THIS EMPLOYMENT AGREEMENT is entered into by and between Evan J.
Griffith, Jr. ("Griffith") and Chugach Electric Association, Inc. an Alaska
electrical cooperative association headquartered in Anchorage, Alaska ("Chugach"
or "Employer"), to be effective on and as of May 1, 2002.
WITNESSETH:
WHEREAS, Chugach is engaged in the business of production, transmission
and distribution of electricity in Alaska;
WHEREAS, Griffith has skills and experience in electric utility
management generally and with the business and technology associated with the
production, transmission and distribution of electricity; and
WHEREAS, Chugach desires to obtain Griffith's services as the General
Manager of its Business, and Griffith desires to be employed in that position by
Chugach;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties hereto agree as follows:
1. Employment. Chugach hereby employs Griffith as its
General Manager, and Griffith hereby accepts such employment upon the terms and
conditions hereinafter set forth.
2. Duties.
a. Griffith shall serve as Chugach's General Manager and shall
perform his services as such within the framework of Chugach's Bylaws, policies,
procedures and goals as Chugach's Board of Directors shall from time to time
determine, including but not limited to the following:
(i) Board Policy 106, Delegations of Authority from the
Board of Directors to the General Manager, Appendix
A hereto;
(ii) Board Policy 107, Board of Directors- General Manager
Relationship, Appendix B hereto;
(iii) Board Policy 118, Delegation of Certain of the
Secretary's and Treasurer's Duties to the General
Manager, Appendix C hereto; and
(iv) General Manager Position Description, Appendix D hereto.
In such capacity, Griffith (i) shall exercise general supervisory responsibility
and management authority over Chugach and all of its controlled affiliates and
(ii) shall perform such other duties commensurate with his position as may be
assigned to him from time to time by the Chugach Board of Directors.
b. Griffith shall devote substantially all his business time,
attention and energies to the performance of his duties and functions under this
Employment Agreement and shall not during the term of his employment hereunder
be engaged in any other substantial business activity for gain, profit or other
pecuniary advantage. Griffith shall faithfully, loyally and diligently perform
his assigned duties and functions and shall not engage in any activities
whatsoever that conflict with his obligations to Chugach during the term of his
employment hereunder. Notwithstanding the foregoing, nothing in the foregoing
shall be construed so as to limit or prohibit personal investments by Griffith;
provided that such investments shall not amount to a controlling interest in any
entity (other than trusts, limited partnerships or other entities adopted by
Griffith for estate planning purposes). Griffith also agrees that he will not
participate in any political activity that will or may reflect adversely upon
Chugach without obtaining the prior consent of Chugach's Board of Directors.
c. Chugach shall furnish Griffith with an office and other
facilities at Chugach's headquarters location and services that are suitable to
his position and adequate for the performance of his duties and functions
hereunder.
3. Term. The term of this Employment Agreement shall commence on the
date hereof (the "Commencement Date") and, unless terminated earlier pursuant to
paragraph 10 hereof, shall continue through March 31, 2004 (the "Initial Term").
If neither party gives written notice to the other party of non-renewal of this
Employment Agreement not less than sixty (60) days prior to March 31, 2004, this
Employment Agreement shall continue in full force and effect for subsequent
one-year terms (the "Extended Term(s)")(the Initial Term, together with the
Extended Terms, if any, being referred to herein as the "Employment Term"),
provided, however, that either party may give written notice of non-renewal to
the other party not less than sixty (60) days prior to the anniversary date of
any Extended Term, in which case this Employment Agreement shall terminate on
that anniversary date without further action by the parties. This Employment
Agreement also is subject to termination pursuant to paragraph 10 hereof during
any Extended Term.
