SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1995
or
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 1-8291
GREEN MOUNTAIN POWER CORPORATION
(Exact name of registrant as specified in its charter)
Vermont 03-0127430
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
25 Green Mountain Drive
South Burlington, VT 05402
Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code (802) 864-5731
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class - Common Stock Outstanding March 31, 1995
$3.33 1/3 Par Value 4,699,300
<TABLE>
GREEN MOUNTAIN POWER CORPORATION
Consolidated Comparative Balance Sheets
(Unaudited)
Part 1 - Item 1
<CAPTION>
March 31 December 31
----------------------------------- ----------------
1995 1994 1994
---------------- ---------------- ----------------
(In thousands) (In thousands)
ASSETS
<S> <C> <C> <C>
ELECTRIC UTILITY
Utility Plant
Utility plant, at original cost.................... $229,765 $216,417 $227,991
Less accumulated depreciation...................... 71,224 66,130 69,246
---------------- ---------------- ----------------
Net utility plant................................ 158,541 150,287 158,745
Property under capital lease....................... 10,278 11,029 10,278
Construction work in progress...................... 7,405 10,157 6,964
---------------- ---------------- ----------------
Total utility plant, net......................... 176,224 171,473 175,987
---------------- ---------------- ----------------
Other Investments
Associated companies, at equity (Note 2)........... 16,591 16,859 16,684
Other investments.................................. 4,029 3,719 4,067
---------------- ---------------- ----------------
Total other investments.......................... 20,620 20,578 20,751
---------------- ---------------- ----------------
Current Assets
Cash............................................... 656 61 2,113
Temporary investments.............................. -- 900 --
Accounts receivable, customers and others,
less allowance for doubtful accounts............. 16,093 15,454 15,240
Accrued utility revenues (Note 1).................. 5,270 5,619 6,012
Fuel, materials and supplies, at average cost...... 3,239 2,756 3,314
Prepayments........................................ 1,562 1,593 1,796
Other.............................................. 274 232 323
---------------- ---------------- ----------------
Total current assets............................. 27,094 26,615 28,798
---------------- ---------------- ----------------
Deferred Charges
Demand side management programs................... 15,865 13,407 16,172
Environmental proceedings costs.................... 7,842 6,152 7,741
Purchased power costs.............................. 1,914 3,027 488
Other.............................................. 11,598 12,515 11,258
---------------- ---------------- ----------------
Total deferred charges........................... 37,219 35,101 35,659
---------------- ---------------- ----------------
NON-UTILITY
Cash and cash equivalents.......................... 1,116 123 579
Other current assets............................... 5,339 3,616 5,716
Property and equipment............................. 11,542 11,198 11,329
Intangible assets.................................. 2,954 3,365 3,022
Other assets....................................... 14,309 9,551 12,770
---------------- ---------------- ----------------
Total non-utility assets......................... 35,260 27,853 33,416
---------------- ---------------- ----------------
Total Assets........................................... $296,417 $281,620 $294,611
================ ================ ================
CAPITALIZATION AND LIABILITIES
ELECTRIC UTILITY
Capitalization
Common Stock Equity
Common stock,$3.33 1/3 par value,
authorized 10,000,000 shares (issued
4,715,156, 4,566,868 and 4,677,512)........... $15,717 $15,222 $15,592
Additional paid-in capital....................... 61,197 57,974 60,378
Retained earnings................................ 26,283 26,668 25,727
Treasury stock, at cost (15,856 shares).......... (378) (378) (378)
---------------- ---------------- ----------------
Total common stock equity...................... 102,819 99,486 101,319
Redeemable cumulative preferred stock.............. 9,135 9,385 9,135
Long-term debt, less current maturities............ 74,967 79,800 74,967
---------------- ---------------- ----------------
Total capitalization........................... 186,921 188,671 185,421
---------------- ---------------- ----------------
Capital lease obligation............................... 10,278 11,029 10,278
---------------- ---------------- ----------------
Current Liabilities
Current maturuties of long-term debt............... 3,500 1,800 4,833
Short-term debt.................................... 14,515 13,215 20,214
Accounts payable, trade, and accrued liabilities... 4,927 5,361 5,489
Accounts payable to associated companies........... 5,857 3,792 4,860
Dividends declared................................. 194 199 194
Customer deposits.................................. 917 1,215 964
Taxes accrued...................................... 2,590 1,697 1,442
Interest accrued................................... 1,755 1,819 1,953
Deferred revenues (Note 1)......................... 5,069 8,177 --
Other.............................................. 630 624 492
---------------- ---------------- ----------------
Total current liabilities...................... 39,954 37,899 40,441
---------------- ---------------- ----------------
Deferred Credits
Accumulated deferred income taxes.................. 22,879 20,954 22,082
Unamortized investment tax credits................. 5,313 5,570 5,390
Other.............................................. 21,297 11,384 21,962
---------------- ---------------- ----------------
Total deferred credits......................... 49,489 37,908 49,434
---------------- ---------------- ----------------
NON-UTILITY
Current liabilities................................ 790 391 918
Other liabilities.................................. 8,985 5,722 8,119
---------------- ---------------- ----------------
Total non-utility liabilities.................. 9,775 6,113 9,037
---------------- ---------------- ----------------
Total Capitalization and Liabilities................... $296,417 $281,620 $294,611
================ ================ ================
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<TABLE>
GREEN MOUNTAIN POWER CORPORATION
Consolidated Comparative Income Statements
(Unaudited)
Part 1 - Item 1
<CAPTION>
Three Months Ended
March 31
-----------------------------------------
1995 1994
----------------- -----------------
(In thousands, except amounts per share)
<S> <C> <C>
Operating Revenues (Note 1)..................................... $40,023 $40,611
----------------- -----------------
Operating Expenses
Power Supply
Vermont Yankee Nuclear Power Corporation (Note 2).......... 7,574 7,379
Company-owned generation................................... 815 1,179
Purchases from others...................................... 12,390 12,773
Other operating............................................... 4,565 4,769
Transmission.................................................. 2,349 2,579
Maintenance................................................... 1,171 1,245
Depreciation and amortization................................. 3,203 2,305
Taxes other than income....................................... 1,669 1,726
Income taxes.................................................. 1,805 1,764
----------------- -----------------
Total operating expenses................................... 35,541 35,719
----------------- -----------------
Operating income......................................... 4,482 4,892
----------------- -----------------
Other Income
Equity in earnings of affiliates and non-utility operations... 596 748
Allowance for equity funds used during construction........... -- 89
Other income and deductions, net.............................. (13) 145
----------------- -----------------
Total other income.......................................... 583 982
----------------- -----------------
Income before interest charges............................ 5,065 5,874
----------------- -----------------
Interest Charges
Long-term debt................................................ 1,686 1,742
Other......................................................... 317 230
Allowance for borrowed funds used during construction........ (165) (138)
----------------- -----------------
Total interest charges...................................... 1,838 1,834
----------------- -----------------
Net Income...................................................... 3,227 4,040
Dividends on preferred stock.................................... 194 199
----------------- -----------------
Net Income Applicable to Common Stock........................... $3,033 $3,841
================= =================
Common Stock Data
Earnings per share............................................ $0.65 $0.85
