Document:

Exhibit 10.25

 

EMPLOYMENT AGREEMENT

BETWEEN

NEW CENTURY ENERGIES, INC.

AND

PAUL J. BONAVIA

 

 

Contents

 

	
  Section 1.

  	
  Term of Employment

  
	
   

  	
   

  
	
  Section 2.

  	
  Position and Responsibilities

  
	
   

  	
   

  
	
  Section 3.

  	
  Executive to Devote Full Time

  
	
   

  	
   

  
	
  Section 4.

  	
  Compensation

  
	
   

  	
   

  
	
  Section 5.

  	
  Expenses

  
	
   

  	
   

  
	
  Section 6.

  	
  Disability

  
	
   

  	
   

  
	
  Section 7.

  	
  Termination of Employment

  
	
   

  	
   

  
	
  Section 8.

  	
  Compensation Upon Termination

  
	
   

  	
   

  
	
  Section 9.

  	
  Offset for Compensation Earned Subsequent
  to Termination

  
	
   

  	
   

  
	
  Section 10.

  	
  Covenants

  
	
   

  	
   

  
	
  Section 11.

  	
  Indemnification

  
	
   

  	
   

  
	
  Section 12.

  	
  Assignment

  
	
   

  	
   

  
	
  Section 13.

  	
  Income Tax

  
	
   

  	
   

  
	
  Section 14.

  	
  Dispute Resolution and Notice

  
	
   

  	
   

  
	
  Section 15.

  	
  Miscellaneous

  
	
   

  	
   

  
	
  Section 16.

  	
  Governing Law

  

 

 

This Employment Agreement is made and entered into this 28 day of
September, 1998, and is effective retroactive to December 15, 1997, by and
between New Century Energies, Inc., (hereinafter referred to as “NCE” or, as
defined in Section 12, below, as the “Company”), having its principal offices
at 1225 17th Street, Denver, Colorado, and Paul J. Bonavia
(hereinafter referred to as the “Executive”):

 

WHEREAS, Executive possesses considerable experienced in, and knowledge
of, the electric and natural gas utility industries, and

 

WHEREAS, the Company desires to employ Executive in an executive
capacity for the Company;

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree
as follows:

 

Section
1.  Term of Employment

 

The Company hereby agrees to employ Executive, and Executive herby
agrees to serve the Company, in accordance with the terms and conditions set
forth herein, commencing as of the effective date of this Agreement, as
indicated above, and ending on December 14, 2000, unless earlier terminated as
provided herein.

 

Section 2.  Position and
Responsibilities

 

Executive shall serve as Senior Vice President and General Counsel of
the Company, or in any other similar executive capacity for the Company, if so
elected by the Board of Directors, and shall report to either the Chief
Executive Officer or Chief Operating Officer of the Company.  Any change in these terms will be by mutual
agreement of the Executive and the Board of Directors.

 

Section 3.  Executive to Devote
Full Time

 

During the term of this Agreement, Executive agrees to devote
substantially his full time, attention, and energies to the Company’s business
and shall not be engaged directly or indirectly in any other business activity,
whether or not such business activity is pursued for gain, profit, or other
pecuniary advantage without prior approval of the Board of Directors, as
expressed by formal resolution.  This
prohibition does not include charitable, civic, nonprofit, or other community
service activities, nor shall it be construed as preventing the Executive from
investing assets in such form or manner as will not require his services in the
daily operations of the affairs of the companies in which such investments are
made, or serving as a director of other companies (subject to the covenants of
Section 10 herein).

 

 

Section
4.  Compensation

 

4.1                                 Base
Salary.                               The
Company shall pay Executive a salary at a rate (hereinafter referred to as “Base
Salary”) that shall be established from time to time by the Board of Directors
of the Company or the Board’s designee; provided, however, that such Base
Salary shall not be less than Two Hundred and Seventy Thousand Dollars
($270,000.00) per year.  This Base Salary
shall be paid to Executive in equal semi-monthly installments throughout the
year, consistent with the normal payroll practices of the Company.  Base Salary shall be reviewed periodically by
the Board of Directors or the Board’s designee following the effective date of
this Agreement, while this Agreement is in force, to ascertain whether in the
judgment of the Board or the Board’s designee, such Base Salary should be
increased (but not decreased).  If so
increased, that salary shall become the Base Salary for all purposes of this
Agreement.

 

4.2                                 Incentive
Compensation.

 

(a)                                  Annual
Bonus.  During the term of this
Agreement, the Executive shall be eligible to participate in the New Century
Energies, Inc. Annual Incentive Plan. 
Executive’s annual target bonus potential shall not be less that
forty-five percent (45%) of Base Salary. 
Awards under this Plan may be made in cash or stock, at the election of
Executive, and are conditioned upon the attainment of certain goals established
by Company management and approved by the Compensation Committee of the
Board.  In addition, upon the
commencement of Executive’s employment with the Company, Executive shall
receive a guaranteed award of $20,000 under the Annual Incentive Plan for the
plan year 1997, payable not earlier than January 5, 1998.  This is in addition to Executive’s actual
participation in the Plan for the month of December 1997.