4. Compensation. Chugach shall pay to Griffith, in
consideration of and as compensation for the services agreed to be rendered by
Griffith hereunder, the following:
a. Base Salary. During the Employment Term, Chugach shall
pay to Griffith an annual salary of One Hundred Eighty-five Thousand Dollars
($185,000) (the "Base Salary"). The Base Salary, subject to the modifications
contained in the Performance Appraisal/Bonus Program section contained below,
shall be adjusted annually each January based upon the Anchorage CPI-U (July
statistic) published by the Bureau of Labor Statistics. The Base Salary shall be
payable in accordance with Chugach's normal payroll schedule, less withholdings
required by law or authorized by Griffith.
b. Performance Appraisal/Bonus Program. Chugach and Griffith
agree that Griffith's total compensation under this Employment Agreement shall
be tied directly to his performance. Accordingly, the parties agree that
Griffith and Chugach's Board of Directors, by mutual agreement, shall by January
31 of each year develop reasonable objectives ("stated objectives") by which to
measure Griffith's performance for the upcoming year. Each year in January, the
parties shall then review the agreed upon stated objectives for the past year
and determine whether Griffith has met or failed to meet the stated objectives.
(i) Bonus for Meeting or Exceeding Stated
Objectives. In the event that Griffith meets or exceeds the stated objectives,
he shall be entitled to a bonus of up to twenty percent (20%) of his Base
Salary. The exact percentage of the bonus ("bonus amount") shall be at the
discretion of the Board of Directors in consideration of the level of goal
achievement including both quantitative and qualitative measures of merit.
Payment of any bonus under this program shall be considered compensation for
purposes of retirement plan credits.
(ii) Salary Reduction for Failing to Meet
Stated Objectives. In the event that the Board of Directors determines
that Griffith has substantially failed to meet the stated objectives, the Board
of Directors is entitled to reduce Griffith's Base Salary for the upcoming year
by an amount not to exceed ten percent (10%) of the previous year's Base Salary.
The precise amount of the salary reduction shall be at the discretion of the
Board of Directors in consideration of the extent of Griffith's failure to meet
the stated objectives and taking into account any mitigating factors outside of
Griffith's control which substantially affected his ability to meet the stated
objectives.
(iii) Reversion to Base Salary After Reduction
for Failure to Meet Stated Objectives. In the event Griffith's base salary is
reduced for failure to meet the stated objectives, his salary shall revert to
the previous year's Base Salary in January of the next year (e.g., 2002 - Base
Salary of $185,000. Failure to meet 2002 goals results in a reduction of 2003
Base Salary to $170,000. In January 2004, the Base Salary shall revert to
$185,000 prior to any adjustments based upon CPI or failure to meet stated goals
for previous year).
(iv) Future Deferred Compensation Plans. In the
event that the Board of Directors adopts and makes available a new deferred
compensation plan during the Employment Term under which eligible employees may
deferportions of their income (and thereby defer tax liability associated with
that income), Griffith shall be entitled to participate in such plan(s) to the
extent that he is eligible to do so. If the plan permits, Griffith may defer
some or all of the bonus amounts, leave or other compensation payable to him
pursuant to this Employment Agreement.
c. Use of Company Vehicles. During the Employment Term,
Griffith shall be permitted to use Chugach vehicles on company business on a
de minimus basis. Griffith shall not be entitled to a company vehicle for
personal use.
5. Benefits. During the Employment Term, Griffith shall be entitled to
participate in all group health, pension, 401(k), 457 and other benefit plans
maintained by Chugach and provided to its salaried administrative personnel, on
the same terms as apply to participation therein by such personnel generally
(except as otherwise provided herein). Further, during the Employment Term,
Griffith shall be entitled to participate in all fringe benefit programs and
shall receive all perquisites if and to the extent that Chugach's Board of
Directors establishes and makes such benefits and perquisites available to its
salaried administrative personnel generally, including, but not limited to,
Employer-paid long-term disability insurance and life insurance coverage.
6. Expenses. During the Employment Term, Chugach shall reimburse
Griffith for all reasonable travel, entertainment and other business expenses
incurred or paid by Griffith in performing his duties and functions hereunder,
subject to Griffith's accounting for and reporting such expenses pursuant to
applicable Chugach policies.
