EXHIBIT 10.64
OLD DOMINION ELECTRIC COOPERATIVE
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EXECUTIVE SEVERANCE AGREEMENT
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This Severance Agreement ("Agreement") dated as of January 1, 2000,
between Old Dominion Electric Cooperative (the "Cooperative"), a Virginia
utility aggregation cooperative, and Daniel M. Walker (the "Executive").
1. Purpose
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The Cooperative considers maintenance of a sound and vital management
to be essential to the best interests of the Cooperative and its Members. In
this connection, the Board has determined that the Executive can best perform
his duties, without distraction, if he, through the security of a severance
agreement, is adequately provided for in the event that his employment is
terminated, without cause (as defined herein) during the term of this Agreement.
In addition, the Cooperative recognizes that the possibility of a Change in
Control (as defined herein) may arise and that such possibility, and the
uncertainty it may raise may result in the departure or distraction of the
Executive to the detriment of the Cooperative and its Members. Accordingly, the
Board of Directors of the Cooperative (the "Board") has determined that
appropriate steps should be taken to encourage the continued dedication of the
Executive to his assigned duties without distraction arising from the
possibility of a Change in Control of the Cooperative. In particular, the Board
believes it important, should the Cooperative or its Members receive a proposal
for transfer of control of the Cooperative, that the Executive be able to advise
the Board whether such proposal would be in the best interests of the
Cooperative and its Members and to take such other action regarding such
proposal as the Board might determine to be appropriate, without being
influenced by the uncertainties of the Executive's own situation.
The execution of this Agreement is an integral element of the
employment relationship between the Cooperative and the Executive and the
Executive's agreement to remain in the employment of the Cooperative. However,
nothing in this Agreement shall be construed as creating an express or implied
contract of employment AND except as otherwise agreed in writing between the
Executive and the Cooperative, the Executive shall not have any right to be
retained in the employ of the Cooperative.
2. Term of Agreement
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This Agreement shall commence on the date hereof (the "Commencement
Date") and shall continue in effect until the fifth anniversary of the
Commencement Date;
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provided, however, that commencing on the fifth anniversary of the Commencement
Date and on each anniversary of the Commencement Date thereafter, the term of
this Agreement shall automatically be extended for one additional year unless at
least one year prior to such anniversary date, the Cooperative or the Executive
shall have given notice that this Agreement shall not be extended; and provided
further that, notwithstanding the delivery of any such notice, this Agreement
shall continue in effect for a period of 24 months after a Change in Control of
the Cooperative if such Change in Control shall have occurred while this
Agreement is in effect.
3. Change in Control
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For all purposes of this Agreement, a "Change in Control" shall mean
the occurrence of any of the following events or circumstances subsequent to the
date of this Agreement, it being agreed that no circumstance or event occurring
on or before the date of this Agreement shall constitute a Change in Control:
(a) There occurs any acquisition, merger or consolidation of the
Cooperative, by, with or into any other corporation (other than a subsidiary or
affiliate of the Cooperative or its Members) and individuals who are directors
of the Cooperative immediately prior to the time the agreement of acquisition,
merger or consolidation is executed shall fail to constitute a majority of the
board of directors of the survivor or successor Cooperative at any time after
consummation of the transaction; or
(b) During a period of two consecutive years immediately following the
execution date of this Agreement, individuals who at the beginning of such
period constitute the entire Board shall cease for any reason to constitute a
majority thereof unless the election or nomination for election by the
Cooperative's Members of each new Cooperative director was approved by a
majority vote of the Member directors still in office who were directors at the
beginning of the period; or
(c) There occurs a sale or disposition by the Cooperative of all or
substantially all of the Cooperative's assets and individuals who are directors
of the Cooperative immediately prior to the time the agreement of sale or
disposition is executed shall fail to constitute a majority of the board of
directors of the Cooperative at any time after consummation of the transaction;
or
No Change in Control shall be deemed to have occurred for purposes of
this Agreement, and provided that none of the events in (a), (b), and (c) above
have occurred, by virtue of any event or transaction relating to a merger,
consolidation or similar transaction between the Cooperative and any other
electric cooperative or with any other corporation, entity or group affiliated
with an electric cooperative. The establishment of an alliance or alliances with
one or more other entities shall not be considered a Change in Control for
purposes of this Agreement unless one or more of the events in (a), (b) or (c)
above have occurred.
