EXHIBIT 10.25
EMPLOYMENT AGREEMENT
BETWEEN
OGLETHORPE POWER CORPORATION
(An Electric Membership Corporation)
AND
THOMAS A. SMITH
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into effective
the 15th day of March, 2002 ("Effective Date"), by and between THOMAS A. SMITH
("Employee") and OGLETHORPE POWER CORPORATION (An Electric Membership
Corporation) ("Employer") (individually a "Party" or collectively "the
Parties").
WITNESSETH:
WHEREAS, the Board of Directors of Employer elected Employee to continue to
serve as its President and Chief Executive Officer, effective March 15, 2002;
WHEREAS, Employee desires to formalize his employment relationship with
Employer and to ensure the security of his position;
WHEREAS, Employer is willing to enter into an agreement with Employee, and
Employee is willing to enter into an agreement on that same basis;
NOW THEREFORE, in consideration of the promises contained herein and other
good and valuable consideration, the Parties agree as follows:
ARTICLE 1
EMPLOYMENT
Employer employs Employee and Employee accepts employment as Employer's
President and Chief Executive Officer ("CEO") upon the terms and conditions set
forth herein.
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ARTICLE 2
TERM AND OTHER EMPLOYMENT
2.1 Term. Subject to the provisions for automatic renewal and termination
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as provided herein below, the term of this Agreement shall be effective as of
March 15, 2002, and shall terminate at 12:00 a.m. on December 31st, 2004
("Term").
2.2 Automatic Renewal. With the exception of Sections 5.3 ("Retention
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Bonus"), 5.4 ("Supplemental Retirement Income"), and 7.6 ("Resignation by
Employee for Other Than Good Reason") of the Agreement, the Agreement shall
automatically be extended for an unlimited number of one-year periods, unless on
or before December 31, 2002, or twenty-four (24) months before the expiration of
any extension of the Agreement, either party to the Agreement provides to the
other written notice of its/his desire not to automatically renew this
Agreement, or unless Employee's employment has previously otherwise terminated
as hereinafter provided.
2.3 Other Employment. Employee agrees that, unless this Agreement is
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terminated in accordance with Article 7 hereof, during the term of this
Agreement he will not, without the consent of Employer, accept employment with
any employer other than Employer.
2.4 Compensation From Other Boards And Similar Actions. Notwithstanding
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Section 2.3, Employee may receive compensation for participation on boards of
directors or similar part-time associations, provided that such participation
does not interfere with the performance of his employment obligations to
Employer and that such participation has been approved in advance by the
Employer's Board of Directors.
ARTICLE 3
PERFORMANCE REVIEWS AND COMPENSATION
3.1 Basic Compensation. For all services rendered by Employee under this
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Agreement, Employer shall pay Employee an annual base salary ("Base
Compensation") as determined from time to time in accordance with this
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Agreement. In no event shall Base Compensation be less than Three Hundred and
Twenty-five Thousand Dollars ($325,000.00) per year, payable in equal
installments on the 15th and the last business day of each month.
3.2 Adjustments To Basic Compensation. On an annual basis, Employer's Board
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of Directors shall review the compensation plan of Employer for the purpose of
determining what, if any, adjustments are to be made to the base compensation
for Employer's associate positions. Employee's Base Compensation will be
reviewed in accordance with this process. The Board of Directors will make such
adjustments, if any, in Employee's Base Compensation as it deems appropriate as
part of this annual review. Any such adjustments will be effective with the
effective date for all other Employer associates.
ARTICLE 4
DUTIES
Employee shall serve as the President and Chief Executive Officer of
Employer and, as directed by the Board of Directors, any subsidiary of Employer.
In these roles he shall manage the day-to-day affairs of the Employer and any
such subsidiary. Employee shall have such other duties and responsibilities as
from time-to-time may be reasonably assigned to him by the Board of Directors of
Employer, and that are consistent with Employee's role as its President and
Chief Executive Officer and with the bylaws of Employer or any subsidiary of
Employer.