Cash dividends declared per share............................. $0.53 $0.53
Weighted average shares outstanding........................... 4,680 4,537
Consolidated Comparative Statements of Retained Earnings
(Unaudited)
Balance - beginning of period................................... $25,727 $25,229
Net Income...................................................... 3,227 4,040
----------------- -----------------
28,954 29,269
----------------- -----------------
Cash Dividends - redeemable cumulative preferred stock.......... 194 199
- common stock................................... 2,477 2,402
----------------- -----------------
2,671 2,601
----------------- -----------------
Balance - end of period......................................... $26,283 $26,668
================= =================
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<TABLE>
GREEN MOUNTAIN POWER CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
Part 1 - Item 1
<CAPTION>
Three Months Ended
March 31
---------------------------------------
1995 1994
----------------- -----------------
(In thousands)
<S> <C> <C>
Operating Activities:
Net Income........................................................... $3,227 $4,040
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................................... 3,203 2,305
Dividends from associated companies less equity income........... 93 26
Allowance for funds used during construction..................... (165) (227)
Amortization of purchased power costs............................ 1,271 1,161
Deferred income taxes............................................ 924 161
Deferred revenues (Note 1)....................................... 5,069 8,177
Amortization of gain on sale of property......................... (13) (13)
Deferred purchased power costs................................... (2,697) (54)
Amortization of investment tax credits........................... (77) (102)
Environmental proceedings costs.................................. (333) (825)
Changes in:
Temporary investments.......................................... -- (900)
Accounts receivable............................................ (854) (641)
Accrued utility revenues....................................... 743 519
Fuel, materials, and supplies.................................. 74 85
Prepayments and other current assets........................... 659 411
Accounts payable............................................... 436 (3,524)
Taxes accrued.................................................. 1,148 1,299
Interest accrued............................................... (198) (251)
Other current liabilities...................................... (37) (202)
Other............................................................ (1,521) (1,197)
----------------- -----------------
Net cash provided by operating activities.......................... 10,952 10,248
----------------- -----------------
Investing Activities:
Construction expenditures.......................................... (2,646) (2,024)
Conservation expenditures.......................................... (482) (857)
Investment in nonutility property.................................. 14 93
----------------- -----------------
Net cash used in investing activities............................ (3,114) (2,788)
----------------- -----------------
Financing Activities:
Issuance of common stock........................................... 944 898
Short-term debt, net............................................... (5,699) (5,801)
Reduction in long-term debt........................................ (1,333) --
Cash dividends..................................................... (2,670) (2,601)
----------------- -----------------
Net cash used in financing activities............................ (8,758) (7,504)
----------------- -----------------
Net decrease in cash and cash equivalents.......................... (920) (44)
Cash and Cash equivalents at beginning of period................... 2,692 227
----------------- -----------------
Cash and Cash Equivalents at End of Period............................. $1,772 $183
================= =================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the quarter for:
Interest (net of amounts capitalized)........................... $2,167 $2,193
Income taxes.................................................... 8 --
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
GREEN MOUNTAIN POWER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995
Part 1 - Item 1
1. SIGNIFICANT ACCOUNTING POLICIES
Pursuant to an order of the Vermont Public Service Board (VPSB), the
Company's rate structure is seasonally differentiated, with higher rates
billed during the four winter months and lower rates billed during the
remaining eight months of the year. In order to match revenues with
related costs more accurately on an interim basis, the Company recognizes
revenue in a manner that seeks to eliminate the impact of such seasonally
differentiated rates. On January 1, 1995, the Company implemented a rate
redesign which in effect flattened the winter and summer rate
differential. At March 31, 1995 and 1994, the Company had recorded
deferred revenues of $3.8 million and $6.6 million, respectively, in
accordance with this policy. These deferred revenues are recognized in
subsequent interim periods.
Included in equity in earnings of affiliates and non-utility operations in
the Other Income section of the Consolidated Comparative Income Statements
are the results of operations of the Company's rental water heater
program, which is not regulated by the VPSB, and four of the Company's
wholly-owned subsidiaries, Green Mountain Propane Gas Company, Mountain
Energy, Inc., GMP Real Estate Corporation, and Lease-Elec, Inc. (also
unregulated). Summarized financial information for the rental water
heater program and such wholly-owned subsidiares is as follows:
Three Months Ended
March 31
1995 1994
(In thousands)
Revenue . . . . . . . . . . . . . . . $3,004 $3,823
Expenses . . . . . . . . . . . . . . 2,883 3,588
------ ------
Net Income . . . . . . . . . . . . . $ 121 $ 235
====== ======
2. INVESTMENT IN ASSOCIATED COMPANIES
The Company accounts for its investment in the companies listed below
using the equity method. Summarized financial information is as follows:
Three Months Ended
March 31
1995 1994
(In thousands)
Vermont Yankee Nuclear Power Corporation
Gross Revenue . . . . . . . . . . . . . . . . . $51,375 $39,169
Net Income Applicable to Common Stock . . . . . 1,758 1,683
Company's Equity in Net Income . . . . . . . . 281 307
Vermont Electric Power Company, Inc.
Gross Revenue . . . . . . . . . . . . . . . . . $12,661 $12,264
Net Income Before Dividends . . . . . . . . . . 333 314
Company's Equity in Net Income
(Includes preferred equity) . . . . . . . . . 99 85
3. ENVIRONMENTAL MATTERS
In 1982, the United States Environmental Protection Agency (EPA) notified
the Company that the EPA, pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (CERCLA), was considering
spending public funds to investigate and take corrective action involving
claimed releases of allegedly hazardous substances at a site identified as
the Pine Street Marsh in Burlington, Vermont. On part of this site was
located a manufactured-gas facility owned and operated by a number of
separate enterprises, including the Company, from the late 19th century to
1967. In its notice, the EPA stated that the Company may be a
"potentially responsible party" (PRP) under CERCLA from which
reimbursement of costs of investigation and of corrective action may be
sought. On February 23, 1988, the Company received a Special Notice
letter from the EPA stating that the letter constituted a formal demand
for reimbursement of costs, including interest thereon, that were incurred
and were expected to be incurred in response to the environmental problems
at the site.
On December 5, 1988, the EPA brought suit against the Company, New England
Electric System, and Vermont Gas Systems, Inc. in the United States
District Court for the District of Vermont seeking reimbursement for costs
it incurred in conducting activities in 1985 to remove allegedly hazardous
substances from the site, and requested a declaratory judgment that the
Company and the other defendants are liable for all costs that have been
incurred since the removal and that continue to be incurred in responding
to claims of releases or threatened releases from the Maltex Pond Area --
the portion of the site where the removal action occurred. The complaint
specifically alleged that the EPA expended at least $741,000 during the
1985 removal action and sought interest on this amount from the date the
funds were expended and costs of litigation, including attorneys' fees.
The Company entered a cross-claim against New England Electric System and
third-party claims against UGI Corporation, Southern Union Corporation,
the State of Vermont, and an individual property owner at the site for
recovery of its response costs and for contribution. Fourth-party
defendants subsequently were joined.