 

(b)                                 Long
Term Incentive Plan.  Executive will
participate in the New Century Energies, Inc., Long Term Incentive Plan with a
target award of not less than 65% of Base Salary.  As currently designed, two-thirds of the
awards under this Plan are provided through the issuance of non-qualified stock
options and the remaining one-third is provided through a Value Creation Plan
Executive’s initial stock option grant under this Plan is 88,000 share of New
Century Energies, Inc. stock, which shall vest on December 15, 1998.  This grant covers the years 1998, 1999, and
2000.  The grant price will be the fair
market value (the closing price) of New Century Energies Inc., common stock on
December 15, 1997.  The Company reserves
the right to amend or modify the design of the Long Term Incentive Plan subject
to approval of the Compensation Committee.

 

4.3                                 Executive
Benefits.                                           The
Company shall provide to the Executive all benefits which other officers and
employees of the Company are entitled to receive, as commensurate with the
Executive’s position, pursuant and subject to the terms and conditions of all
then applicable plans.  Such benefits
shall include, but not be limited to, group term life insurance, comprehensive
health and major medical insurance, long-term disability, accidental death and
dismemberment insurance, travel accident insurance, and 

 

 

participation in any
supplemental benefit plans (including a supplemental executive retirement
plan), employee savings plans, supplemental savings plan, all employee welfare
benefit plans, and employee pension benefit plans.

 

4.4                                 Supplemental
Retirement Benefit.                Executive
shall be entitled under this Agreement to a supplemental retirement benefit.  Assuming full vesting and accrual, such
benefit shall be equal each year to fifty-five percent (55%) of Executive’s
Annual Compensation, minus any benefit received by Executive in that year
pursuant to any Company qualified retirement plan, Company SERP Plan, or Social
Security.  “Annual Compensation” is
defined as the average of the highest three of Executive’s last five years of
both annual Base Salary and annual incentives earned in the corresponding
year.  The Company may modify its salary
and incentive compensation structure after the date hereof, provided that no
such modification shall have the effect of reducing the monetary value of
Executive’s benefit under this Section. 
So long as Executive shall be employed by the Company, the benefit shall
accrue at the rate of five percent (5%) of Annual Compensation per year of
service, to reach fifty-five (55%) of Annual Compensation not later than
December 15, 2008.  The benefit shall
become one hundred percent (100%) vested in December 15, 2002, or upon a Change
in Control as that term is defined in the Change in Control Agreement,
whichever occurs earlier.  Yearly benefit
payments shall commence at age 60 or at separation from service, whichever
occurs later.  The benefit shall be funded
in a mutually acceptable manner through a rabbi trust or other funding vehicle.

 

4.4A                       SERP Plan.                                      Executive
shall be participant in the Supplemental Executive Retirement Plan for key
management employees, which may be amended or revised from time to time by the
Company (“SERP Plan”).  Terms and
conditions applicable to any benefit to which Executive may be entitled
thereunder shall be governed by the SERP Plan documents.

 

4.5                                 Executive
Life Insurance.           The
Company shall provide Executive with a life insurance policy with a death
benefit equal to 400% of Base Salary if death occurs during employment, and
equal to 200% of final Base Salary if death occurs during retirement.

 

4.6                                 Paid
Time Off.                     Executive
shall be entitled each calendar year to paid vacation in accordance with the standard
vacation policy of the Company with regard to vacations of Executive
Officers.  Executive shall receive a sick
leave accrual according to standard Company policy with regard to sick leave
for Executive Officers as of the date hereof.

 

4.7                                 Perquisites.                                  The
Company shall provide to Executive at the Company’s cost, all perquisites to
which other officers of the Company are entitled.  The Company also shall provide such other
perquisites which are suitable to the character of Executive’s position with the
Company and adequate for the performance of his duties hereunder, including,
but not limited to: (i) a monthly flexible perquisite allowance of $750.00;
(ii) an annual allowance for financial/estate planning and tax preparation of 

 

 

$3,500.00; (iii) an annual
medical examination at the Company’s expense; and (iv) a furnished executive
office and a full-time secretary located at the Company’s corporate
headquarters.  Executive shall likewise
have the benefit of any additional benefits, as may be established during the
term of this Agreement, by written policy of the Company.

 

4.8                                 Participation
in Programs.        In addition, and without
limiting the generality of the foregoing, during the term hereof:  (A) the Executive shall be entitled to
participate in all applicable incentive, savings and retirement plans,
practices, policies and programs of the Company and its affiliates to the same
extent as other senior executives of the Company; and (B) the Executive and/or
the Executive’s family, as the case may be, shall be eligible for participation
in, and shall receive all benefits under, all applicable welfare benefit plans,
practices, policies and programs provided by the Company and it affiliates,
other than severance plans, practices, policies and programs but including,
without limitation, medical, prescription, dental, disability, sick leave,
employee life insurance, group life insurance, accidental death and travel
accident plans and programs, to the same extent as other senior executives of
the Company.

 

4.9                                 Modifications
to Programs.                                               Sections
4.2, 4.3, 4.4A, and 4.5 herein refer to plans or programs in effect or under
consideration as of the date hereof.  By
reason of such sections, the Company shall not be obligated to institute,
maintain, or refrain from changing, amending, or discontinuing any benefit
plan, program, or perquisite, so long as such changes are similarly applicable
to the Company’s senior executive employees generally.  However, notwithstanding any change or
amendment to, discontinuance of, or benefit limitation set forth in any plan or
program, Executive shall be entitled under this Agreement (a) during Executive’s
term of employment under this Agreement, to incentive compensation
opportunities at least equal in monetary value to those provided for in Section
4.2, above, and (b) during and after Executive’s term of employment, to the
supplemental retirement benefit as provided in Section 4.4, above.