7. Holidays, Sick Leave and Annual Leave. Griffith shall be entitled to
such holidays, sick leave and annual leave as are provided to its salaried
administrative personnel generally, which paid time off work shall continue to
accrue at the same rate(s) as Griffith accrued holidays, sick leave and annual
leave as an Executive Manager. For example, Griffith shall continue to accrue
annual leave at the rate of 9.23 hours per pay period (e.g., at the rate of 30
days per year). Griffith shall carry over to this Employment Agreement all
annual leave previously accrued as of the Commencement Date of this Employment
Agreement, provided, however, that all such carried over annual leave shall be
valued at Griffith's rate of compensation as Executive Manager immediately prior
to the Commencement Date. Additionally, Griffith shall either use or cash out
annual leave that accrues to his account after the Commencement Date so that he
does not add more than six (6) weeks of annual leave to his pre-Commencement
Date annual leave balance. Chugach agrees to reconsider this six-week cap on
additions to Griffith's annual leave balance if Griffith is unable to take leave
for business-related reasons. Griffith shall be entitled to such vacations,
taken at such time or times, as Griffith shall determine in his reasonable
discretion, consistent with the performance of Griffith's obligations hereunder
and the direction of Chugach's Board of Directors.
8. Non-Competition. During the Employment Term and for a period of one
(1) year thereafter, Griffith shall not enter into or participate in any
business competitive to the business carried on by Chugach in Southcentral
Alaska or at such additional locations, if any, outside Southcentral Alaska at
which Chugach conducts business. (This paragraph 8 does not apply to a
Termination Other Than For Cause pursuant to paragraph 10(b) hereof.) As used
herein, the term "business competitive to the business carried on by Chugach"
means any business that involves the production, transmission or distribution of
electricity, and the words "Southcentral Alaska" mean a business conducted in
whole or in part within the boundaries of the Municipality of Anchorage, the
Kenai Peninsula Borough, or the Matanuska-Susitna Borough. The provisions of
this paragraph 8 shall survive the expiration and/or termination of this
Employment Agreement. If a court of competent jurisdiction should declare any or
all of this provision unenforceable because of any unreasonable restriction of
duration and/or geographical area, then such court shall have the express
authority to reform this provision to provide for reasonable restrictions and/or
to grant Chugach such other relief, at law or in equity, as are reasonably
necessary to protect its interests.
9. Confidential Information. During the Employment Term and for so long
thereafter as the information remains confidential, Griffith will not use for
his own advantage or disclose to any unauthorized person any confidential
information relating to the business operations or properties of Chugach and any
affiliate of Chugach. Upon the expiration or termination of the Employment Term,
upon Chugach's request, Griffith will surrender and deliver to Chugach all
documents and information of every kind relating to or connected with Chugach
and its affiliates. As used herein "confidential information" means all
information, whether written or oral, tangible or intangible, of a private,
secret, proprietary or confidential nature, of or concerning Chugach and its
business and operations, including without limitation, any trade-secrets or
know-how, computer software programs in both source code and object code,
information regarding any product or service, development, technology,
technique, process or methodology, any sales, promotional or marketing plans,
programs, techniques, practices or strategies, any expansion or acquisition
plans, any operational and management guidelines, any cost, pricing or other
financial data or projections, and any other information which is to be treated
as confidential because of any duty of confidentiality owed by Chugach to any
third party or any other information that Chugach shall, in the ordinary course
of its business, possess or use and not release externally without restriction
on use or disclosure. The foregoing confidential information provision shall not
apply to information which: (i) is or becomes publicly known through no wrongful
act of Griffith, (ii) is rightfully received from any third party without
restriction and without breach by Griffith of this Employment Agreement; or
(iii) is independently developed by Griffith after the term of his employment
hereunder or is independently developed by a competitor of Chugach at any time.
The provisions of this paragraph 9 shall survive the expiration and/or
termination of this Employment Agreement.
10. Termination.
a. Termination for Cause. Chugach may terminate Griffith's
employment for "cause" immediately upon written notice to Griffith, provided,
however, that Griffith has been given ten (10) days written notice of cause for
termination and has failed to, or is unable to, cure such cause within that
time. Such notice shall specify in reasonable detail the nature of the cause.