In July 1990, the Company and other parties signed a proposed Consent
Decree settling the removal action litigation. All 14 settling defendants
contributed to the aggregate settlement amount of $945,000. Individual
contributions were treated as confidential under the proposed Consent
Decree. On December 26, 1990, upon the unopposed motion of the United
States, the Consent Decree was entered by the Court.
During the summer and fall of 1989, the EPA conducted the initial phase of
the Remedial Investigation (RI) and commenced the Feasibility Study (FS)
relating to the site. In the fall of 1990 and in 1991, the EPA conducted
a second phase of RI work and studied the treatability of soils and
groundwater at the site. In the fall of 1991, the EPA responded favorably
to a request from the Company and other PRPs to participate in informal
discussions on the EPA's ongoing investigation and evaluation of the site,
and invited the Company and other interested parties to share technical
information and resources with the EPA that might assist it in evaluating
remedial options.
On November 6, 1992, the EPA released its final RI/FS and announced a
proposed remedy with an estimated total cost of approximately
$49.5 million, including 30 years' operation and maintenance costs, with a
net present value of approximately $26.4 million. The EPA's preferred
remedy called for construction of a Containment/Disposal Facility (CDF)
over a portion of the site. The CDF would have consisted of subsurface
vertical barriers and a low permeability cap, with collection trenches and
hydraulic control system to capture groundwater and prevent its migration
outside of the CDF. Collected groundwater would have been treated and
discharged or stored and disposed of off-site. The proposed remedy also
would have required construction of new wetlands to replace those that
would be destroyed by construction of the CDF and a long-term monitoring
program.
In May 1993, the PRP group in which the Company participated submitted
extensive comments to the EPA opposing the proposed remedy. In response
to an earlier request from the EPA, the PRP group also submitted a
detailed analysis of an alternative remedy anticipated to cost
approximately $20 million. In early June 1993, in response to
overwhelming negative comment, the EPA withdrew its proposed remedy and
announced that it would work with all interested parties in developing a
new proposal. Since then, the EPA has established a coordinating council,
with representatives of PRPs, environmental groups, and government
agencies, and presided over by a neutral facilitator. The council is
charged with determining what additional studies may be appropriate for
the site and also is planning to eventually address additional response
activities.
In July 1994, the Company, New England Electric System (NEES), and Vermont
Gas Systems, Inc. (VGS), entered into an Administrative Order by Consent
with the EPA, pursuant to which these PRPs are conducting certain
additional studies that have been agreed to by the coordinating council.
These studies constitute the first phase of action the council has decided
on to fill data gaps at the site. A second phase, including tasks carried
over from the first phase, additional field studies and preparation of an
addendum feasibility study is expected to be performed during 1995 by the
same parties under a second Order. The EPA has not required reimbursement
for its past RI/FS study costs as a condition to allowing the PRPs to
conduct these additional studies. The EPA has previously advised the
Company that ultimately it will seek to hold the Company and the PRPs
liable for such costs.
On December 1, 1994, the Company, NEES and VGS entered into a confidential
agreement with the State, the City of Burlington and nearly all other
landowner PRPs under which the liability of those landowner PRPs for
future Superfund response costs would be limited and specified. On
December 1, 1994, the Company entered into a confidential agreement with
VGS compromising contribution and cost recovery claims of each party and
contractual indemnity claims of the Company arising from the 1964 sale of
the manufactured gas plant to VGS, and also entered into a confidential
agreement with NEES for funding of work under the Order.
In December 1991, the Company brought suit against several previous
insurers seeking recovery of unrecovered past costs and indemnity against
future liabilities associated with environmental problems at the site.
Discovery in the case is largely complete, with the exception of expert
discovery which was stayed by the magistrate pending the resolution of
Summary Judgment Motions filed by the Company. In August 1994, the
Magistrate granted the Company's Motion for Summary Judgment with respect
to defense costs against one defendant and denied it against another
defendant. The United States District Judge affirmed those orders on
September 30, 1994.
The Company has reached confidential settlements with two of the
defendants in its insurance litigation. One of these defendants provided
the Company with comprehensive general liability insurance between 1976
and 1982, and with environmental impairment liability insurance from 1981
to 1984. These policies were in place in 1982 when the EPA first notified
the Company that it might be a potentially responsible party at the Pine
Street Marsh site. The other defendant provided the Company with second
layer excess liability coverage for a seven-month period in 1976.
The Company has deferred amounts received from third parties pending
resolution of the Company's ultimate liability with respect to the site
and rate recognition of that liability. The Company is unable to predict
at this time the magnitude of any liability resulting from potential
claims for the costs of the RI/FS or the performance of any remedial
action, or the likely disposition or magnitude of claims the Company may
have against others, including its insurers, except to the extent
described above.
Through rate cases filed in 1991 and 1993, the Company has sought and
received recovery for ongoing expenses associated with the Pine Street
Marsh site. Specifically, the Company proposed rate recognition of its
unrecovered expenditures between January 1991 and July 31, 1993 (in the
total of approximately $4.6 million) for technical consultants and legal
assistance in connection with the EPA's enforcement actions at the site
and insurance litigation. While reserving the right to argue in the
future about the appropriateness of rate recovery for Pine Street Marsh
related costs, the Company and the Vermont Department of Public Service
(the Department) reached agreements in both cases that the full amount of
Pine Street Marsh costs reflected in those rate cases should be recovered
in rates. The Company's rates approved by the VPSB on April 2, 1992 and
on May 13, 1994 reflected the Pine Street Marsh related expenditures
referred to above.
In a rate case filed on September 26, 1994, the Company sought recovery in
rates of approximately $2.7 million in expenses associated with the Pine
Street site. This amount represented the Company's unrecovered
expenditures between August 1993 and June 1994 for technical consultants
and legal assistance in connection with EPA's enforcement action at the
site and insurance litigation. While reserving the right to argue in the
future about the appropriateness of rate recovery for Pine Street related
costs (and whether recovery or non-recovery of past costs and any
insurance proceeds is relevant to such issue), the parties to the case
have reached agreement that the full amount of Pine Street costs reflected
in the Company's 1994 rate case should be recovered in rates. This
agreement is currently pending before the VPSB.
Management expects to seek and (assuming treatment consistent with the
previous regulatory treatment set forth above) receive ratemaking
treatment for unreimbursed costs incurred beyond the amounts for which
ratemaking treatment has been received. As of March 31, 1995, such
amounts are approximately $1,198,000.
4. 1994 Retail Rate Case
On September 26, 1994, the Company filed a request with the VPSB to
increase retail rates by 13.9 percent. The increase is needed primarily
to cover the rising cost of existing power sources, the cost of new power
sources the Company has secured to replace power supply that will be lost
in the near future, and the cost of energy efficiency programs the Company
has implemented for its customers. The Company, the Department and the
other parties have reached a settlement agreement providing for a
9.25 percent retail rate increase effective June 15, 1995, and a target
return on equity for utility operations of 11.25 percent. The agreement
must be reviewed and approved by the VPSB.