 

Section 5.
Expenses

 

5.1                                 Moving
and Relocation Expenses.          The
Company shall pay, or reimburse Executive, for reasonable and necessary moving
and relocation expenses incurred in the relocation of Executive’s principal
residence, in accordance with the Company’s existing relocation policy.

 

5.2                                 Ongoing
Expenses.                                         The
Company shall pay, or reimburse Executive in accordance with Company policies,
for all ordinary and necessary expenses, in a reasonable amount, which
Executive incurs in performing his duties under this Agreement, including, but
not limited to travel, entertainment, professional dues and subscriptions, and
all dues, fees, and expenses associated with membership in various
professional, business, social, and civic associations and societies in which
Executive’s participation is in the best interests of the Company.

 

 

Section 6.                                            Disability

 

6.1                                 Long
Term Disability.                             The
Company will provide to the Executive benefits pursuant and subject to the
terms and conditions of the Long Term Disability Plan then in effect.

 

Section 7.                                            Termination
of Employment

 

7.1                                 Termination
for Good Reason.    “Good Reason” means
the occurrence, on or after the date of a Change in Control (as that term is
defined in the Change in Control Agreement between Paul J. Bonavia and New
Century Energies, Inc., effective December 15, 1997, referred to in this
Agreement as the “Change in Control Agreement”) and which is Executive’s
written consent, of any of the following events or circumstances, as determined
in good faith by Executive:

 

(a)                                  A
reduction in executive’s base salary in effect immediately prior to the
Change in Control.

 

(b)                                 A
material reduction in Executive’s target opportunity, measured as a
percentage of base salary, to earn annual or long-term incentives or bonuses.

 

(c)                                  A
failure to provide to Executive employee benefits and perquisites (other than
amounts described in subsection (a) and (b)) which are reasonably equivalent in
the aggregate to those provided to Executive immediately prior to the Change in
Control.

 

(d)                                 A
material reduction by NCE of Executive’s job duties and responsibilities
that existed immediately prior to the Change in Control, including but not
limited to the assignment to Executive of duties and responsibilities which are
materially inconsistent with those of Executive’s position immediately prior to
the Change in Control.

 

(e)                                  Assignment
or reassignment of Executive to another place of employment that is more than
50 miles (measured by the shortest paved highway route) from Executive’s place
of employment immediately prior to the Change in Control.

 

(f)                                    A
failure by NCE to pay to Executive when due any deferred compensation that was
deferred by Executive prior to the Change in Control.

 

(g)                                 A
failure by NCE to comply with the terms and conditions of this Agreement.

 

 

Notwithstanding the foregoing:

aa)                                An
event or circumstance shall not constitute Good Reason unless Executive
provides written notice to NCE specifying the basis for Executive’s
determination that Good Reason exists within six months after the first day on
which such Good Reason existed.  If NCE
cures the event or circumstance within 30 days of receiving such written notice
(including retroactive restoration of any lost compensation or benefits, where
reasonably possible), Good Reason shall be deemed never to have existed.

 

bb)                              NCE
and Executive may, upon mutual written agreement waive any provision of this
Section which would otherwise constitute Good Reason.

 

7.2                                 Termination
by Notice.                      Either the
Company or the Executive may terminate this Agreement without cause by
delivering proper written notice to the other party, as follows:

 

(a)                                  Notice
by Executive.                                   Executive
may terminate this Agreement at any time by giving the Company’s Board of
Directors a minimum of ninety (90) days’ prior written notice of his intent to
terminate.  In such case, the Company
shall pay Executive his full Base Salary through the ninety (90) day period,
with the termination being effective on whatever date during that period is
designated by the Board of Directors, but in any event not later than the last
day of the ninety (90) day period.  As of
the last day of the ninety (90) day period. 
Executive shall forfeit all rights and benefits (other than vested
benefits) he would otherwise have been entitled to receive under this Agreement
(including, if applicable, the Executive’s annual expected target bonus for
that year).  The Company and Executive
thereafter shall have no further obligations under this Agreement.

 

(b)                                 Notice
by the Company.               The
Company may terminate this Agreement at any time by the Board of Directors
giving Executive written notice of the Company’s intent to terminate.  Subject to the consulting requirements of
Section 8 herein, Executive’s obligation to serve the Company, and the Company’s
obligation to employ Executive under the terms of this Agreement shall
terminate simultaneously on the date specified in the written notice, and the
Executive shall receive those benefits specified in Section 8 herein.

 

7.3                                 Termination
for Cause.                       Nothing in
this Agreement shall be construed to prevent the Company’s Board of Directors
from terminating Executive’s employment under this Agreement for cause.  “Termination for cause” shall have the same
definition herein as the term “Discharge for Cause” in the Change in Control
Agreement.

 

In the event
this Agreement is terminated by the Company for cause, the Company shall pay
Executive his full Base Salary through the date of termination, and Executive
shall immediately thereafter forfeit all rights and benefits (other than vested
benefits) he would otherwise have been entitled to receive under this Agreement

 

 

(including, if applicable, the
Executive’s annual expected target bonus for that year).  The Company and Executive thereafter shall
have no further obligations under this Agreement, except as set forth in
Section 15.6.

