the Executive's termination shall be treated as a "Normal
Termination" as defined in the Pinnacle West Capital Corporation 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 restrictions remaining on any "Re-
stricted Stock" (as defined in such Stock Option and Incentive Plan) awarded
to the Executive shall lapse on his or her Termination Date; and
(c) "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. Notwithstanding 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 commensu-
rate 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(c). 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 deliv-
ered its Notice of Termination and there shall be no Termination Date
arising out of such notice.
(d) If the Executive shall in good faith give a Notice of
Termination for Good Reason and the Company notifies the Executive that a
dispute exists concerning the termination within the fifteen (15) day period
following the Company's receipt of such notice, the Executive may elect to
continue his or her employment during such dispute. If it is thereafter de-
termined 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 Termina-
tion Payment shall reflect events occurring after the Executive delivered
his or her Notice of Termination; or (ii) Good Reason did not exist, the
employment of the Executive shall continue after such determination as if
the Executive had not delivered the Notice of Termination asserting Good
Reason.
(e) If the Executive does not elect to continue employment
pending resolution of a dispute regarding a Notice of Termination under
Sections 12(c) and (d), and it is finally determined that the reason for
termination set forth in such Notice of Termination did not exist, if such
notice was delivered by the Executive, the Executive will be deemed to have
voluntarily terminated his or her employment and if delivered by the
Company, the Company will be deemed to have terminated the Executive other
than by reason of death, disability or Cause.
(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 capa-
city 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 competition 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 with the Company and following his or her Termination Date, to
hold in strict confidence any and all information in the Executive's
possession as a result of the Executive's employment with the 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 Executive from participating in any way in any
state or federal administrative, judicial or legislative proceeding or
investigation with respect to any such claims and matters.
14. Arbitration. All claims, disputes and other matters in
question between the parties arising under this Agreement, other than
Section 13 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).
(b) This Agreement and all rights of the Executive shall inure to
the benefit of and be enforceable by the Executive's personal or legal
representatives, estates, executors, administrators, heirs and beneficia-
ries. 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. Except as otherwise provided
herein, the term of this Agreement shall run until December 31, 1994, 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, 1994 (or the anniversary of that date in the event the Agreement
continues beyond that date pursuant to the provisions of this Section 19)
that it does not intend to continue the Agreement. Notwithstanding the
foregoing, (i) if a Change of Control has occurred on or before the date on
which the Agreement 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 of Control, the Executive
ceases to be employed by the Company in an executive position.
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, including, but not limited to, the Key
Executive Employment and Severance Agreement by and between the Company and
the Executive executed on or about January 30, 1990.
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