5. 1993 RETAIL RATE CASE
On October 1, 1993, the Company filed a request with the VPSB to increase
retail rates by 8.6 percent. The increase was needed primarily to cover
the cost of buying power from independent power producers, the cost of
energy conservation programs, the cost of plant additions made in the past
two years, and costs incurred in 1992 and 1993 associated with the
Company's response to the EPA's RI/FS and proposed remedy at the Pine
Street Marsh site and with the Company's litigation against its previous
insurers seeking recovery of past costs incurred and indemnity against
future liabilities in connection with the site. On January 28, 1994, the
Company and the other parties in the proceeding reached a settlement
agreement providing for a 2.9 percent retail rate increase effective June
15, 1994, and a target return on equity for utility operations of
10.5 percent. The settlement agreement also provided for the Company's
recovery in rates of $4.2 million in costs associated with the Pine Street
Marsh site, as described herein above. The agreement was approved by the
VPSB on May 13, 1994.
6. 1991 RETAIL RATE CASE
On July 19, 1991, the Company filed a request with the VPSB to increase
retail rates by 9.96 percent to cover power supply cost increases expected
in 1992, the costs of upgrading and maintaining the Company's generation,
transmission and distribution facilities; expenditures associated with the
Company's conservation programs; and higher employee pension and health
care costs. In orders dated April 2, 1992 and May 21, 1992, the VPSB
approved an increase of 5.6 percent, or approximately $6.6 million,
effective April 2, 1992.
The Department appealed the VPSB orders challenging, among other rulings,
the VPSB's acceptance of the Company's method of treating accumulated
depreciation and certain Vermont Yankee-related power costs. The Company
filed a cross-appeal contending, among other things, that the VPSB had
erred in reducing ratebase relating to certain demand-side management
(DSM) program cost projections that had been made in the Company's prior
rate case.
On April 22, 1994 the Vermont Supreme Court affirmed in part and reversed
in part the VPSB orders. The Court overturned the VPSB's decision
disallowing certain DSM costs. The impact of this portion of the Court's
ruling resulted in the Company's other income since April 1992 being
increased by $162,000. On the other hand, the Court overturned the VPSB
decision in the Company's favor on an issue involving the method of
treating accumulated depreciation, and on the inclusion of one item of
Vermont Yankee's capital projections in power costs. The overall impact
of the Court's ruling resulted in a reduction of $840,000 in the Company's
revenues.
7. RECLASSIFICATION
Certain line items on the prior year balance sheet have been reclassified
for consistent presentation with the current year.
The Consolidated Financial Statements are unaudited and, in
the opinion of the Company, reflect the adjustments
necessary to a fair statement of the results of the interim
periods. All such adjustments, except as specifically
noted in the Consolidated Financial Statements, are of a
normal, recurring nature.
GREEN MOUNTAIN POWER CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1995
Part 1 - Item 2
RESULTS OF OPERATIONS
Earnings Summary
Earnings per share of common stock in the first quarter of 1995 were
$0.65, compared to $0.85 per share in the first quarter of 1994. The
decrease in earnings in 1995 was primarily due to a decrease in operating
revenues resulting from warmer than normal winter weather.
Operating Revenues and MWh Sales
Operating revenues, megawatthour (MWh) sales and average number of
customers are summarized as follows:
Three Months Ended
March 31
1995 1994
Operating Revenues (In thousands)
Retail . . . . . . . . . . . . . . . . . . $ 35,566 $ 35,892
Sales for Resale . . . . . . . . . . . . . 3,364 3,609
Other . . . . . . . . . . . . . . . . . . 1,093 1,110
-------- --------
Total Operating Revenues . . . . . . . . $ 40,023 $ 40,611
======== ========
MWh Sales
Retail . . . . . . . . . . . . . . . . . . 460,337 477,169
Sales for Resale . . . . . . . . . . . . . 91,383 99,561
------- -------
Total MWh Sales . . . . . . . . . . . . . 551,720 576,730
======= =======
Average Number of Customers
Residential . . . . . . . . . . . . . . . 69,466 68,579
Commercial & Industrial . . . . . . . . . 11,669 11,617
Other . . . . . . . . . . . . . . . . . . 76 73
------ ------
Total Customers . . . . . . . . . . . . . 81,211 80,269
====== ======
Total operating revenues in the first quarter of 1995 decreased
1.5 percent compared to the same period in 1994. Retail revenues
decreased nearly 1 percent in the first quarter of 1995 compared to the
same period in 1994 primarily due to a 4.3 percent decrease in sales
resulting from warmer than normal winter weather. Heating degree days in
the first quarter of 1995 were 21 percent lower than the same period in
1994. Wholesale revenues decreased 6.8 percent in the first quarter of
1995 compared to the same period in 1994 primarily due to the expiration
of certain wholesale contracts.
Operating Expenses
Power supply expenses decreased 2.6 percent in the first quarter of 1995
compared to the same period in 1994, as the Company required less
electricity in 1995 to serve customer needs.
Other operating expenses decreased 4.3 percent in the first quarter of
1995 compared to the same period in 1994 primarily due to cost containment
measures implemented during the latter part of the second quarter of 1994,
which resulted in decreased expense in 1995.
Transmission expenses decreased 8.9 percent in the first quarter of 1995
compared to the same period in 1994 primarily due to cost reduction
efforts of VELCO and a one-time sale of transmission access to another
utility that purchased power from Hydro-Quebec.
Maintenance expenses decreased 6.0 percent in the first quarter of 1995
compared to the same period in 1994 primarily due to a scheduled decrease
in plant maintenance.
Depreciation and amortization expenses increased 39.0 percent in the first
quarter of 1995 over the same period in 1994 primarily due to the
amortization of expenditures related to energy conservation programs and
the Pine Street Marsh environmental matter and insurance litigation. (See
Note 3 of Notes to Consolidated Financial Statements.)
Income Taxes
Income taxes increased 2.3 percent in the first quarter of 1995 over the
same period in 1994 primarily due to the effect of the Vermont Supreme
Court decision in 1994 related to the treatment of accumulated
depreciation. (See Note 6 of Notes to Consolidated Financial Statements.)
Other Income
Other income decreased 40.6 percent in the first quarter of 1995 compared
to the same period in 1994 primarily due to a $362,000 decrease in
earnings experienced by Green Mountain Propane Gas Company, the Company's
wholly-owned propane subsidiary, resulting from reduced sales of propane
caused by warm weather in 1995. This decrease was partially offset by a
$288,000 increase in earnings generated by Mountain Energy, Inc., the
Company's wholly-owned subsidiary that invests in electric energy-related
development projects. Additionally, other income in the first quarter of
1994 benefited from a one-time increase of $162,000 resulting from a
Vermont Supreme Court ruling overturning a VPSB decision disallowing
certain DSM costs. (See Note 6 of Notes to Consolidated Financial
Statements.)
Interest Charges
Interest charges were essentially unchanged in the first quarter of 1995
compared to the same period in 1994.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 1995, construction and conservation
expenditures totaled $3.1 million. Such expenditures in 1995 are expected
to be approximately $23.5 million, principally for expansion and
improvements of the Company's transmission and distribution plant and for
conservation measures.
