Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT executed this 11 day of October, 2002, and
effective as of October 1, 2002, by and between ARIZONA PUBLIC SERVICE COMPANY,
an Arizona corporation (hereinafter referred to as the "Company" or "Employer")
and XXXXX X. XXXXXX (hereinafter referred to as the "Employee");
RECITALS
A. The Company desires to employ Employee in the position of Executive
Vice President APS Generation.
B. The Company desires to insure, insofar as possible, that it will
continue to have the benefit of the Employee's services over the
Employment Term and to protect its confidential information and good
will.
C. Employer is engaged in the business of generation, construction, and
acquisition of electrical power, and the transmission and distribution
of electrical power.
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:
AGREEMENTS
1. TITLE. The Company does hereby employ the Employee as Executive Vice
President APS Generation, and the Employee does hereby accept and agree to such
employment.
2. EMPLOYMENT TERM.
(a) The Employee shall be employed by the Company in the position set forth
in Section 1 for a five (5) year period commencing on October 1, 2002 and ending
on October 1, 2007 (the "Employment Term").
(b) The parties may renew this Employment Agreement for additional periods
on mutually acceptable terms and conditions, but neither the Company nor the
Employee is under any obligation to agree to such extensions.
(c) In the event of a "Change of Control" [as defined in the Employee's Key
Executive Employment Severance Agreement ("KEESA")] the terms of the KEESA are
controlling.
3. COMPENSATION. Employer agrees to pay Employee an annual salary in the
amount of $550,000.00.
4. BONUSES AND OTHER COMPENSATION.
All incentive plans are subject to change or termination at the Board of
Director's sole discretion.
(a) INCENTIVE PAY. Employer agrees to award Employee an incentive bonus of
up to 60% of base salary with a target level of 40% of base salary under the
Officer Incentive Plan if corporate, departmental and individual targets are
met, all in accordance with the terms of that Plan.
(b) PERFORMANCE SHARES AND STOCK OPTIONS. Employer agrees to request the
Human Resources Committee ("the Committee") to grant Employee Performance Shares
in an amount equivalent to 65% - 85% of the amount awarded to a member of the
Office of the President under the Stock Incentive Plan. The Employer also agrees
to request the Committee to grant Performance Accelerated Stock Options under
the Stock Incentive Plan equal to five times the number of Performance Shares
granted under this Paragraph (b).
(c) ADDITIONAL PERFORMANCE SHARES. In addition to (b) above, Employer
agrees to request the Committee to grant Employee 2000 Performance Shares each
year under the 2002 Stock Incentive Plan (the "2002 Plan") without any matching
requirement, all in accordance with the terms of the 2002 Plan and as previously
agreed upon by the parties.
(d) PENSION. Employee's pension benefit that was agreed upon effective
January 1, 2002 will remain the same.
(e) OTHER PAYMENTS.
i. Employee is eligible for incentive payments based on Palo Verde
Nuclear Generating Station maintenance of specified federal and nuclear
oversight program ratings, nuclear safety, and for successful outage
results.
ii. The Company agrees to pay for a Country Club membership for
Employee's use. The Company will purchase the membership and Employee will
assume payment of the monthly dues.
5. BENEFITS AND OBLIGATIONS.
(a) The Employee shall be included to the extent eligible in any and all
plans providing general benefits to the Company's employees and which shall be
made available on the same terms and conditions as to other employees of
comparable status and position.
(b) The Employee agrees that if, during the Employment Period, the Company
terminates his employment or he voluntarily quits, the Employee shall not, for a
period commencing on the date of termination and ending after one (1) year, (i)
directly own, manage, operate, control, be employed by, participate in, finance,
consult, advise, or be connected in any manner whatsoever with the ownership,
management, operation, control or financing of any business, person,
corporation, partnership, or other entity which directly or indirectly engages
in electric power generation, in competition with the Company, or (ii) engage in
any other activity involving competition with the Company in the foregoing
industry without the prior written approval of the Company's Board of Directors;
provided, however, that nothing in this Section shall prohibit the Employee from
owning stock or other securities of a competitor amounting to less than twenty
2
percent (20%) of the stated capital of such competitor. For purposes of this
provision, if a Court of competent jurisdiction should rule that a one (1) year
period is unenforceable then the period shall be six (6) months.
(c) The Employee covenants and agrees, during the Employee's employment by
the Company and following his Termination Date, to hold in strict confidence any
and all information in the Employee's possession as a result of the Employee's
employment; provided that nothing in this Employment Agreement shall be
construed to prohibit the Employee from reporting or disclosing any suspected
instance of illegal activity of any nature, any nuclear safety concerns, any
workplace safety concerns or any public safety concerns to the United States
Nuclear Regulatory Commission ("NRC"), United States Department of Labor
("DOL"), or any federal, state, or local governmental agency or court. This
Employment Agreement shall not be construed to prohibit the Employee from
providing information to the NRC, DOL, or any other federal or state
governmental agency or governmental officials, or testifying in any civil or
criminal proceedings, even if such information or testimony being provided
relates to the claims or matters covered by this Employment Agreement. This
Employment Agreement shall not be construed as a waiver or withdrawal of any
safety concerns which Employee has or may have reported to the NRC or DOL, or
withdrawal of any participation by Employee in any NRC or DOL proceedings.
Notwithstanding anything to the contrary in this paragraph, Employee hereby
waives and releases any right to receive any relief as a result of Employee's
participation in any investigation or proceeding of the NRC, DOL, or any
federal, state or local government agency or court.
6. TERMINATION. This Employment Agreement shall automatically terminate on
the expiration of the initial Employment Term described in Section 2(a) without
any notice from either party, unless the parties mutually agree to extend this
Employment Agreement in writing for additional periods of time. The Company
retains the right to terminate this Agreement for cause at any time prior to the
expiration of the Employment Term.
7. ARBITRATION. All claims, disputes and other matters in question between
the parties arising under this Employment Agreement, other than Sections 5(b)
and (c) 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. Such arbitration shall
take place in Phoenix, Arizona. The Company shall pay the cost of 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.
8. SEVERABILITY. In the event that a court of competent jurisdiction
determines that any portion of this Employment Agreement is in violation of any
statute or public policy, then only the portions of this Employment Agreement
which violate such statute or public policy shall be stricken. All portions of
this Employment Agreement which do not violate any statute or public policy
shall continue in full force and effect. Further, any court order striking any
portion of this Employment Agreement shall modify the stricken terms as narrowly
as possible to give as much effect as possible to the intentions of the parties
under this Employment Agreement.
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9. GOVERNING LAW. This Employment Agreement shall be governed in all
respects, whether as to validity, construction, capacity, performance, or
otherwise, by the laws of the State of Arizona, and no action involving this
Employment Agreement may be brought except in the Superior Court for the State
of Arizona or the Federal District Court for the District of Arizona, subject to
Section 7.
10. AMENDMENT OR TERMINATION. This Employment Agreement and the KEESA
embody the entire agreement of the parties respecting the matters within its
scope and may be modified only in writing.
11. ASSIGNMENT. This Agreement may be assigned by Employer and shall be
fully binding on any such assignee and shall not be assignable by Employee.
IN WITNESS WHEREOF, the parties have executed this Agreement.
ARIZONA PUBLIC SERVICE COMPANY
By: Xxxxxxx X. Post
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Xxxxxxx X. Post
Pinnacle West Capital Corporation
Its Chief Executive Officer and
Chairman of the Board
Date: 10-11-02
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EMPLOYEE
Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Date: 10-11-02
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