For purposes of this Employment Agreement, "cause" means a business-related
reason that is not arbitrary, capricious or illegal and which is based on facts
(i) supported by substantial evidence and (ii) reasonably believed by the Board
of Directors to be true. Examples of "cause" for termination of employment are
provided in Chugach Operating Policy 013 dated September 19, 2001, and are
incorporated herein by reference to the extent they are consistent with this
Employment Agreement. In the event of the involuntary termination of his
employment for cause, Griffith shall not be entitled to receive any compensation
hereunder other than his Base Salary and employee benefits and leave as accrued
through the effective date of such termination. Griffith's obligations under
Paragraphs 8 and 9 shall continue under the terms and conditions of this
Employment Agreement.
b. Termination Other Than for Cause. Chugach shall have the
right to terminate Griffith's employment for any reason, upon thirty (30) days
prior written notice to Griffith, whereupon Griffith's employment pursuant to
this Employment Agreement shall terminate as of the effective date of
termination. In the event of the involuntary termination of his employment other
than for cause, Griffith shall be entitled to receive: (i) his Base Salary,
bonus amount, leave and employee benefits as accrued through the effective date
of such termination; (ii) an amount equal to Griffith's Base Salary and benefits
for a period equal to five (5) months following the effective date of
termination; and (iii) a pro-rata portion of the bonus amount for that period.
Griffith will be entitled to receive the aforementioned amounts in this
Paragraph 10(b), if and only if Griffith signs a valid general release of all
claims against Chugach in a form provided by Chugach. All payments shall be made
at normal Chugach payroll periods, less withholdings required by law, unless
otherwise mutually agreed to in writing by Griffith and Chugach. Griffith's
obligations under Paragraph 9 shall continue under the terms and conditions of
this Employment Agreement.
c. Voluntary Termination. Griffith may voluntarily terminate
his employment under this Agreement at any time upon sixty (60) days' prior
written notice to Chugach's Board of Directors, whereupon Chugach's employment
of Griffith shall terminate at the end of the sixty (60) day notice period. In
the event of Griffith's voluntary termination of employment, he shall not be
entitled to receive any compensation hereunder other than his Annual Salary and
employee benefits as accrued through the effective date of such termination.
Griffith's obligations under Paragraphs 8 and 9 shall continue under the terms
and conditions of this Employment Agreement.
d. Death or Disability. Griffith's employment pursuant to this
Agreement shall terminate automatically on the date of Griffith's death or
disability. Upon Griffith's death or disability, no compensation shall be
payable to Griffith under this Agreement except for Griffith's Base Salary,
bonus amount and employee benefits as accrued through the date of his death or
disability, whichever is applicable, including any employee benefits payable in
the event of Griffith's death or disability, whichever is applicable. For
purposes of this Employment Agreement, Griffith shall be deemed to be disabled
(as medically determined by an independent physician), if for a period of at
least three (3) consecutive months he is unable to perform the essential
functions of his position with Chugach, with or without reasonable
accommodation. For purposes of this Agreement, if Griffith's employment
terminates by reason of his disability, his employment termination date shall be
deemed to be the last day of the three (3) month period described in this
paragraph.
e. Excess Parachute Payment. In the event that Chugach treats
any portion of Griffith's payments or benefits hereunder as an "excess parachute
payment" within the meaning of Section 280G of the Internal Revenue Code
("Code") or any comparable provision of state or local tax law, or it is
otherwise asserted (including on an audit of either Chugach or Griffith) that
any portion of such payments or benefits is such an "excess parachute payment,"
Chugach shall prior to the date on which any amount of excise tax (or penalty or
interest) must be paid in respect thereof, promptly make an additional lump sum
payment in cash to Griffith in an amount sufficient, after giving effect to all
federal, state and other taxes and charges (including interest and penalties, if
any) with respect to such payment to make Griffith whole for all taxes
(including withholding and social security taxes) imposed under Section 4999 of
the Code, or any comparable provision of state or local tax law, with respect to
the "excess parachute payment" and all associated interest and penalty amounts.