 

7.4                                 Termination
After a Change in Control.    In the
event of a Change in Control (as defined in Executive’s Change in Control
Agreement), the Executive shall be entitled to the greater of:  (a) the payments he would otherwise be
entitled to receive for the remaining term of employment under this Agreement;
or (b) those payments provided for under the Change in Control Agreement.  If it is determined that payments will be
made pursuant to this Agreement following a Change in Control, the executive
shall be entitled to tax-free reimbursements of any excise taxes that may arise
as a result of such payments.

 

Section 8.                                            Compensation
Upon Termination

 

In the event this Agreement is terminated for Good Reason (as provided
in Section 7.1 herein) or by notice by the Company as provided in Section 7.2
(b) herein, the Company shall continue the Executive’s total compensation
package for the remaining term of this Agreement which shall constitute the
following amounts upon the effective date of such termination, or as otherwise
specified:

 

(a)                                  Executive’s
annual Base Salary (as stated in Section 4.1 herein and adjusted by the Board
from time to time), continued for the remaining term of this Agreement, paid to
the Executive in equal semi-monthly installments consistent with the normal
payroll practices of the Company;

 

(b)                                 For
annual incentive plans(s) in place and operational on the date of termination,
the greater of target or actual bonus paid for the year in which employment
termination occurs, as provided in the annual incentive plan and subject to the
authority of the Board under such plan, continued for the remaining term of
this Agreement;

 

(c)                                  For
long-term incentive plans(s) in place and operational on the date of
termination, an immediate vesting of all outstanding long-term incentive awards
held by the Executive, plus the economic equivalent value of any long-term
incentive awards the Executive would have received had the Executive remained
employed for the remaining term of this Agreement, as provided in the long-term
incentive plan and subject to the authority of the Board under such plan;

 

(d)                                 For
the supplemental retirement benefit provided for in Section 4.4 and the SERP
Plan (or any successor plan) in place and operational on the date of
termination, payment, in accordance with the terms of the plan, of the
Executive’s accrued benefits, vested or otherwise; plus, Executive shall
receive credit for such additional years of service under this Agreement at the
time of termination;

 

 

(e)                                  For
the Supplemental Savings Plan (or any successor plan) in place and operational
on the date of termination, payment, in accordance with the terms of the plan,
within thirty (30) days of termination, of the Executive’s account balances
therein; plus credit for the maximum additional Company contributions the
Executive would have been entitled to receive had the Executive remained
employed for the remaining term of this Agreement;

 

(f)                                    For
welfare benefit plan(s) in place and operational on the date of termination,
Executive shall receive full benefit coverage for the remaining term of this
Agreement;

 

(g)                                 For
all qualified retirement plans in place and operational on the date of
termination, Executive shall receive, by direct payment from the Company, the
present value of the benefits that would have been paid under the qualified
plans if the Executive had received credit for additional years of service
equal to the number of years remaining under this Agreement at the time of
termination; plus the maximum Company matching contributions and accruals under
any such retirement plans Executive would have been entitled to receive had his
employment continued for the remaining term of this Agreement; and

 

(h)                                 For
all perquisite programs in place and operational on the date of termination,
Executive shall receive full perquisites for the remaining term of this
Agreement.

 

As consideration for the continuation of the above-stated benefits,
Executive agrees to make himself available during the remaining term of the
Agreement, at reasonable times and location, to the Company and/or to the
successor to his position at the Company, to provide consulting advice (as
requested).

 

Section 9.  Offset for
Compensation Earned Subsequent to Termination

 

In the event
this agreement is terminated for good reason (as provided in Section 7.1
herein) or by notice by the Company as provided in Section 7.2 herein, the
continuation of the Executive’s Base Salary (as provided in Section 8(a)
herein), any annual incentive award, if applicable (as provided in Section 8(b)
herein), long-term incentive plan(s) awards, if any (as provided in Section
8(c) herein), the SERP Plan and supplemental retirement benefit, if any (as
provided in Section 8(d) herein), and the Supplemental Savings Plan, if any (as
provided in Section 8(e) herein), shall not be offset by compensation earned
from a subsequent employer during the remaining term of employment under this
Agreement.

 

Section
10.  Covenants

 

10.1                           Non-competition.   Without the prior written
consent of the Company, for the greater of twenty-four (24) months following
the termination of Executive’s employment under Section 7 of this Agreement, or
the remaining term of employment under this Agreement, the Executive shall not,
as a shareholder, employee, officer, 

 

 

director, partner, consultant,
or otherwise, engage directly or indirectly in any business or enterprise which
is “in competition” with the Company or its successors or assigns.

 

A business or enterprise is deemed to be “in competition” if it is
engaged in the business of generation, purchase, transmission, distribution, or
sale of electricity, or in the purchase, transmission, distribution, sale or
transportation of natural gas, within the states of Colorado, Wyoming or Texas.

 

10.2                           Disclosure
of Information.     Executive
recognizes that he will have access to and knowledge of certain confidential
and proprietary information of the Company and its subsidiaries which is
essential to the performance of his duties under this Agreement.  Executive will not, during or after the term
of his employment by the Company, in whole or in part, disclose such
information to any person, firm, corporation, association, or other entity for
any reason or purpose whatsoever, nor shall he make any use of any such
information for his own purposes.

 

10.3                           Covenants
Regarding Other Employees.                           For
the greater of twenty-four (24) months following a termination under Section 7
of this Agreement, or the remaining term of employment under this Agreement,
the Executive agrees not to induce any employees of the Company to terminate
their employment, accept employment with anyone else, or to interfere in a
similar manner with the business of the Company.