ARTICLE 5
EMPLOYER PROVIDED BENEFITS
5.1 Basic Benefits. Employer currently provides to all of its associates,
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including Employee, a comprehensive benefits package. During the term of his
employment, Employee shall be entitled to receive and shall be allowed to
participate in these benefits on the terms and conditions as provided in the
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policies and practices of Employer as the same may be modified from time-to-time
by Employer's Board of Directors.
5.2 Modification Of Benefits. Employee recognizes that it is within the
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sole discretion of Employer's Board of Directors to modify the benefits of
Employer from time-to-time and agrees that no claim will arise against Employer
by virtue of its Board of Directors' exercise of its rights to modify Employer's
benefits package. In addition, Employee shall be entitled to five (5) weeks paid
vacation time and an automobile or an automobile allowance and such benefits
shall not be reduced during the term of this Agreement (including any extensions
thereof).
5.3. Retention Bonus.
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(a) As a reward for Employee's past service with Employer, and to
incentivize Employee to enter into the Agreement, Employer will pay Employee, in
addition to the salary and benefits identified in Articles 3 and 5, a lump sum
payment equaling $100,000, to be paid on March 15, 2002.
(b) If Employee is employed by Employer through December 31, 2002, Employee
will receive, in addition to the salary and benefits identified in Articles 3
and 5, a lump-sum payment equaling $50,000, to be paid by January 31, 2003.
Employee agrees he is not entitled to this payment if, prior to December 31,
2002, Employee ceases or terminates employment with Employer other than for
"Good Reason" as defined in Section 7.5, or if he is terminated for cause as
defined in Section 7.1.
(c) If Employee is employed by Employer through December 31, 2003, Employee
will receive, in addition to the salary and benefits identified in Articles 3
and 5, a lump-sum payment equaling $25,000, to be paid by January 31, 2004.
Employee agrees he is not entitled to this payment if, prior to December 31,
2003, Employee ceases or terminates employment with Employer other than for
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"Good Reason" as defined in Section 7.5, or if he is terminated for cause as
defined in Section 7.1.
(d) If Employee is employed by Employer through December 31, 2004, Employee
will receive, in addition to the salary and benefits identified in Articles 3
and 5, a lump-sum payment equaling $25,000, to be paid by January 31, 2005.
Employee agrees he is not entitled to this payment if, prior to December 31,
2004, Employee ceases or terminates employment with Employer other than for
"Good Reason" as defined in Section 7.5, or if he is terminated for cause as
defined in Section 7.1.
5.4 Supplemental Retirement Income. Employer will set aside deferred
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compensation for Employee in accordance with the parties' Participation
Agreement for the Oglethorpe Power Corporation Executive Supplemental Retirement
Plan, executed by the parties contemporaneously herewith.
5.5 Variable Pay. Prior to January 31st of each year, Employer's Board of
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Directors shall establish Employee's goals to be accomplished during that
calendar year. These may be goals that can be fully accomplished during that
calendar year or intermediate milestones for corporate initiatives, which cannot
be accomplished during that calendar year. Each goal shall have associated with
it variable pay which Employee can earn upon accomplishment of the goal. Each
goal shall be realistically achievable. Employee must be employed through
December 31st of the year in which these goals are established and accomplished,
in order to be paid any variable pay. Any variable pay earned is payable on
March 15th of the following year. Notwithstanding Section 5.2 of the Agreement,
in no event shall Employer reduce Employee's variable pay target below
Employee's target as of the Effective Date or the year preceding the one in
question, whichever is higher.
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ARTICLE 6
EMPLOYEE EXPENSES
Employee is authorized to incur reasonable business expenses on behalf of
Employer and its subsidiaries in performing his duties. Such reasonable expenses
shall be promptly paid (or reimbursed as applicable) by Employer.