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4. Termination Following Change in Control
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If any of the events described in Section 3 hereof constituting a
Change in Control of the Cooperative shall have occurred, the Executive shall be
entitled to the benefits provided in Section 5 upon the termination of the
Executive's employment with the Cooperative within twenty-four (24) months after
such Change in Control, unless such termination is (a) because of death of the
Executive, (b) by the Cooperative for Cause or Disability or (c) by the
Executive for Good Reason (as all such capitalized terms are hereinafter
defined).
(a) Disability. Termination by the Cooperative of the Executive's
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employment based on "Disability" shall mean termination because of the
Executive's inability to perform his duties with the Cooperative on a full time
basis for 90 consecutive days or a total of at least 180 days in any calendar
year as a result of the Executive's incapacity due to physical or mental illness
(as determined by an independent physician selected by the Board of Directors of
the Cooperative).
(b) Cause. Termination by the Cooperative of the Executive's employment
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for "Cause" shall mean termination for:
(i) gross incompetence, gross negligence, willful misconduct in
office, insubordination, or breach of fiduciary duty owed to the Cooperative or
any subsidiary or affiliate of the Cooperative or its Members;
(ii) conviction of a felony, a crime of moral turpitude or
commission of an act of embezzlement or fraud against the Cooperative or any
subsidiary or affiliate of the Cooperative or its Members;
(iii) any material breach by the Executive of a material term
of this Agreement, including without limitation material failure to perform of
his assigned duties and responsibilities hereunder; or
(iv) deliberate dishonesty of the Executive with respect to the
Cooperative or any subsidiary or affiliate of the Cooperative or its Members.
(c) Good Reason. The Executive may terminate his employment with the
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Cooperative for Good Reason at any time within twenty-four (24) months after the
date of a Change of Control and be entitled to compensation under Section 5 of
this Agreement. For purposes of this Agreement, "Good Reason" shall mean
termination based on:
(i) a determination by the Executive, in his reasonable judgment,
that there has been a material adverse change in the Executive's status or
position(s) as an executive officer of the Cooperative as in effect immediately
prior to the Change in Control, including, without limitation, any material
adverse change in his status or
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position as a result of a diminution in his duties or responsibilities or the
assignment to the Executive of any duties or responsibilities which are
inconsistent with such status or position(s), or any removal of the Executive
from, or any failure to reappoint or reelect the Executive to, such positions(s)
(except in connection with the termination of the Executive's employment for
Cause or Disability or as a result of the Executive's death or by the Executive
other than for Good Reason)
(ii) a material reduction by the Cooperative in the Executive's
base salary as in effect immediately prior to the Change in Control;
(iii) the failure by the Cooperative to continue in effect any
Plan (as hereinafter defined) in which the Executive is participating at the
time of the Change in Control of the Cooperative (or Plans providing the
Executive with at least substantially similar benefits) other than as a result
of the normal expiration of any such Plan in accordance with its terms as in
effect at the time of the Change in Control, or the taking of any action, or the
failure to act, by the Cooperative which would adversely affect the Executive's
continued participation in any of such Plans on a substantially similar basis to
the Executive as is the case on the date of the Change in Control, or which
would materially reduce the Executive's benefits in the future under any of such
Plans or deprive the Executive of any material benefit enjoyed by the Executive
at the time of the Change in Control;
(iv) the failure by the Cooperative to provide and credit the
Executive with the number of paid vacation days to which the Executive is then
entitled in accordance with Cooperative's normal vacation policy as in effect
immediately prior to the Change in Control;
(v) the Cooperative requiring the Executive to be based at any
office that is greater than (50) miles from where the Executive's office is
located immediately prior to the Change in Control, except for required travel
on the Cooperative's business to an extent substantially consistent with the
business travel obligations which the Executive undertook on behalf of the
Cooperative prior to the Change in Control;
(vi) the failure by the Cooperative to obtain an agreement
reasonably satisfactory to the Executive from any Successor (as defined in
Section 6(a) hereof) to assume and agree to perform this Agreement; or
(vii) the failure by the Cooperative to pay to the Executive
any portion of his compensation or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation program of
the Cooperative within 15 days of the date the Executive gives notice of such
failure, without prior written consent of the Executive.