The Company anticipates issuing $15 million of common stock and
$10 million of first mortgage bonds in 1995. The proceeds will be used to
finance capital projects and to retire short-term debt.
OTHER
A major European manufacturer of carpeting, which in 1994 had decided to
locate in the Company's service territory, announced on May 9, 1995 that
it would not proceed with its plans. The carpeting manufacturer cited the
collapse of the world carpet market and the decline of the dollar as the
principal reasons for reconsidering the decision to expand operations in
Vermont. This development will have no material impact on the Company's
earnings.
GREEN MOUNTAIN POWER CORPORATION
March 31, 1995
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
See Notes 3, 4, 5 and 6 of Notes to Consolidated Financial
Statements
ITEM 2. Changes in Securities
NONE
ITEM 3. Defaults Upon Senior Securities
NONE
ITEM 4. Submission of Matters to a Vote of Security Holders
NONE
ITEM 5. Other Information
NONE
ITEM 6. (a) EXHIBITS
10-d-16 Severance Agreement with R. C. Young
10-d-17 Severance Agreement with P. H. Zamore
12 Computation of Ratio of Earnings to
Fixed Charges
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
Form 8-K was not required to be filed
during the current quarter
GREEN MOUNTAIN POWER CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GREEN MOUNTAIN POWER CORPORATION
(Registrant)
Date: May 15, 1995 /s/ C. L. Dutton
C. L. Dutton, Vice President, Chief
Financial Officer and Treasurer
Date: May 15, 1995 /s/ G. J. Purcell
G. J. Purcell, Controller
Exhibit 10-d-16
PERSONAL AND CONFIDENTIAL
April 5, 1993
Mr. Robert C. Young
Assistant Vice President
Green Mountain Power Corporation
P.O. Box 850
South Burlington, VT 05402-0850
Dear Bob:
Green Mountain Power Corporation (the "Company") considers it essential to
the best interests of its shareholders to foster the continuous employment
of key management personnel. In this connection, the Board of Directors
of the Company (the "Board") recognizes that, as is the case with many
publicly held corporations, the possibility of a change in control may
exist and that such possibility, and the uncertainty and questions which
it may raise among management, may result in the distraction or departure
of management personnel to the detriment of the Company and its
shareholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members
of the Company's management, including yourself, to their assigned duties
without distraction in the face of potentially disturbing circumstances
arising from the possibility of a change in control of the Company,
although no such change is known to be contemplated.
In order to induce you to remain in the employ of the Company and in
consideration of your agreement set forth in Subsection 2(ii) hereof, the
Company agrees that you shall receive the severance benefits set forth in
this letter agreement ("Agreement") in the event your employment with the
Company is terminated subsequent to a "change in control of the Company"
(as defined in Section 2 hereof) under the circumstances described below.
1. Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1993;
provided, however, that commencing on January 1, 1994 and each
January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not
later than September 30 of the preceding year, the Company shall
have given notice that it does not wish to extend this
Agreement; provided, further, if a change in control of the
Company shall have occurred during the original or extended term
of this Agreement, this Agreement shall continue in effect for a
period of at least twenty-four (24) months beyond the month in
which such change in control occurred.
2. Change in Control.
(i) No benefits shall be payable hereunder unless there
shall have been a change in control of the Company, as
set forth below. For purposes of this Agreement, a
"change in control of the Company" shall be deemed to
have occurred if (A) any "person" (as such term is used
in sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), other than
a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a corporation
owned, directly or indirectly, by the shareholders of
the Company in substantially the same proportions as
their ownership of stock of the Company, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities
of the Company representing 25% or more of the combined
voting power of the Company's then outstanding
securities (a "25% Holder"); or (B) during any period of
two consecutive years (not including any period prior to
the execution of this Agreement), individuals who at the
beginning of such period constitute the Board of
Directors of the Company (the "Board") and any new
director (other than a director designated by a person
who has entered into an agreement with the Company to
effect a transaction described in clauses (A) or (C) of
this Subsection) whose election by the Board or
nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were
directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a majority
of the directors of the Company; or (C) the shareholders
of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger
or consolidation which would result in the voting
securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities
of the surviving entity) at least 80% of the combined
voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such
merger or consolidation, or the shareholders of the
Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by
the Company of all or substantially all the Company's
assets; provided, however, that a change in control of
the Company shall not be deemed to have occurred under
clauses (A) or (C) above if a majority of the Continuing
Directors (as defined below) determine within five
business days after the occurrence of any event
specified in clauses (A) or (C) above that control of
the Company has not in fact changed and it is reasonably
expected that such control of the Company in fact will
not change. Notwithstanding that, in the case of clause
(A) above, the Board shall have made a determination of
the nature described in the preceding sentence, if there
shall thereafter occur any material change in facts
involving, or relating to, the 25% Holder or to the 25%
Holder's relationship to the Company, including, without
limitation, the acquisition by the 25% Holder of l% or
more additional outstanding voting stock of the Company,
the occurrence of such material change in facts shall
result in a new "change in control of the Company" for
the purpose of this Agreement. In such event, the sec-
ond immediately preceding sentence hereof shall be
effective. As used herein, the term "Continuing
Director" shall mean any member of the Board on the date
of this Agreement and any successor of a Continuing
Director who is recommended to succeed the Continuing
Director by a majority of Continuing Directors. If,
following a change in control of the Company (as defined
in this Agreement), you are the beneficial owner of two
percent or more of the then-outstanding equity
securities of the Company, or its successor in interest,
a majority of the Continuing Directors may elect, within
five business days after such change in control of the
Company, to terminate any benefits payable to you under
this Agreement after the date of such an election by the
Continuing Directors.
(ii) For purposes of this Agreement, a "potential change in
control of the Company" shall be deemed to have occurred
if (A) the Company enters into an agreement, the
consummation of which would result in the occurrence of
a change in control of the Company, (B) any person
(including the Company) publicly announces an intention
to take or to consider taking actions which if
consummated would constitute a change in control of the
Company; (C) any person, other than a trustee or other
fiduciary holding securities under an employee benefit
plan of the Company or a corporation owned, directly or
indirectly, by the shareholders of the Company in
substantially the same proportion as their ownership of
stock of the Company, becomes the beneficial owner,
directly or indirectly, of securities of the Company
representing 5% or more of the combined voting power of
the Company's then outstanding securities; or (D) the
Board adopts a resolution to the effect that, for pur-
poses of this Agreement, a potential change in control
of the Company has occurred. You agree that, subject to
the terms and conditions of this Agreement, in the event
of a potential change in control of the Company, you
will remain in the employ of the Company until the ear-
liest of (i) a date which is six (6) months from the
occurrence of such potential change in control of the
Company, (ii) the termination by you of your employment
by reason of Disability or Retirement (at your normal
retirement age), as defined in Subsection 3(i), or (iii)
the occurrence of a change in control of the Company.