ARTICLE 7
TERMINATION OF EMPLOYMENT
7.1 Termination For Cause. Employer may terminate Employee's employment at
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any time for "Cause." Cause shall exist if Employee commits: (a) an act or acts
of dishonesty, which constitute a felony or job-related misdemeanor, or an act
or acts which both materially breach Employee's fiduciary duties to Employer, or
a subsidiary of Employer, for which he is acting as President and Chief
Executive Officer and which either: (1) causes material harm to Employer, or a
subsidiary of Employer, for which he is acting as President and Chief Executive
Officer; (2) materially impairs the reputation of Employer, or a subsidiary of
Employer, for which he is acting as President and Chief Executive Officer; or
(3) materially interferes with the operations of the Employer, or a subsidiary
of Employer, for which he is acting as President and Chief Executive Officer.
Cause shall also be defined as: (b) physical or mental disability or other
inability to perform the essential functions of Employee's position, with or
without accommodation, which shall be interpreted to be consistent with
Employer's obligations to Employee under the ADA; or (c) the death of Employee.
7.2 Notice Of Decision By Employer. Employer shall provide written notice
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specifying with particularity the action or inaction it believes constitute
cause.
7.3 Effect Of Termination For Cause. In the event that Employer terminates
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Employee for Cause, Employee will be entitled to receive the portion of Salary
accrued and owing to Employee only through the date of such termination, within
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thirty (30) days after notice of termination. If Employer terminates Employee
for Cause during the notice period identified in Section 7.6, Resignation By
Employee For Other Than Good Reason, then this Section 7.3 supercedes, and takes
precedence over, any resignation by Employee pursuant to Section 7.6.
7.4 Termination Without Cause. Employer may terminate Employee's employment
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at any time without cause. However, in the event Employee is terminated by
Employer without cause, Employee shall be entitled to receive (in addition to
accrued salary and benefits, including amounts earned under Article 5 during the
previous year but unpaid) the following amounts in lump-sum form payable within
thirty (30) days of such termination without cause: (a) all Base Compensation
(at the then applicable yearly rate) he would be entitled to receive through the
then applicable term of the Agreement. In no event shall this amount be greater
than two (2) years' Base Compensation (at the then applicable yearly rate) nor
less than one (1) year's Base Compensation (at the then applicable yearly rate),
and (b) an amount equal to the cost of providing all health and dental insurance
during the remaining term of the Agreement or one (1) year, whichever is longer.
7.5 Resignation By Employee For Good Reason. Employee shall have the right
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to terminate his employment with Employer, and such termination shall, for
purposes of this Agreement, be considered a resignation by Employee for "Good
Reason" if Employer: (i) changes Employee's position and title from President
and Chief Executive Officer to a title and position of decreased responsibility
or salary; or (ii) Employee's place of employment is located more than fifty
(50) miles from the current corporate location in Tucker, Georgia. An event
described in this Section 7.5(d) will not constitute Good Reason unless it is
(i) communicated by Employee to Employer in writing and (ii) not corrected by
Employer within thirty (30) days of Employer's receipt of such written notice.
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If Employee resigns for "Good Reason", he is entitled to the compensation
designated in Section 7.4.
7.6 Resignation by Employee for Other Than Good Reason.
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(a) Employee shall have the right to terminate his employment with
Employer, and such termination shall, for purposes of this Agreement, be
considered a resignation for "Other Than Good Reason" if Employee determines, in
his discretion, that he wishes to resign; provided that, if he resigns for Other
Than Good Reason, Employee must provide Employer with sixty (60) days notice of
his intent to leave the Company.
(b) If Employee resigns for Other Than Good Reason prior to December 31,
2002, Employer will pay Employee twelve (12) months' salary within thirty (30)
days of his resignation.
(c) If Employee resigns for Other Than Good Reason between January 1, 2003,
and December 31, 2003, Employer will pay Employee six (6) months' salary within
thirty (30) days of his resignation.
