EXHIBIT 10.26
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of September 1,
1998 between Oglethorpe Power Corporation ("Oglethorpe") and Thomas A. Smith
(the "Employee").
WHEREAS, TAS & Associates, Inc. (the "Consultant") has been engaged by
Oglethorpe to provide financial consulting and advisory services to Oglethorpe
and has done so by providing the services of Thomas A. Smith.
WHEREAS, Oglethorpe now desires to obtain the benefit of the Employee's
experience and expertise as an employee rather than through the Consultant.
NOW, THEREFORE, in consideration of the agreements herein set forth,
Oglethorpe and the Employee agree as follows:
1. EMPLOYMENT. Oglethorpe hereby employs the Employee to serve as
Oglethorpe's Senior Vice President and Chief Financial Officer in accordance
with the terms of this Agreement. The Employee hereby accepts such employment.
This Agreement supersedes and replaces that certain Consulting Agreement, dated
as of February 1, 1998, between Oglethorpe and the Consultant (the "Prior
Agreement"). After the date of this Agreement, the Prior Agreement shall
terminate except for (i) Oglethorpe's obligation to pay compensation for periods
prior to the date of this Agreement, to reimburse expenses and to provide
indemnification and (ii) the confidentiality obligations of the Consultant.
2. TERM OF EMPLOYMENT. The term of this Agreement shall commence on the
date hereof and shall end on August 31, 2003, subject to earlier termination as
herein provided.
3. TITLE AND DUTIES. The Employee shall serve as Oglethorpe's Senior
Vice President and Chief Financial Officer. In that capacity, Employee shall
have such duties and responsibilities as are customary for such position.
4. TIME COMMITMENT. Oglethorpe and the Employee agree that the
Employee's employment under this Agreement initially will not be on a full-time
basis. The Employee shall devote an average of four work days per week to his
employment under this Agreement until February 28, 1999 or such earlier date as
the Employee shall specify in a written notice to Oglethorpe. Thereafter, the
Employee shall devote full time effort to his employment hereunder. Until such
date, Oglethorpe and the Employee understand and agree that the Employee is
engaged as an employee of Oglethorpe under this Agreement on a non-exclusive
basis, and that the Employee may work as an employee of another or otherwise
provide financial consulting and advisory services to others on a basis
consistent with his undertakings hereunder. The Employee may not serve as an
employee of another or provide financial consulting and advisory services to
others if doing so would involve conflicts of interest as determined by
Oglethorpe in the exercise of its judgment.
5. BASE COMPENSATION. Oglethorpe shall pay the Employee base annual
compensation equal to: (i) $160,000 through February 28, 1999, or such earlier
date on which the Employee commences full-time employment as provided in Section
4; and (ii) $180,000 thereafter. Increases in base annual compensation shall be
determined on each anniversary of this Agreement by mutual agreement. Oglethorpe
shall pay the Employee at such intervals and in such manner as it pays its other
executives of a comparable level.
6. BENEFIT PLANS. The Employee is an officer and employee of
Oglethorpe. As such, he shall participate in all employee benefit, health care,
savings, insurance, retirement or similar plans, practices, policies or programs
applicable to employees of Oglethorpe.
7. INCENTIVE COMPENSATION. Oglethorpe shall pay the Employee incentive
compensation in accordance with this Section 7:
(a) In the event Oglethorpe's Board of Directors approves the
terms of a restructuring of Oglethorpe's RUS-guaranteed indebtedness on or
before September 1, 2001 and where such restructuring results in significant
savings to Oglethorpe, Oglethorpe shall pay to the Employee incentive
compensation as provided in this subsection (a). Such Board approval shall be
considered to have occurred when the Board of Directors approves any arrangement
pursuant to which Oglethorpe's obligations with respect to such RUS-guaranteed
indebtedness (whether such obligation is set forth in a promissory note, a power
purchase arrangement or otherwise) is proposed to be modified in any way
(otherwise than as permitted by the express provisions of the promissory notes
currently evidencing such indebtedness) as a consequence or in recognition of
the possibility that the assets securing such indebtedness have a value that is
less than the amount of such indebtedness or other factors affecting
Oglethorpe's ability to meet existing debt service obligations. In such event,
Oglethorpe shall pay to the Employee, as incentive compensation, the sum of
$100,000 or 5% of the first four (4) years of savings under the restructured
debt, whichever is less. Such incentive compensation shall be paid in two equal
installments, one due on the date such debt restructuring is approved by the
Board and the remaining balance on the date on which definitive documents with
respect to such debt restructuring are signed by Oglethorpe or the date of
termination of this Agreement, if earlier.
(b) In the event there is no debt restructuring as described in
subsection (a) above and Oglethorpe's Board of Directors determines, in its sole
discretion, that Oglethorpe's risks with respect to its obligations for its
nuclear generation units have been materially reduced as a consequence of
arrangements achieved through efforts for which the Employee was substantially
responsible, Oglethorpe shall pay to the Employee, as incentive compensation,
the sum of $100,000 to be paid in two equal installments, one due promptly after
the Board's determination and the remaining balance on such date as the Board
shall determine but not later than the first anniversary of the first payment
date.