3. Termination Following Change in Control. If any of the events
described in Subsection 2(i) hereof constituting a change in
control of the Company shall have occurred, you shall be
entitled to the benefits provided in Subsection 4(iii) hereof
upon the subsequent termination of your employment during the
term of this Agreement unless such termination is (A) because of
your death, Disability or Retirement, (B) by the Company for
Cause, or (C) by you other than for Good Reason.
(i) Disability; Retirement. If, as a result of your
incapacity due to physical or mental illness, you shall
have been absent from the full-time performance of your
duties with the Company for six (6) consecutive months,
and within thirty (30) days after written notice of
termination is given you shall not have returned to the
full-time performance of your duties, your employment
may be terminated for "Disability". Termination by the
Company or you of your employment based on "Retirement"
shall mean termination in accordance with the Company's
retirement policy, including early retirement, generally
applicable to its salaried employees or in accordance
with any retirement arrangement established with your
consent with respect to you.
(ii) Cause. Termination by the Company of your employment
for "Cause" shall mean termination upon (A) the willful
and continued failure by you to substantially perform
your duties with the Company (other than any such
failure resulting from your incapacity due to physical
or mental illness or any such actual or anticipated
failure after the issuance of a Notice of Termination,
by you for Good Reason as defined in Subsections 3(iv)
and 3(iii), respectively) after a written demand for
substantial performance is delivered to you by the
Board, which demand specifically identifies the manner
in which the Board _believes that you have not
substantially performed your duties, or (B) the willful
engaging by you in conduct which is demonstrably and
materially injurious to the Company, monetarily or
otherwise. For purposes of this Subsection, no act, or
failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you not in good
faith and without reasonable belief that your action or
omission was in the best interest of the Company.
Notwithstanding the foregoing, you shall not be deemed
to have been terminated for Cause unless and until there
shall have been delivered to you a copy of a resolution
duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the
Board at a meeting of the Board called and held for such
purpose (after reasonable notice to you and an
opportunity for you, together with your counsel, to be
heard before the Board), finding that in the good faith
opinion of the Board you were guilty of conduct set
forth above in clauses (A) or (B) of the first sentence
of this Subsection and specifying the particulars
thereof in detail.
(iii) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean, without your
express written consent, the occurrence after a change
in control of the Company of any of the following
circumstances unless, in the case of paragraphs (A),
(E), (F), (G), or (H), such circumstances are fully
corrected prior to the Date of Termination specified in
the Notice of Termination, as defined in Subsections
3(v) and 3(iv), respectively, given in respect thereof:
(A) the assignment to you of any duties inconsistent
with your status as Assistant Vice President of
Green Mountain Power Corporation or a substantial
adverse alteration in the nature or status of your
responsibilities from those in effect immediately
prior to the change in control of the Company;
(B) a reduction by the Company in your annual base
salary as in effect on the date hereof or as the
same may be increased from time-to-time except for
across-the-board salary reductions similarly
affecting all executives of the Company and all
executives of any person in control of the
Company;
(C) the relocation of the Company's principal
executive offices (presently located at Green
Mountain Drive, South Burlington, Vermont) to a
location more than fifty miles distant from the
present location prior to the change in control of
the Company, or the closing thereof, or the
Company's requiring you to be based anywhere other
than within fifty miles of the present location,
except for required travel on the Company's
business to an extent substantially consistent
with your present business travel obligations;
(D) the failure by the Company, without your consent,
to pay to you any portion of your current
compensation except pursuant to an across-the-
board compensation deferral similarly affecting
all executives of the Company and all executives
of any person in control of the Company;
(E) the failure by the Company to offer you any
compensation plan introduced to other executives
of similar responsibility or any substitute plans
adopted prior to the change in control, unless an
equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with
respect to such plan, or the failure by the
Company to continue your participation therein (or
in such substitute or alternative plan) on a basis
not materially less favorable, both in terms of
the amount of benefits provided and the level of
your participation relative to other participants,
as existed at the time of the change in control;
(F) the failure by the Company to continue to provide
you with benefits substantially similar to those
enjoyed by you under any of the Company's pension,
savings and thrift, group life insurance, medical,
dental or disability plans in which you were
participating at the time of the change in control
of the Company, the taking of any action by the
Company which would directly or indirectly
materially reduce any of such benefits or deprive
you of any material fringe benefit enjoyed by you
at the time of the change in control of the
Company, or the failure by the Company to provide
you with the number of paid vacation days to which
you are entitled on the basis of years of service
with the Company in accordance with the Company's
normal vacation policy in effect at the time of
the change in control of the Company;
(G) the failure of the Company to obtain a
satisfactory agreement from any successor company
to assume and agree to perform this Agreement, as
contemplated in Section 5 hereof; or
(H) any purported termination of your employment
which is not effected pursuant to a Notice of
Termination satisfying the requirements of
Subsection (iv) below (and if applicable, the
requirements of Subsection (ii) above); for
purposes of this Agreement, no such purported
termination shall be effective.
Your right to terminate your employment pursuant to this
Subsection shall not be affected by your incapacity due
to physical or mental illness. Your continued
employment shall_not constitute consent to, or a waiver
of rights with respect to, any circumstance constituting
Good Reason hereunder.
(iv) Notice of Termination. Any purported termination of
your employment by the Company or by you shall be
communicated by written Notice of Termination to the
other party hereto in accordance with Section 6 hereof.
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 and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of your employment under the provision so
indicated.
(v) Date of Termination, etc. "Date of Termination" shall
mean (A) if your employment is terminated for
Disability, thirty (30) days after Notice of Termination
is given (provided that you shall not have returned to
the full-time performance of your duties during such
thirty (30) day period), and (B) if your employment is
terminated pursuant to Subsection (ii) or (iii) above or
for any other reason (other than Disability), the date
specified in the Notice of Termination (which, in the
case of a termination pursuant to Subsection (ii) above
shall not be less than thirty (30) days, and in the case
of a termination pursuant to Subsection (iii) above
shall not be less than fifteen (15) nor more than sixty
(60) days, respectively, from the date such Notice of
Termination is given); provided that if within fifteen
(15) days after any Notice of Termination (as determined
without regard to this provision), the party receiving
such Notice of Termination notifies the other party that
a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement
of the parties, by a binding arbitration award, or by a
final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no
appeal has been perfected); provided further that the
Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding
the pendency of any such dispute, the Company will
continue to pay you your full compensation in effect
when the notice giving rise to the dispute was given
(including, but not limited to, base salary) and
continue you as a participant in all compensation,
benefit and insurance plans in which you were
participating when the notice giving rise to the dispute
was given, until the dispute is finally resolved in
accordance with this Subsection. Amounts paid under
this Subsection are in addition to all other amounts due
under this Agreement and shall not be offset against or
reduce any other amounts due under this Agreement except
to the extent otherwise provided in paragraph (E) of
Subsection 4(iii).
4. Compensation Upon Termination or During Disability. Following a
change in control of the Company, as defined by Subsection 2(i),
upon termination of your employment or during a period of
disability you shall be entitled to the following benefits:
(i) During any period that you fail to perform your full-
time duties with the Company as a result of incapacity
due to physical or mental illness, you shall continue to
receive your base salary at the rate in effect at the
commencement of any such period, together with all
compensation payable to you under any other plan in
effect during such period, until this Agreement is ter-
minated pursuant to Section 3(i) hereof. Thereafter, or
in the event your employment shall be terminated by the
Company or by you for Retirement, or by reason of your
death, your benefits shall be determined under the
Company's retirement, insurance and other compensation
programs then in effect in accordance with the terms of
such programs.