7.7 Receipt In Lieu Of Other Compensation. Employee acknowledges that the
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receipt of the compensation outlined in this Article is in lieu of any other
amounts to which he may be entitled for any reason related to his employment by
Employer or, as appropriate, a subsidiary of Employer and in lieu of any monies
he would otherwise be entitled to receive under any then applicable corporate
policy.
7.8 Mutual Release. Employee agrees that in the event of a termination
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without cause, Resignation for "Good Reason", or Resignation for "Other Than
Good Reason", as a condition precedent to receipt of the monies described in
this Article 7, he shall execute a full and final release of all claims (other
than vested benefits) against Employer, its Members, Directors, officers,
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agents, associates, subsidiaries, affiliates and attorneys, in the reasonable
form provided by Employer to Employee, and Employee shall receive a comparable
reciprocal release from Employer in the form provided by Employee to Employer.
7.9 No Duty To Mitigate. In the event Employee's employment is terminated
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in a manner that gives Employee a right to receive payment described in this
Article 7 (collectively "damages"), Employee shall have no obligation to
mitigate such damages, and no subsequent earnings shall serve as mitigation of
the amounts owed hereunder to Employee by the Employer.
ARTICLE 8 NOTICE TO
EMPLOYER UPON VOLUNTARY RESIGNATION
Employee agrees that, should he choose to voluntarily separate himself from
Employer, he will provide Employer with a minimum of sixty (60) days written
notice, said notice to be provided in accordance with the terms of this
Agreement.
ARTICLE 9
COVENANTS NOT TO COMPETE/SOLICIT
9.1 Non Compete. Employee agrees that in the event he voluntarily separates
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himself from Employer pursuant to Section 7.6 or if he is terminated for cause
as defined by Section 7.1 of the Agreement, he will not, for a period of one (1)
year thereafter, unless he obtains written consent from the Chairman of the
Board of Employer, within the "Defined Territory", be employed by or engage in
any business that supplies power, or other business that competes with Employer
wherein Employee would perform services which are the same or substantially
similar to those duties performed by Employee for Employer. "Defined Territory"
is the State of Georgia.
9.2 Non-Solicitation of Customers. Employee agrees that in the event he
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voluntarily separates himself from Employer pursuant to Section 7.6 of the
Agreement, or if he is terminated for Cause as defined by Section 7.1 of the
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Agreement, he will not, for a period of one (1) year thereafter, unless he
obtains written consent from the Chairman of the Board of Employer, call upon,
contact or solicit any customer or potential customer of Employer who was a
customer or potential customer to whom Employee marketed, promoted, distributed
or sold Employer's services on Employer's behalf, or with whom Employee had
contact as President and CEO of Employer, where such call, contact or
solicitation is for the purpose of marketing, promoting, distributing, or
selling services competitive to those offered by Employer.
9.3 Non-Solicitation of Employees - Employee agrees that in the event he
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voluntarily separates himself from Employer pursuant to Section 7.6 of the
Agreement, or if he is terminated for Cause as defined by Section 7.1 of the
Agreement, he will not, for a period of one (1) year thereafter, unless he
obtains written consent from the Chairman of the Board of Employer, contact, or
encourage another to contact, any person who is, at that time, and was, during
Employee's employment with the Company, an employee, agent or contractor of the
Company, for the purpose of enticing him or her away from the employ of the
Company.
9.4 Reasonableness Of Provisions. Employee acknowledges that the provisions
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specified herein in Article 9 regarding his non-competition and non-solicitation
are fair and equitable under the circumstances and agrees that the period for
such undertaking may be tolled or suspended pursuant to a court order for any
period of time during which he is found by a court of competent jurisdiction to
be in violation of this Article 9. Moreover, Employee acknowledges that should
he be in violation of this Article 9, Employer shall be entitled to seek
injunctive or monetary relief in a court of competent jurisdiction, and Employer
shall recover its costs, including attorney's fees, in having to specifically
enforce these covenants. However, in the event any such effort by Employer is
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wholly or significantly unsuccessful, it is Employee (versus Employer) who shall
be entitled to his costs, including attorneys' fees.