Griffith shall cooperate in all reasonable respects with Chugach to attempt to
minimize any such tax liability.
f. Miscellaneous. In the event of any termination or attempted
termination hereof: (i) if multiple events, occurrences or circumstances are
asserted as bases for such termination or attempted termination, the event,
occurrence or circumstance that is earliest in time, and any termination or
attempted termination found to be proper hereunder based thereon, shall take
precedence over the others; (ii) no termination of this Employment Agreement
shall relieve or release either party from liability hereunder based on any
breach of the terms hereof by such party occurring prior to the Termination
Date; and (iii) the terms of this Employment Agreement relevant to performance
or satisfaction of any obligation hereunder expressly remaining to be performed
or satisfied in whole or in part at the Termination Date shall continue in force
until such full performance or satisfaction has been accomplished and otherwise
neither party hereto shall have any other or further remaining obligations to
other party hereunder.
g. No Set-off; No Duty of Mitigation. There shall be no right
of setoff or counterclaim, in respect of any actual or alleged claim, debt or
obligation, against any payments or benefits required to be made or provided to
Griffith hereunder (including, without limitation, pursuant to subparagraphs
10(a) and 10(b)). In the event of any termination of Griffith's employment under
this paragraph 10, Griffith shall be under no obligation to seek other
employment and shall be entitled to all payments or benefits required to be made
or provided to Griffith hereunder, without any duty of mitigation of damages and
regardless of any other employment obtained by Griffith.
11. Injunctive Relief. It is agreed that the services of Griffith are
unique and that any breach or threatened breach by Griffith of any provision of
this Employment Agreement cannot be remedied solely by damages. Accordingly, in
the event of a breach by Griffith of his obligations under this Employment
Agreement, Chugach shall be entitled to seek and obtain interim restraints and
permanent injunctive relief, restraining Griffith and any business, firm,
partnership, individual, corporation or entity participating in such breach or
attempted breach. Nothing herein, however, shall be construed as prohibiting
Chugach from pursuing any other remedies available at law or in equity for such
breach or threatened breach, including the recovery of damages and the
termination of the services of Griffith.
12. Arbitration. Any dispute or controversy arising out of or relating
to this Employment Agreement or any claimed breach hereof shall be resolved, at
the request of either party, by a private arbitration proceeding. The
arbitration proceeding shall be conducted pursuant to the Alaska Uniform
Arbitration Act, AS 09.43.010 -- 09.43.180 (the "Act") and the Model Employment
Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association ("AAA"), each of which is incorporated herein by this reference to
the extent that the Act and the Arbitration Rules are consistent with this
Employment Agreement. The arbitrator shall be an impartial arbitrator qualified
to serve in accordance with the Arbitration Rules. The arbitrator shall be
selected by mutual agreement of the parties. If the parties are unable to agree
to a mutually acceptable arbitrator within twenty-one (21) days of the request
for arbitration, Chugach shall request that the AAA submit a list of seven (7)
arbitrators. After a coin toss to determine who makes the first strike, the
parties shall strike names from the AAA list alternately until the name of one
arbitrator remains. That arbitrator shall be deemed mutually acceptable to both
parties unless the arbitrator is unavailable, in which case the last arbitrator
whose name was struck shall be deemed acceptable to the parties, and so on. The
arbitration hearing shall be held in Anchorage, Alaska, or in such other place
as may be mutually agreed upon by the parties, at a time and location determined
by the arbitrator. Within thirty (30) days of the close of the arbitration
hearing, the arbitrator shall hand down a written decision and award. The
decision shall explain the basis for the arbitrator's award. The arbitrator
shall have authority to interpret and enforce this Employment Agreement, but
shall not have authority to alter, amend or supercede any provision of this
Employment Agreement. The decision and award shall be final and binding on the
parties, subject only to such appeal rights as are available under the Act.
Either party may seek entry of judgment upon such decision and award in any
court having jurisdiction over the parties. The expenses of the arbitration
proceeding shall be borne by Chugach. Each party shall pay for and bear the cost
of its own experts, witnesses and legal counsel in such arbitration proceeding.
13. Indemnification.
a. Chugach shall indemnify Griffith (as a "protected person")
to the fullest extent permitted by AS 10.25.145 (the terms of which are
incorporated herein by this reference) against all costs, expenses, liabilities
and losses (including, without limitation, attorneys' fees, judgments, penalties
and amounts paid in settlement) reasonably incurred by Griffith in connection
with any action, suit or proceeding, whether civil, criminal, administrative or
investigative in which Griffith is made, or is threatened to be made, a party to
or a witness in such action, suit or proceeding by reason of the fact that he is
or was an officer or agent of Chugach or of any of Chugach's controlled
affiliates or is or was serving as an officer, trustee, agent or fiduciary of
any other entity at the request of Chugach (a "Proceeding").