(ii) If your employment shall be terminated by the Company
for Cause or by you other than for Good Reason,
Disability, death or Retirement, the Company shall pay
you your full base salary through the Date of
Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which
you are entitled under any compensation or benefit plan
of the Company at the time such payments are due, and
the Company shall have no further obligations to you
under this Agreement.
(iii) If your employment by the Company shall be terminated
(a) by the Company other than for Cause, Retirement or
Disability or (b) by you for Good Reason, then you shall
be entitled to the benefits provided below:
(A) The Company shall pay you your full base salary
through the Date of Termination at the rate in
effect at the time Notice of Termination is given,
plus all other amounts to which you are entitled
under any compensation or benefit plan of the
Company, at the time such payments are due, except
as otherwise provided below.
(B) In lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the
Company shall pay as severance pay to you a lump
sum severance payment (the "Severance Payment")
equal to 2.99 times your "base amount," as defined
in section 280G of the Internal Revenue Code of
1986, as amended (the "Code"). Such base amount
shall be determined in accordance with temporary
or final regulations, if any, promulgated under
section 280G of the Code and based upon the advice
of the tax counsel referred to in paragraph (C),
below.
(C) The Severance Payment shall be reduced by the
amount of any other payment or the value of any
benefit received or to be received by you in
connection with a change in control of the Company
or your termination of employment (whether
pursuant to the terms of this Agreement or any
other plan, agreement or arrangement with the
Company, any person whose actions result in a
change of control, or any person affiliated with
the Company or such person) unless (i) you shall
have effectively waived your receipt or enjoyment
of such payment or benefit prior to the date of
payment of the Severance Payment, (ii) in the
opinion of tax counsel selected by the Company's
independent auditors and acceptable to you, and
who may rely, without independent examination,
upon the report of an independent consultant
(Compensation Consultant) engaged in the practice
of preparing compensation studies and rendering
advice concerning compensation issues, such other
payment or benefit does not constitute a
"parachute payment" within the meaning of section
280G(b)(2) of the Code, or (iii) in the opinion of
such tax counsel who may rely upon any
Compensation Consultant's report, the Severance
Payment (in its full amount or as partially re-
duced under this paragraph (C), as the case may
be) plus all other payments or benefits which
constitute "parachute payments" within the meaning
of section 280G(b)(2) of the Code are reasonable
compensation for services actually rendered,
within the meaning of section 280G(b)(4) of the
Code or are otherwise not subject to disallowance
as a deduction by reason of section 280G of the
Code. The value of any non-cash benefit or any
deferred payment or benefit shall be determined by
the Company's independent auditors in accordance
with the principles of sections 280G(d)(3) and (4)
of the Code.
(D) The Company shall pay to you all legal fees and
expenses incurred by you as a result of such
termination (including all such fees and expenses,
if any, incurred in contesting or disputing any
such termination or in seeking to obtain or
enforce any right or benefit provided by this
Agreement or in connection with any tax audit or
proceeding to the extent attributable to the
application of section 4999 of the Code to any
payment or benefit provided hereunder), such
payment to be made at the later of the times
provided in paragraph (E), below or within five
(5) days after your request for payment accom-
panied with such evidence of fees and expenses
incurred as the Company reasonably may require.
(E) The payments provided for in paragraphs (B) and
(D), above, shall (except as otherwise provided
therein) be made not later than the fifth day
following the Date of Termination, provided,
however, that if the amounts of such payments, and
the limitation on such payments set forth in
paragraph (C) above, cannot be finally determined
on or before such day, the Company shall pay to
you on such day an estimate, as determined in good
faith by the Company, of the minimum amount of
such payments and shall pay the remainder of such
payments (together with interest at the rate
provided in section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but
in no event later than the thirtieth day after the
Date of Termination. In the event that the amount
of the estimated payments exceeds the amount
subsequently determined to have been due, such
excess shall constitute a loan by the Company to
you, payable on the fifth day after demand by the
Company (together with interest at the rate pro-
vided in section 1274(b)(2)(B) of the Code).
(F) In the event that any payment or benefit received
or to be received by you in connection with a
change in control of the Company or the
termination of your employment (whether pursuant
to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any
person whose actions result in a change in control
or any person affiliated with the Company or such
person) (collectively with the Severance Payments,
"Total Payments") would not be deductible (in
whole or part) as a result of section 280G of the
Code by the Company, an affiliate or other person
making such payment or providing such benefit, the
Severance Payments shall be reduced until no
portion of the Total Payments is not deductible,
or the Severance Payments are reduced to zero.
For purposes of this limitation (i) no portion of
the Total Payments the receipt or enjoyment of
which you shall have effectively waived in writing
prior to the date of payment of the Severance
Payments shall be taken into account, (ii) no por-
tion of the Total Payments shall be taken into
account which in the opinion of tax counsel
selected by the Company's independent auditors and
acceptable to you does not constitute a "parachute
payment" within the meaning of section 280G(b)(2)
of the Code, (iii) the Severance Payments shall be
reduced only to the extent necessary so that the
Total Payments (other than those referred to in
clauses (i) or (ii)) in their entirety constitute
reasonable compensation for services actually
rendered within the meaning of section 280G(b)(4)
of the Code or are otherwise not subject to
disallowance as deductions, in the opinion of the
tax counsel referred to in clause (ii); and (iv)
the value of any non-cash benefit or any deferred
payment or benefit included in the Total Payments
shall be determined by the Company's independent
auditors in accordance with the principles of
sections 280G(d)(3) and (4) of the Code.
(G) If it is established pursuant to a final
determination of a court or an Internal Revenue
Service proceeding that, notwithstanding the good
faith of you and the Company in applying the terms
of this Subsection 4(iii), the aggregate
"parachute payments" paid to or for your benefit
are in an amount that would result in any portion
of such "parachute payments" not being deductible
by reason of section 280G of the Code, then you
shall have an obligation to pay the Company upon
demand an amount equal to the sum of (1) the
excess of the aggregate "parachute payments" paid
to or for your benefit over the aggregate
"parachute payments" that could have been paid to
or for your benefit without any portion of such
"parachute payments" not being deductible by
reason of section 280G of the Code; and (2) in-
terest on the amount set forth in clause (1) of
this sentence at the rate provided in section
1274(b)(2)(B) of the Code from the date of your
receipt of such excess until the date of such
payment.
(iv) If your employment shall be terminated (A) by the
Company other than for Cause, Retirement or Disability
or (B) by you for Good Reason, then for a twenty-four
(24) month period after such termination, the Company
shall arrange to provide you with group life,
disability, medical and dental insurance benefits
substantially similar to those which you are receiving
immediately prior to the Notice of Termination.