 

Section
11.  Indemnification

 

The Company hereby covenants and agrees to indemnify and hold harmless
Executive fully, completely, and absolutely against, and in respect to any and
all actions, suits, proceedings, claims, demands, judgments, costs, expenses
(including attorneys’ fees), losses, and damages resulting from Executive’s
good faith performance of his duties and obligations under the terms of this
Agreement.

 

Section 12.  Assignments and
Successors

 

This Agreement shall be binding upon and shall inure to the benefit of
any successor to or assign of NCE.  The
term “Company” as used in this Agreement is defined as NCE and any successor or
assign.  The term “successor” is defined
to include any person, firm, corporation or entity which at any time and by any
means, directly or indirectly (a) merges or consolidates with NCE; (b) acquires
all or the majority of NCE’s voting shares or assets; or (c) obtains control of
NCE, its voting shares, assets or business activities.  NCE (if it should continue to exist following
the occurrence of any such event) shall remain jointly and severally liable for
all of its obligations hereunder.

 

Except as herein provided, this Agreement may not be assigned by the
Company without the written consent of the Executive.

 

This Agreement shall inure to the benefit of, and be enforceable by,
Executive’s personal or legal representatives, executors, and administrators,
successors, heirs, 

 

 

distributees, devises and legatees. 
If Executive should die while any amounts payable to Executive hereunder
remain outstanding, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement to Executive’s devisee,
legatee, or other designee or, in the absence of such designee, the Executive’s
estate.

 

Other than a transfer by reason of death, the rights and duties of
Executive hereunder are personal and may not be assigned or transferred.

 

Section
13.  Income Tax

 

The Company may withhold, from any benefits payable under this
Agreement, all federal, state, city or other taxes as may be required pursuant
to any law or governmental regulation or ruling.

 

Section 14.  Dispute Resolution
and Notice

 

14.1                           Dispute
Resolution.                                      The
parties agree that any dispute or controversy arising under or in connection
with this Agreement shall be submitted to arbitration as the exclusive forum;
provided that if a party gives notice to the other party of his or its desire
that the arbitration hearing be held forthwith and a hearing is not conducted
within ninety (90) days following said notice, the party having given such
notice may initiate litigation, in which case the Court’s jurisdiction shall
supersede and replace that of the arbitrators. 
The arbitrators shall have all powers of a court to grant legal or
equitable relief to remedy any breach of this Agreement.

 

Arbitration proceedings shall be conducted before a panel of three (3) arbitrators
sitting in a location selected by the Executive within fifty (50) miles from
the location of his principal place of employment, in accordance with the rules
of the American Arbitration Association then in effect.  Judgment may be entered on the award of the
arbitrators in any court having competent jurisdiction.

 

The arbitrators’ fees shall be divided and paid equally by Executive
and the Company.  Executive and the
Company shall pay his/its own costs and attorneys’ fees, if any, in the
arbitration proceedings, preliminary and ancillary proceedings, and any court
proceedings to enforce or vacate an arbitration award, provided that if
Executive recovers through such action some amount or benefit (regardless of
size or value) in excess of what NCE had offered prior to commencement of the
proceeding, NCE will pay or reimburse Executive for all arbitration expenses,
costs and attorney’s fees.

 

14.2                           Notice.          Any notices, requests,
demands and other communications provided for by this Agreement be sufficient
if in writing and if sent by registered or certified mail to Executive at the
last address he has filed in writing with the Company or, in the case of the
Company, at its principal executive offices.

 

 

Section 15.                                      Miscellaneous

 

15.1                           Waiver.      A waiver of any breach of
this Agreement, or a failure to enforce any provision hereof, shall not be a
waiver of any subsequent breach of the Agreement.

 

15.2                           Modification.                        This
Agreement shall not be varied, altered, modified, canceled, changed, or in any
way amended except by mutual agreement of the parties in a written instrument
executed by the parties hereto or their legal representatives.

 

15.3                           Severability.                              In
the event that any provision or portion of this Agreement shall be determined
to be invalid or unenforceable for any reason, the remaining provision of this
Agreement shall be unaffected thereby and shall remain in full force and
effect.

 

15.4                           Integration
Clause.                                           This
Agreement and the Change in Control Agreement set forth the complete agreement
between the parties, and supersede all prior statements, stipulations,
representations, promises, or agreements, if any, between the parties.  No other consideration, other than that set
forth in this Agreement and the Change in Control Agreement is due between the
parties.

 

15.5                           Counterparts.                       This
Agreement may be executed in one (1) or more counterparts, each of which shall
be deemed to be an original, but all of which together will constitute one (1)
and the same Agreement.

 

15.6                           Survival
of Obligations According to Their Terms.                     The
provisions of Sections 4.4, 4.9, 8, 9, 10, 11, 12, 13 and 14 shall survive the
termination of this Agreement for any reason, whether such termination is by
NCE, by Executive, or otherwise, and shall survive the expiration of Executive’s
term of employment.  Such obligations
shall continue thereafter in full force and effect.

 

15.7                           No
Attachment.  Except as required by law,
no right to receive payments under this Agreement shall be subject to
anticipation, commutation, alienation, sale, assignment, encumbrance, charge,
pledge or hypothecation or to execution, attachment, levy or similar process or
assignment by operation of law, and any attempt, voluntary or involuntary, to
effect such action shall be null, void and of no effect.