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(c) Oglethorpe shall pay to the Employee, as additional incentive
compensation, amounts to be agreed upon on an annual basis on or before December
31 each year for the following calendar year during the term of this Agreement.
8. TERMINATION. This Agreement may be terminated (i) by Oglethorpe at
any time by giving thirty (30) days written notice to the Employee, and (ii) by
the Employee at any time by giving thirty (30) days written notice to
Oglethorpe.
9. TERMINATION PAYMENTS. Upon termination of this Agreement as provided
in Section 8, Oglethorpe shall make the payments and take the other actions
required by this Section 9:
(a) in the event this Agreement is terminated by the Employee for
"Good Reason" (as hereinafter defined) or by Oglethorpe for any reason other
than "Cause" (as hereinafter defined), Oglethorpe shall:
(i) pay to the Employee on the date of termination his base
compensation through the date of termination plus an amount equal to
three (3) months of base compensation payable to the Employee under
Section 5;
(ii) pay to the Employee on the date of termination all earned
but unpaid incentive compensation under Section 7;
(iii) continue for six months, or until the Employee procures a
new job and becomes entitled to substantially equivalent benefits, if
earlier, after the date of termination, at Oglethorpe's expense, all
life and health insurance maintained by Oglethorpe for the Employee at
the date of termination;
(iv) pay or reimburse the Employee for expenses for the services
of an out placement consulting firm approved by Oglethorpe up to a
maximum amount of $25,000; and
(v) in the event the Employee has not procured a new job with
substantially equivalent compensation within three months of the date
of termination, pay to the Employee amounts equal to the base
compensation that would have been payable to the Employee under Section
5 for the period commencing at the end of such three-month period and
ending three months thereafter or on the date the Employee procures
such a new job, if earlier.
(b) In the event this Agreement is terminated by the Employee
other than for Good Reason or by Oglethorpe for Cause, Oglethorpe shall pay to
the Employee his base compensation through the date of termination, plus any
earned but unpaid incentive compensation under Section 7.
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(c) For purposes of this Section 9, the following terms shall have
the following definitions:
"Cause" means conviction of a felony, or other fraudulent or
willful misconduct by the Employee that is materially and demonstrably injurious
to the business or the reputation of Oglethorpe, or the willful and continued
failure by Employee to perform his duties with Oglethorpe (other than any such
failure resulting from incapacity due to physical or mental illness) after a
written demand for substantial performance is delivered to the Employee by the
Board or chief executive officer of Oglethorpe which specifically identifies the
manner in which the Board or the chief executive officer believes that Employee
has not substantially performed his duties.
"Good Reason" means the occurrence of any of the following without
the written consent of the Employee:
(1) a material reduction in the scope of the Employee's duties
or responsibilities;
(2) a material reduction in the compensation payable to the
Employee;
(3) a material reduction in the benefits available to the
Employee; or
(4) any request by Oglethorpe that the Employee participate in
an unlawful act or take any action that constitutes a breach
of Employee's professional standard of conduct.
10. ASSIGNMENT; SUCCESSORS.
(a) The rights and duties of the Employee under this Agreement,
other than accrued and unpaid amounts due hereunder, shall not be assignable,
without the prior written consent of Oglethorpe.
(b) This Agreement shall not be assignable by Oglethorpe,
provided, that with the consent of the Employee, Oglethorpe may assign this
Agreement to another corporation wholly-owned by it, either directly or through
one or more other corporations, or to any corporate successor of Oglethorpe or
any such corporation.
(c) Notwithstanding the foregoing, any business entity succeeding
to substantially all of the business of Oglethorpe by purchase, merger,
consolidation, sale of assets or otherwise, shall be bound by and shall adopt
and assume this Agreement, and Oglethorpe shall obtain the assumption of this
Agreement by such successor.
11. NOTICES. Any notice or other communications under this Agreement
shall be in writing, signed by the party making the same, and shall be delivered
personally or sent by certified or registered mail, postage prepaid, addressed
as follows:
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If to the Employee: Mr. Thomas A. Smith
9385 Stoney Ridge Lane
Alpharetta, Georgia 30022
Tel.: (770) 998-6752
If to Oglethorpe: Oglethorpe Power Corporation
2100 East Exchange Place
Post Office Box 1349
Tucker, Georgia 30085-1349
Tel.: (770) 270-7600
Fax: (770) 270-7872
Attn: President and Chief Executive Officer
or to such other address or agent as may hereafter be designated by either party
hereto. All such notices shall be deemed given on the date personally delivered
or mailed.
12. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Georgia.
13. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid, but if any one
or more of the provisions contained in this Agreement shall be invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability or any such provisions in every other respect and of the
remaining provisions of this Agreement shall not be in any way impaired.
14. ENTIRE AGREEMENT. This Agreement contains the entire agreements of
the parties hereto with respect to the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to the matters set forth herein. This Agreement may not be amended
or modified except by a writing executed by the parties.
[Signatures On Next Page]
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IN WITNESS WHEREOF, Oglethorpe and the Employee have executed and
delivered this Agreement as of the date first above written.
OGLETHORPE POWER CORPORATION
By: /s/ JACK. L. KING
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Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
By: /s/ THOMAS A. SMITH
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Thomas A. Smith
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