b. Chugach shall advance to Griffith all reasonable costs and
expenses incurred by him in connection with a Proceeding within twenty (20) days
after receipt by Chugach of a written request for such advance, accompanied by
an itemized list of the actual or anticipated costs and expenses and Griffith's
written undertaking to repay to Chugach on demand the amount of such advance if
it shall ultimately be determined that Griffith is not entitled to be
indemnified against such costs and expenses. Griffith shall periodically account
to Chugach for all such costs and expenses incurred by Griffith in connection
with his defense of the Proceeding.
c. The indemnification provided to Griffith hereunder is in
addition to, and not in lieu of, any additional indemnification to which he may
be entitled pursuant to Chugach's Certificate of Incorporation or Bylaws, any
insurance maintained by Chugach from time to time providing coverage to Griffith
and other officers and directors of Chugach, or any separate written agreement
with Griffith. The provisions of this paragraph 13 shall survive any termination
of this Employment Agreement.
14. Amendment and Modification. This Employment Agreement contains the
entire agreement between the parties with respect to the subject matter hereof,
and supersedes any and all prior agreements, arrangements or understandings
between the parties hereto with respect to the subject matter hereof, whether
written or oral. Subject to applicable law and upon the consent of Chugach's
Board of Directors, this Employment Agreement may be amended, modified and
supplemented by written agreement of Chugach and Griffith with respect to any of
the terms contained herein.
15. Waiver of Compliance. Any failure of either party to comply with
any obligation, covenant, agreement or condition on its part contained herein
may be expressly waived in writing by the other party, but such waiver or
failure to insist upon strict compliance shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Employment Agreement requires or permits consent by or on behalf of any party,
such consent shall be given in writing.
16. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand, sent by registered or certified U.S. Mail,
postage prepaid, commercial overnight courier service or transmitted by
facsimile and shall be deemed served or delivered to the addressee at the
address for such notice specified below when hand delivered, upon confirmation
of sending when sent by fax, on the day after being sent when sent by overnight
delivery or five (5) days after having been mailed, certified or registered,
with postage prepaid:
If to Chugach: If to Griffith:
-------------- --------------
Chugach Electric Association, Evan J. Griffith, Jr.
Inc. HC 85, Box 9242
P.O. Box 196300 Eagle River, AK 99577
Anchorage, AK 99519-6300
Facsimile: (907) 762-4688 Facsimile:
Attention: Chairman of Board of
Directors
or, in the case of either such party, to such substitute address as such party
may designate from time to time for purposes of notices to be given to such
party hereunder, which substitute address shall be designated as such in a
written notice given to the other party addressed as aforesaid.
17. Assignment. This Employment Agreement shall inure to the
benefit of Griffith and Chugach and be binding upon the successors and general
assigns of Employer. This Employment Agreement shall not be assignable,
except to the extent set forth in paragraph 20.
18. Enforceability. In the event it is determined that this
Employment Agreement is unenforceable in any respect, it is the mutual intent
of the parties that it be construed to apply and be enforceable to the maximum
extent permitted by applicable law.
19. Applicable Law. This Employment Agreement shall be construed
and enforced in accordance with the laws applicable to contracts executed,
delivered and fully to be performed in the State of Alaska.
20. Beneficiaries: Executive's Representative. Griffith shall be
entitled to select (and to change, from time to time, except to the extent
prohibited under any applicable law) a beneficiary or beneficiaries to receive
any payments, distributions or benefits to be made or distributed hereunder upon
or following Griffith's death. Any such designation shall be made by written
notice to Chugach. In the event of Griffith's death or of a judicial
determination of Griffith's incompetence, references in this Employment
Agreement to Griffith shall be deemed, as appropriate, to refer to his
designated beneficiary, to his estate or to his executor or personal
representative ("Griffith's Representative") solely for the purpose of providing
a clear mechanism for the exercise of Griffith's rights hereunder in the case of
Griffith's death or disability.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
to be effective on and as of the day and year first above written.
CHUGACH ELECTRIC ASSOCIATION, INC.
By: /s/ Bruce E. Davison
Name: Bruce E. Davison
Title: President, Board of Directors
/s/ Evan J. Griffith