 

Section 16.                                      Governing Law

 

This Agreement shall be construed and enforced in accordance with the
laws of the State of Colorado.  The
parties understand and intend that this Agreement is a fully enforceable
contract and not a benefit plan within the meaning of ERISA.

 

 

IN WITNESS
WHEREOF, Executive has executed, and the Company (pursuant to a resolution
adopted at a duly constituted meeting of its Board of Directors) has executed
this Agreement, effective as December 15, 1997.

 

 

	
  ATTEST:

  	
  NEW CENTURY ENERGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Cathy Hart

  	
   

  	
  /s/ Wayne H. Brunetti

  	
   

  
	
  By: Cathy Hart

  	
  By:

  	
   

  	
   

  
	
  lts: Corporate Secretary

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Paul J. Bonavia

  	
   

  
	
   

  	
  Paul J. Bonavia

  
					

 

 

Amendment One to Employment Agreement Between
New Century Energies, Inc.

and Paul J. Bonavia

 

This Amendment One to the Employment Agreement Between New Century
Energies, Inc. and Paul J. Bonavia, effective December 15, 1997, is effective
as of the date described below.  The
employment agreement, as amended, will be referred to as the “Agreement”.

 

WHEREAS, New Century Energies, Inc. has completed a Merger, pursuant to
which the surviving corporation, Xcel Energy, Inc., has succeeded to all rights
and obligations under the Agreement.  The
term “Company” will hereafter mean Xcel Energy, Inc.; and

 

WHEREAS, at the Company’s direction, Executive ceased to serve as
either the Company’s Senior Vice President and General Counsel or President of
its International Business Unit as of the Effective Time; and

 

WHEREAS, as of the Effective Time, the Company requested Executive to
serve as President of its Energy Markets Business Unit pursuant to terms set
forth in a letter attached hereto as Exhibit A;

 

NOW THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereby amend the Agreement as follows:

 

1.                                       Section 17 is
added, which provides:

 

Section 17.  Definitions.  For all purposes of this Agreement, the
following terms shall have the following respective meanings:

 

17.1                           Determination.                  A decision made
by Executive in his sole discretion, after consultation with the Chief
Executive Officer, concerning the items set forth in paragraph 1 of Section
4.4B of this Agreement.

 

17.2                           Determination
Date.                                      January
6, 2003.

 

17.3                           Development
Objective.   Development of the Xcel Energy
marketing organization into a multi-regional energy merchant by having
implemented one of the following means; (a) joining a consortium of energy
marketing organizations; (b) acquiring other energy marketing organizations; or
(c) building such attributes internally.

 

17.4                           Diminished.                                 Materially
and adversely diminished in comparison to the duties and responsibilities
enjoyed by the Executive on the effective date of the Merger Agreement, within
the meaning of Section 4.2(a)(iii) of the Severance Policy.

 

 

17.5                           Effective
Time.                 The Effective
Time of the Merger, as defined in the Merger Agreement.

 

17.6                           Integration.                                  Combination
of the existing NSP and NCE energy marketing organization (excluding NRG
Energy, Inc.) to create one Xcel energy marketing organization with principal
operations in one location and one set of processes for trading, risk
management and reporting, financial reporting and back office functions.

 

17.7                           Merger.   The merger contemplated by the Merger
Agreement.

 

17.8                           Merger
Agreement.                                        This
Agreement and Plan of Merger by and between Northern States Power Company (“NSP”)
and New Century Energies, Inc. (“NCE”), dated as of March 24, 1999.

 

17.9                           Severance
Policy.  The Xcel Energy Senior Executive
Severance Policy, effective as of the Effective Time.

 

2.                                       Section 2 is
amended to provide:

 

Executive shall serve as President of the Company’s Energy Markets
Business Unit or in any other capacity which the Company, in its sole
discretion, may direct and shall report to the Chief Executive Officer.

 

3.                                       Section 4.4B is
added, which provides:

 

4.4B                         Separation
Benefits.  Executive agrees that,
notwithstanding any changes to his duties and responsibilities which the
Company in its sole discretion has made or might make, he will not assert at
any time before the Determination Date that his duties and responsibilities
have been Diminished.  In consideration
of such agreement and the other agreements contained herein, the Company agrees
to pay Executive separation benefits under this Agreement upon the occurrence or
satisfaction of all of the following conditions:

 

1.                                       Executive
shall have made a Determination that, as of the Determination Date (a)
integration of the NSP and NCE energy marketing organizations has been
satisfactorily accomplished; and (b) either the Development Objective has not
been satisfactorily accomplished or it has been satisfactorily accomplished but
Executive has not been employed on mutually acceptable terms to head the
organization or consortium designated to perform the larger role created by the
Development Objective;

 

2.                                       During
the period commencing on the Determination Date and ending at the close of the
seventh business day thereafter, Executive shall have given written notice of
the Determination and the consequent termination of his employment; and

 

 

3.                                       Executive
shall have executed and not revoked a release agreement substantially in the
form described in the Severance Policy.

 

The separation benefits to which Executive shall be entitled hereunder
will be calculated determined and paid in accordance with the provisions of
Section 4.3, 4.4, 4.5, 4.6 and Schedule I of the Severance Policy.