For purposes of this Agreement, "Plan" shall mean any compensation
plan or any employee benefit plan such as a thrift, pension, profit sharing,
medical, disability,
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accident, life insurance plan or a relocation plan or policy or any other plan,
program or policy of the Cooperative intended to benefit employees, including
the salary continuation plan currently in place for the Executive.
(d) Notice of Termination. Any purported termination by the Cooperative
or by the Executive following a Change in Control shall be communicated by a
written Notice of Termination to the other party. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon.
5. Compensation Upon Termination.
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(a) If during the term of this Agreement and prior to a Change in
Control of the Cooperative, the Executive's employment by the Cooperative is
terminated other than on account of the Executive's death and is terminated by
the Cooperative other than for Cause, or Disability, the Executive shall be
entitled to receive 1.5 times his base salary payable in 18 equal monthly
installments following termination.
(b) If, within 24 months after a Change in Control of the Cooperative
has occurred, the Executive's employment by the Cooperative is terminated other
than on account of the Executive's death and is terminated by the Cooperative
other than for Cause, Disability or by the Executive for Good Reason, then the
Cooperative shall pay to the Executive, no later than the fifteenth day
following the date of termination, without regard to any contrary provisions of
any Plan, the following:
(i) The Executive's base salary through the date of termination
at the rate in effect immediately prior to the time a Notice of Termination is
given, plus any benefits or awards which pursuant to the terms of any Plans have
been earned or become payable, but which have not yet been paid to the Executive
(including any amounts which previously had been deferred at the Executive's
request).
(ii) A lump sum payment in cash in an amount equal to 2.99
times the Executive's base salary at the rate in effect immediately prior to the
time a Notice of Termination is given.
(iii) In the event any payment or distribution by the Cooperative
to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 5(b)(iii) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any
interest or penalties are incurred by the Executive with respect to such excise
tax (collectively, the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any income taxes and
interest or penalties imposed with respect to such taxes) and the Excise Tax
imposed on the Gross-Up Payment, the
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Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed on the Payments. All determinations required to be made under this
Section 5(b)(iii) shall be made by the Cooperative's regular independent
auditors as of the date of the Notice of Termination (the Accounting Firm). All
fees and expenses of the Accounting Firm shall be borne solely by the
Cooperative, and any determination by the Accounting Firm shall be binding upon
the Cooperative and the Executive. Any Gross-Up Payment shall be paid to the
Executive by the Cooperative within 15 days of the Cooperative's receipt of the
Accounting Firm's determination.