9.5 Failure Of Employer to Provide 9.1 Consent. In the event that Employee
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voluntarily separates himself from Employer for "Good Reason" as defined in
Section 7.5 of this Agreement, and Employer does not provide written consent
waiving the provisions of Section 9.1 above, on the termination date of
Employee's employment, Employer shall provide one (1) year's compensation
equivalent to Employee's Base Compensation and one (1) year's health and dental
benefits. Such payment shall be made regardless of whether Employee obtains
employment that does not violate Section
9.1. ARTICLE 10 ARBITRATION
10.1 Agreement To Arbitrate. Except as otherwise provided in this
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Agreement, Employer and Employee hereby agree to resolve by binding arbitration
all claims and controversies for which a court otherwise would be authorized by
law to grant relief, in any way arising out of, relating to or associated with
Employee's employment with Employer or any subsidiary of Employer, including
disputes concerning the formation or terms of this Agreement and disputes
regarding a determination by Employer's Board of Directors that there is "cause"
for Employee's termination.
10.2 Procedure. Any such arbitration shall be in accordance with the then
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applicable rules of the American Arbitration Association ("AAA") or CPR
Institute for Dispute Resolution. The arbitration hearing will be held before an
experienced employment arbitrator or panel of such arbitrators licensed to
practice law in the State of Georgia and selected by and in accordance with the
rules of the AAA or CPR Institute for Dispute Resolution, as the exclusive
remedy for such claims or dispute. The forum of such arbitration shall be
Atlanta, Georgia.
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10.3 Required Notice. The Party seeking arbitration of a dispute, claim
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or controversy as required by this Article 10, must give specific written notice
of any claim to the other Party within twelve (12) months of the date the Party
seeking arbitration first has knowledge of the events giving rise to a claim or
dispute; otherwise, the claim shall be void and deemed waived even if there is a
federal or state statute of limitation which would have given more time to
pursue the claim.
10.4 Right To Additional Relief. Notwithstanding the foregoing, Employer
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shall have the right to seek temporary and/or preliminary injunctive relief in a
court of competent jurisdiction to enforce the terms of Article 9 hereof. The
ultimate resolution of the underlying issues in such litigation shall, however,
be subject to the agreement by the Parties to resolve any disputes by
arbitration as set forth herein.
10.5 Reimbursement Of Expenses. Employer shall be responsible for payment
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of the arbitration costs, excluding Employee's attorney's fees, unless Employee
prevails, in which event Employer shall also pay Employee's attorney's fees and
related arbitration expenses.
ARTICLE 11
FURTHER RESTRUCTURING
11.1 Recognition Of Possible Future Restructuring. It is recognized by
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Employer and Employee that the volatility in the utility industry may result in
further restructurings, which may be forced by changes in the regulatory
environment or which may be determined by the Board of Directors of the Employer
to be in the best interests of Employer and its Members. Employee recognizes
this possibility and the need for the Board of Directors of the Employer to be
able to react to such changes. Said recognition is not in derogation of any
rights or obligation in this Agreement.
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11.2 Sale Or Transfer Of Employer. In the event that Employer or a majority
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of its assets (or control of such assets) are sold or otherwise transferred such
that: (1) Employee's services as President and Chief Executive Officer of
Employer are no longer required; or (2) a material reduction of Employee's
title, responsibilities or reporting relationships occurs that is inconsistent
with Employee's position, Employee will be entitled to compensation as if such
event is a termination without cause.