 

Notwithstanding any other provision of this Agreement or any other
plan, program, practice or policy of the Company or its predecessors or
successors, any cash Separation Benefits that Executive becomes entitled to
receive under Section 4.4B of this Agreement, shall be reduced (but not below
zero) by the aggregate amount of cash severance, separation, Change in Control
or similar benefits that the Executive may be entitled to receive under any
other plan, program, policy, contract, agreement or arrangement of the Company,
its predecessors or successors (including without limitation the Xcel Senior
Executive Severance Policy), except to the extent the Executive waives his
right thereto.

 

4.                                       Section
4.9 is amended to provide:

 

Sections 4.2,
4.3, 4.4A, 4.4B, and 4.5 herein refer to plans or programs in effect as of the
Effective Time, by reason of such sections, the Company shall not be obligated
to institute, maintain, or refrain from changing, amending or discontinuing any
benefit plan, program or perquisite, so long as such changes are similarly
applicable to the Company’s senior executive employees generally.  However, notwithstanding any change or amendment
to, discontinuance of, or benefit limitation set forth in any plan or program,
Executive shall be entitled under this Agreement (a) during Executive’s term of
employment under Section 1 of this Agreement, to incentive compensation
opportunities at least equal in monetary value to those provided for in Section
4.2 above, and (b) during and after such term of employment to the supplemental
retirement benefit as provided in Section 4.4 above, and separation benefits as
provided in Section 4.4B, above.

 

5.                                       Section
15.6 is amended to provide:

 

The provisions of Section 4.4, 4.4B, 4.9, 8, 9, 11, 12, 13, 14, and 17
shall survive the termination of this Agreement for any reason, whether by the
Company, by Executive, or otherwise, and shall survive the expiration of
Executive’s term of employment.  Such
obligations shall continue thereafter in full force and effect.

 

6.                                       All
other terms and provisions of this Agreement remain in full force and effect,
without modification.  Except as
expressly stated herein, Executive reserves all rights arising under law, under
any agreement, plan or policy (including but not limited to the Severance
Policy), or otherwise.

 

 

IN WITNESS WHEREOF, the parties have executed this Amendment One to the
Agreement, effective as of the Effective Time of the Merger.

 

 

	
  ATTEST:

  	
  XCEL ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Cathy Hart

  	
   

  	
  By:

  	
  /s/ Wayne H. Brunetti

  	
   

  
	
   

  	
  Cathy Hart, Corporate Secretary

  	
   

  	
  Wayne H. Brunetti, President and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Paul J. Bonavia

  	
   

  
	
   

  	
  Paul J. Bonavia

  
						

 

 

Amendment Two to Employment Agreement Between
Xcel Energy Inc.

and Paul J. Bonavia

 

This Amendment One to the Employment Agreement (“Agreement”) between
Xcel Energy, Inc. as successor employer to New Century Energies, Inc. and Paul
J. Bonavia (“Participant”).  Said
Agreement was first effective December 15, 1997, and later amended with the
First Amendment thereto, and is now amended with the following Amendment Two:

 

1.                                       Section
17.2                                Determination
Date, is hereby amended by substituting “January 13, 2003” for “January 6, 2003”
as it appears therein.

 

IN WITNESS WHEREOF, the parties have executed this Amendment Two to the
Agreement, effective as of the Effective December 31, 2002.

 

 

	
  ATTEST:

  	
  XCEL ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/ Wayne H. Brunetti

  	
   

  
	
  lts:

  	
   

  	
   

  	
   

  	
  Wayne H. Brunetti

  
	
   

  	
   

  	
  President and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Paul J. Bonavia

  	
   

  
	
   

  	
  Paul J. Bonavia

  

 

 

Amendment Three to Employment Agreement
Between Xcel Energy, Inc.

and Paul J. Bonavia

 

This Amendment Three to the Employment Agreement Between Xcel Energy,
Inc. (as successor to New Century Energies, Inc.) and Paul J. Bonavia,
effective as of January 6, 2003.  The
employment agreement, as amended, will be referred to as the “Agreement”.

 

WHEREAS, Executive has made a Determination pursuant to Section 4.4B.1
of the Agreement that, as of the Determination Date, integration of the NSP and
NCE energy marketing organizations has been satisfactorily accopmplished and
the Development Objective has not been satisfactorily accomplished; and

 

WHEREAS, the Company has asked Executive to continue in its employ
through August 31, 2003, notwithstanding such Determination, and Executive has
agreed to do so; and

 

WHEREAS, the Company hereby waives the conditions set forth in Section
4.4B.2;

 

NOW THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereby amend the Agreement as follows:

 

1.                                       The
first sentence of Section 4.4B is amended to provide:

 

4.4B                         Separation
Benefits.                                     Executive
agrees that, notwithstanding any changes to his duties and responsibilities
which the Company in its sole discretion has made or might make, he will not
assert at any time that his duties and responsibilities have been Diminished.

 

2.                                       Section
4.4C is added, which provides:

 

4.4C                         Entitlement
to Separation Benefits.    The parties
agree that the conditions of Section 4.4B.1 and 4.4B.2 have been satisfied or
waived.  The Company will pay Executive
separation benefits pursuant to Section 4.4B as set out in Attachment 1,
adjusted for inflation from January 6, 2003, if:  (a) Company terminates Executive’s employment
at any time for any reason other than for Cause, as defined in Section 4.2(b)
of the Severance Policy; or (b) Executive terminates his employment at any time
after August 31, 2003.  In either event,
payment is conditioned on Executive executing and not revoking a release
agreement in accordance with Section 4.4B.3.