(c) If, within 24 months after a Change in Control of the Cooperative
has occurred, the Executive's employment by the Cooperative is terminated other
than on account of the Executive's death and is terminated by the Cooperative
other than for Cause or Disability, or by the Executive for Good Reason, then
the Cooperative shall maintain in full force and effect, for three years, at the
sole cost of the Cooperative (except for the regular contributions of the
Executive as described below, if any), for the continued benefit of the
Executive and his dependents for a period terminating on the earliest of (a) 12
months after the date of termination, or (b) the Commencement Date of equivalent
benefits from a new employer, all insured and self-insured employee benefit
Plans in which the Executive was entitled to participate immediately prior to
the date of termination; provided that (i) the Executive's continued
participation is possible under the general terms and provisions of such Plans
(ii) the Executive continues to pay an amount equal to his regular contribution
under such Plans prior to the Change in Control for such participation, and
(iii) it is acknowledged that the post termination Plans may be different from
the Plans in effect on the date of termination. In the event that the
Executive's participation in any such Plan is barred, the Cooperative, at its
sole cost and expense, shall arrange to have issued for the benefit of the
Executive and his dependents individual policies of insurance providing benefits
substantially similar (on an after-tax basis) to those which the Executive
otherwise would have been entitled to receive under such Plans pursuant to this
Section or, if such insurance is not available at a reasonable cost to the
Cooperative, the Cooperative shall otherwise provide the Executive and his
dependents with equivalent benefits (on an after-tax basis). The Executive shall
not be required to pay any premiums or other charges in an amount greater than
that which the Executive would have paid in order to participate in such Plans.
The Cooperative's obligation to provide the Executive with these benefits shall
be reduced to the extent these benefits are provided to the Executive from a
subsequent employer.
(d) Except as specifically provided in paragraph (c) above, the amount
of any payment provided for in this Section shall not be reduced, offset or
subject to recovery by the Cooperative by reason of any compensation earned by
the Executive as the result of employment by another employer after the date of
termination, or otherwise.
6. Successors; Binding Agreement.
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(a) The Cooperative will seek, by written request at least five
business days prior to the time any corporation, person, other entity, or group
becomes a Successor (as
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hereinafter defined), to have such corporation, person, other entity, or group,
by agreement in form and substance satisfactory to the Executive, assent to the
fulfillment of the Cooperative's obligations under this Agreement. Failure of
such corporation, person, other entity, or group to furnish such assent by the
later of three business days prior to the time such corporation, person, other
entity, or group becomes a Successor or ten business days after such
corporation, person, other entity, or group receives a written request to so
assent may at the election of the Executive, constitute Good Reason for
termination by the Executive of his employment if a Change in Control of the
Cooperative occurs or has occurred. For purposes of this Agreement, "Successor"
shall mean any corporation, person, other entity, or group that succeeds to, or
has the practical ability to control (either immediately or with the passage of
time), the Cooperative's business directly, by merger or consolidation, or
indirectly, by control of the Cooperative's Members or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amount would still be payable to him hereunder if he had continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's devisee, legatee
or other designee or, if no such designee exists, to his estate.
7. Fees and Expenses; Mitigation.
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(a) The Cooperative shall reimburse the Executive, on a current basis,
for all reasonable legal fees and related expenses which he shall incur in
connection with the Agreement following a Change in Control of the Cooperative,
including without limitation, all such fees and expenses, if any, incurred (i)
in contesting or disputing any termination of the Executive's employment or (ii)
the Executive's seeking to obtain or enforce any right or benefit provided by
this Agreement, in each case, regardless of whether or not the Executive's claim
is upheld by a court of competent jurisdiction; provided, however, the Executive
shall be required to repay any such amounts to the Cooperative to the extent
that a court issues a final and non-appealable order setting forth the
determination that the position taken by the Executive was frivolous or advanced
by him in bad faith.
(b) The Executive shall not be required to mitigate the amount of any
payment the Cooperative becomes obligated to make to the Executive in connection
with this Agreement, by seeking other employment or otherwise.
8. Taxes.
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All payments to be made to the Executive under this Agreement will be
subject to required withholding of federal, state and local income and
employment taxes.
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9. Notice.
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Any notices, requests, demands and other communications provided for
by this Agreement shall be sufficient if in writing and delivered in person or
sent by registered or certified mail, postage prepaid (in which case notice
shall be deemed to have been given on the third day after mailing), or by
overnight delivery by a reliable overnight courier service (in which case notice
shall be deemed to have been given on the day after delivery to such courier
service) to the Executive at the last address the Executive has filed in writing
with the Employer or, in the case of the Employer, at its main offices, to the
attention of the President and Chief Executive Officer.