ARTICLE 12
RURAL UTILITIES SERVICE REQUIREMENTS
12.1 Rights Of Employer Upon Event Of Default. Upon the occurrence of an
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Event of Default (as defined in the Amended and Consolidated Loan Contract
between the Employer and the United States of America, dated as of March 1,
1997, which is hereby incorporated into the Agreement by reference) or if an
event occurs and is continuing, which will, with the passage of time or the
giving of notice, or both, become an Event of Default, and the Rural Utilities
Service requests that the Employer terminate Employee, then notwithstanding any
other provision in this Agreement, Employer may immediately upon written notice
to Employee terminate the employment of Employee.
12.2 Effective Termination Under Section 12.1. Termination under this
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Article 12 shall be deemed a termination without cause, unless the event or the
Event of Default which gives rise to the Rural Utilities Service's request is
caused by action of Employee which permit termination for Cause under Article 7.
In either case, Employee's right to compensation will be governed by Article 7.
ARTICLE 13
MISCELLANEOUS
13.1 Third Party Beneficiaries. There are no third party beneficiaries to
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this Agreement.
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13.2 Notices. Any notice required or permitted to be given under this
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Agreement shall be sufficient if in writing and sent by certified or registered
mail to Employee's residence then on file with Employer. In the case of Employer
or any of its subsidiaries, Notice shall be sent as follows:
Oglethorpe Power Corporation
2100 East Exchange Place
P.O. Box 1349
Tucker Georgia 30085-1349
Attention: Chairman of the Board
13.3 Waiver Of Breach. The waiver by Employer or Employee of a breach of
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any provision of this Agreement by the other shall not operate or be construed
as a waiver of any subsequent breach by Employee or Employer, respectively.
13.4 Assignment. The rights and obligations of Employer under this
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Agreement shall inure to the benefit of and shall be binding upon Employer's
successors and assigns.
13.5 Governing Law. This Agreement shall be governed by, construed under,
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performed, and enforced in accordance with the laws of the State of Georgia.
13.6 Severability. Should any provision of this Agreement or portion
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thereof, be ruled void, invalid, unenforceable or contrary to public policy by
any court of competent jurisdiction, then any remaining portion of such
provision and all other provisions of this Agreement shall survive and be
applied and any invalid or unenforceable portion shall be construed or performed
to preserve as much of the original words, terms, purpose, and intent as shall
be permitted by law.
13.7 Counterparts. This Agreement shall be executed in duplicate
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counterparts. Each counterpart is deemed an original of equal dignity with the
other. The official executing this Agreement on behalf of Employer represents
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and warrants that he has full requisite authority to do so.
13.8 Entire Agreement. This Agreement sets forth the entire understanding
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and agreement of Employer and Employee with respect to the employment
relationship between Employer and Employee which is the subject of this
Agreement. All courses of dealing, and prior representations, promises,
understandings and agreements, whether oral or written, including all other
employment agreements between Employee and Employer, are superseded by this
Agreement, including, but not limited to, the Parties' Employment Agreement
dated September 15, 1999, and the Amendment to Employment Agreement, dated May
8, 2001. No modification of or amendment to this Agreement shall be binding upon
Employer or Employee unless in writing and signed by both Parties hereto. No
provision of this Agreement shall be construed against or interpreted to the
advantage or disadvantage of either Party by any court, judicial or other
governmental authority by reason of such Party having been deemed to have
structured, written, drafted or dictated such provision.
13.9 Captions. The title to each Article and the underlined headings and
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titles preceding each Section of this Agreement are for the purpose of
identification, convenience and ease of reference, and shall be completely
disregarded in the construction of this Agreement.
13.10 Prior Employment Contract. This Agreement shall supersede and replace
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any and all prior contracts for employment between Employer and Employee.
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IN WITNESS WHEREOF, Employer and Employee have caused these presents to be
executed as of the date first stated above.
EMPLOYER:
OGLETHORPE POWER CORPORATION
(An Electric Membership Corporation)
By: /s/ J. Calvin Earwood
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Title: Chairman of the Board
EMPLOYEE:
Thomas A. Smith
/s/ Thomas A. Smith
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