 

3.                                       The
first sentence of Section 15.6 is amended to provide:

 

 

The provisions of Sections 4.4, 4.4B, 4.4C, 4.9, 8, 9, 11, 12, 13, 14
and 17 shall survive the termination of this Agreement for any reason whether
by the Company, by Executive, or otherwise, and shall survive the expiration of
Executive’s term of employment.

 

4.                                       All
other terms and provisions of this Agreement remain in full force and effect,
without modification.

 

IN WITNESS WHEREOF, the parties have executed this Amendment Three to
the Agreement.

 

 

	
  ATTEST:

  	
  XCEL ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Cathy Hart

  	
   

  	
  By:

  	
  /s/ Wayne H. Brunetti

  	
   

  
	
   

  	
  Cathy Hart, Corporate Secretary

  	
   

  	
  Wayne H. Brunetti

  
	
   

  	
   

  	
  President and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Paul J. Bonavia

  	
   

  
	
   

  	
  Paul J. Bonavia

  
	
   

  	
   

  
							

 

 

ATTACHMENT I

 

	
  Paul Bonavia

  
	
  Termination Date: January 7, 2003 – Through
  – July 7, 2005

  
	
  Salary = $385,000

  

 

	
   

  	
   

  	
  2.5X Package

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.5 years of Base Salary

  	
   

  	
  $

  	
  962,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.5 years of Annual Incentive

  	
   

  	
  $

  	
  657,300

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.5 years of Long Term Incentives

  	
   

  	
  $

  	
  1,585,938

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2003 Prorated Annual Incentive Award

  	
   

  	
  $

  	
  3,473

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2003 Prorated Long Term Incentives

  	
   

  	
  $

  	
  10,404

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.5 years of 401(k) Match

  	
   

  	
  $

  	
  36,458

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.5 years of Pension Credit

  	
   

  	
  $

  	
  60,950

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.5 years of SERP Credit

  	
   

  	
  $

  	
  657,611

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.5 years of Perquisite (car) Allowance

  	
   

  	
  $

  	
  45,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Severance Lump Sum Sub Total

  	
   

  	
  $

  	
  4,019,633Exhibit 10.26

 

Directors’
Compensation

 

The following table
provides information on our compensation and reimbursement practices for
non-employee directors.  Neither Mr.
Brunetti nor Mr. Kelly, each employed by us, received any compensation for his
Board activities.

 

	
  Annual Director Retainer

  	
   

  	
  $

  	
  35,000

  	
   

  
	
  Board Meeting Attendance Fees (per meeting)

  	
   

  	
  $

  	
  1,500

  	
   

  
	
  Telephonic Meeting Attendance Fees (per meeting)

  	
   

  	
  $

  	
  650

  	
   

  
	
  Committee Meeting Attendance Fees (per meeting)

  	
   

  	
  $

  	
  1,500

  	
   

  
	
  Additional Retainer for Committee Chair:

  	
   

  	
   

  	
   

  
	
  Governance, Compensation & Nominating Committee

  	
   

  	
  $

  	
  5,000

  	
   

  
	
  Operations, Nuclear & Environmental Committee

  	
   

  	
  $

  	
  5,000

  	
   

  
	
  Audit Committee

  	
   

  	
  $

  	
  10,000

  	
   

  
	
  Finance Committee

  	
   

  	
  $

  	
  5,000

  	
   

  
	
  Stock Equivalent Units

  	
   

  	
  $

  	
  52,800

  	
   

  

 

We have a Stock
Equivalent Plan for Non-Employee Directors to more closely align directors’
interests with those of our shareholders. 
Under this Stock Equivalent Plan, which is filed as Exhibit 10.16 to
this Form 10-K, directors may receive an annual award of stock equivalent units
with each unit having a value equal to one share of our common stock.  Stock equivalent units do not entitle a
director to vote and are only payable as a distribution of whole shares of the
Company’s common stock upon a director’s disability or termination of
service.  The stock equivalent units
fluctuate in value as the value of our common stock fluctuates.  Additional stock equivalent units are
accumulated upon the payment of, and at the same value as, dividends declared
on our common stock.

 

On May 21, 2004, each
non-employee director of the Company received an award of 3,287 stock
equivalent units representing approximately $52,800 in cash value.  Additional stock equivalent units were
accumulated during 2004 as dividends were paid on our common stock.  The number of stock equivalents for each
non-employee director is listed in the share ownership chart that is set forth
below.

 

During 2004, directors
were able to participate in a deferred compensation plan that provided for
deferral of director retainer and meeting fees until after retirement from the
Board.  A director could defer director
retainer and meeting fees into the Stock Equivalent Plan.  A director who elected to defer compensation
under this plan may receive a premium of 20% of the compensation that is
deferred.  In December 2004, the
Board amended a number of executive and director compensation plans, including
the Stock Equivalent Plan for Non-Employee Directors and the Non-Employee
Directors Deferred Compensation Plan, in part to comply with deferred
compensation requirements of new Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”), as added by Section 885 of the American
Jobs Creation Act of 2004, and other legislation.  As a result of the amendments, participation in
the Stock Equivalent Plan for Non-Employee Directors and the Non-Employee
Directors Deferred Compensation Plan was frozen.  The plans will continue to operate in
accordance with their terms with respect to amounts deferred and/or awarded
prior to January 1, 2005.  It is
expected that the plans will be amended in 2005 in order to achieve compliance
with the new deferred compensation requirements and that the deferral of
compensation will again be permitted under these plans.

 

1

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