10. Miscellaneous.
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No provision of this Agreement may be modified, waived or discharged
unless such modification, waiver or discharge is agreed to in a writing signed
by the Executive and a duly authorized person who is the Chairman of the Board
or President of the Cooperative. No waiver by either party at any time of any
breach by the other party of, or of compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.
11. Governing Law.
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The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Virginia, without
regard to the choice of law provisions of any jurisdiction.
12. Validity.
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The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
13. Cooperative's Warranties.
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The Cooperative warrants and covenants that in order to induce the
Executive to remain in the employ of the Cooperative and in consideration of the
Executive's warranties as set forth below, the Cooperative agrees, under the
terms and conditions set forth in this Agreement, to pay the Employee the
Compensation Upon Termination described herein and such other benefits payable
to the Executive under any other compensation and benefits plan in place during
the term of this Agreement.
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14. Executive's Warranties.
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The Executive warrants and covenants that in the event a Change of
Control occurs during the term of this Agreement, he will remain in the employ
of the Cooperative until the earlier of the following: (i) one (1) year from the
date upon which the Cooperative becomes aware of such Change of Control; (ii)
the date of a Change of Control; (iii) the date of termination by the Executive
of the Executive's employment for Good Reason, or by reason of death,
Disability, or retirement, or (iv) the termination by the Cooperative of the
Executive's employment for any reason. The Executive further agrees that
subsequent to his period of employment with the Cooperative, the Executive will
not at any time communicate or disclose to any unauthorized person, without the
written consent of the Cooperative, any proprietary processes of the Cooperative
or other confidential information concerning its business, affairs, products,
suppliers, or customers, which, if disclosed would have a material adverse
effect upon the business or operations of the Cooperative taken as a whole, it
being understood, however, that the obligations under this Section shall not
apply to the extent that the aforesaid matters (a) are disclosed in
circumstances where the Executive legally is required to do so or (b) become
generally known to, and available for use by, the public otherwise than by the
Executive's wrongful act or omission.
15. Non-Compete.
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During a period of two years following the date of termination of
Executive's employment with the Cooperative other than for Cause or Disability
and which termination occurs prior to a Change in Control, the Executive will
not, directly or indirectly, whether as owner, partner, shareholder, consultant,
agent, employee, co-venturer or otherwise, compete in Delaware, Maryland or
Virginia during the period in which this covenant of non-competition is in
effect with the Cooperative's or its Members' (including subsidiaries,
affiliates or assignees) business of marketing and providing energy and energy
related services or any other business conducted by the Cooperative or its
Members during the period of the Executive's employment hereunder.
16. Legal Counsel.
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This Agreement has been prepared by LeClair Ryan, A Professional
Corporation, as counsel to the Cooperative, after full disclosure of its
representation of the Cooperative and with the consent of the Executive. The
Executive has reviewed the contents of this Agreement and fully understands its
terms. The Executive acknowledges that he is fully aware of his right to the
advice of counsel independent from that of the Cooperative, that LeClair Ryan, A
Professional Corporation, has advised him of such right and disclosed to him the
risks in not seeking such independent advice, and that he understands the
potentially adverse interests of the parties with respect to this Agreement. The
Executive further acknowledges that no representations have been made with
respect to the income or estate tax or other consequences of this Agreement to
him and that he has been advised of the importance of seeking independent advice
of counsel with respect to such consequences.
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Cooperative, by its duly authorized officer, and by the
Executive, as of the date first above written.
OLD DOMINION ELECTRIC
COOPERATIVE
By: /s/ J. E. Reasor
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Title: President & CEO
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Date: 1/19/2000
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/s/ Daniel M. Walker
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Daniel M. Walker
Date: January 11, 2000
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Address: 7106 University Drive
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Richmond, VA 23229
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