Benefits otherwise receivable by you pursuant to this
Subsection 4(iv) shall be reduced to the extent
comparable benefits are actually received by you during
the twenty-four (24) month period following your
termination, and any such benefits actually received by
you shall be reported to the Company. If the benefits
provided to you under this Subsection shall result in a
decrease, pursuant to paragraph (E) of Subsection
4(iii), in the Severance Payments and such benefits are
thereafter reduced pursuant to the immediately preceding
sentence, the Company shall, at the time of such
reduction, pay to you the lesser of (a) the amount of
such decrease in the Severance Payments or (b) the
maximum amount which can be paid to you without being,
or causing any other payment to be, nondeductible by
reason of section 280G of the Code.
(v) If your employment shall be terminated (A) by the
Company other than for Cause, Retirement or Disability
or (B) by you for Good Reason, then in addition to the
retirement benefits to which you are entitled under the
Company's Retirement Plan and Officers' Supplemental
Retirement Plan or any successor plans thereto, the
Company shall pay you in cash at the time and in the
manner provided in paragraphs (E), (F) and (G) of
Subsection 4(iii), a lump sum equal to the actuarial
equivalent of the excess of (x) the retirement pension
(determined as a straight life annuity commencing at age
sixty-five) which you would have accrued under the terms
of the Company's Retirement Plan and Officers'
Supplemental Retirement Plan without regard to any
amendment to the Company's Retirement Plan and Officers'
Supplemental Retirement Plan made subsequent to a change
in control of the Company and on or prior to the Date of
Termination, which amendment adversely affects in any
manner the computation of retirement benefits thereun-
der, determined as if you were fully vested thereunder
and had accumulated (after the Date of Termination)
twenty-four (24) additional months of service credit
thereunder at your highest annual rate of compensation
during the twelve (12) months immediately preceding the
Date of Termination over (y) the retirement pension
(determined as a straight life annuity commencing at age
sixty-five) which you had then accrued pursuant to the
provisions of the Company's Retirement Plan and
Officers' Supplemental Retirement Plan. For the
purposes of this Subsection, "actuarial equivalent"
shall be determined using the same methods and assump-
tions utilized under the Company's Retirement Plan and
Officers' Supplemental Retirement Plan immediately prior
to the change in control of the Company.
(vi) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other
employment or otherwise, nor shall the amount of any
payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as the result
of employment by another employer, by retirement
benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise.
(vii) In addition to all other amounts payable to you under
this Section 4, you shall be entitled to receive all
benefits payable to you under the Company's Retirement
Plan, Savings and Thrift Plan, Officers' Supplemental
Retirement Plan and any other plan or agreement relating
to retirement benefits.
5. Successors; Binding Agreement.
(i) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and
agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to
perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall
entitle you to compensation from the Company in the same
amount and on the same terms as you would be entitled to
hereunder if you terminate your employment for Good
Reason following a change in control of the Company,
except that for purposes of implementing the foregoing,
the date on which any such succession becomes effective
shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or
otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives,
executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die
while any amount would still be payable to you hereunder
if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee,
legatee or other designee or, if there is no such
designee, to your estate.
6. Subsidiary Corporations. Upon approval of the Board of
Directors of the appropriate wholly-owned subsidiary, this
Agreement shall apply to an executive of any wholly-owned
subsidiary of the Company with the same force and effect as if
said executive were employed directly by the Company. Upon
approval by said subsidiary's Board of Directors, the executive
of the wholly-owned subsidiary shall be entitled to the same
benefits from the Company as those granted to executives of the
Company. For purposes of this Agreement the transfer of an
employee from the Company to any wholly-owned subsidiary of the
Company, or from any wholly-owned subsidiary to the Company, or
from one wholly-owned subsidiary to another shall not constitute
a termination of such employee's employment. As applied to an
executive of a wholly-owned subsidiary, the duties and
obligations of the Company shall, wherever appropriate, refer to
the duties and obligations of the Company's wholly-owned
subsidiary which employs the executive; provided, however, that
the Company rather than the wholly-owned subsidiary shall remain
liable to the executive for payment of benefits due hereunder.
7. Notice. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement,
provided that all notice to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the
Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon
receipt.
8. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification, or
discharge is agreed to in writing and signed by you and such
officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or 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. This
Agreement supersedes any previous agreements between the Company
and you on the matters herein addressed. 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. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Vermont.
All reference to sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such
sections. Any payments provided for hereunder shall be paid net
of any applicable withholding required under federal, state or
local law. The obligations of the Company under Section 4 shall
survive the expiration of the term of this Agreement.
9. Validity. 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.
10. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original
but all of which together will constitute one and the same
instrument.
11. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by
arbitration in Burlington, Vermont in accordance with the rules
of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that you shall be entitled to
seek specific performance of your right to be paid until the
Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
ACKNOWLEDGMENT OF ARBITRATION
The parties hereto understand that this Agreement contains an agreement to
arbitrate. After signing this document, the parties understand that they
will not be able to bring a lawsuit concerning any dispute that may arise
which is covered by the arbitration agreement, unless it involves a
question of constitutional or civil rights. Instead the parties agree to
submit any such dispute to an impartial arbitrator.
This letter is submitted in duplicate. If it sets forth our agreement on
the subject matter hereof, kindly sign both copies and return one copy to
me within thirty (30) days (after which this offer of severance benefits
will lapse). These letters will then constitute our agreement on this
subject.
By: /s/Thomas P. Salmon
Thomas P. Salmon, Chairman
Board of Directors
Green Mountain Power Corporation
Agreed to this 5th day of April, 1993.
/s/Robert C. Young
Robert C. Young
Exhibit 10-d-17
PERSONAL AND CONFIDENTIAL
January 26, 1995
Peter H. Zamore, Esq.
General Counsel
Green Mountain Power Corporation
P.O. Box 850
South Burlington, VT 05402-0850
Dear Peter:
Green Mountain Power Corporation (the "Company") considers it essential to
the best interests of its shareholders to foster the continuous employment
of key management personnel. In this connection, the Board of Directors
of the Company (the "Board") recognizes that, as is the case with many
publicly held corporations, the possibility of a change in control may
exist and that such possibility, and the uncertainty and questions which
it may raise among management, may result in the distraction or departure
of management personnel to the detriment of the Company and its
shareholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members
of the Company's management, including yourself, to their assigned duties
without distraction in the face of potentially disturbing circumstances
arising from the possibility of a change in control of the Company,
although no such change is known to be contemplated.
In order to induce you to remain in the employ of the Company and in
consideration of your agreement set forth in Subsection 2(ii) hereof, the
Company agrees that you shall receive the severance benefits set forth in
this letter agreement ("Agreement") in the event your employment with the
Company is terminated subsequent to a "change in control of the Company"
(as defined in Section 2 hereof) under the circumstances described below.
1. Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1995;
provided, however, that commencing on January 1, 1996 and each
January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not
later than September 30 of the preceding year, the Company shall
have given notice that it does not wish to extend this
Agreement; provided, further, if a change in control of the
Company shall have occurred during the original or extended term
of this Agreement, this Agreement shall continue in effect for a
period of at least twenty-four (24) months beyond the month in
which such change in control occurred.
2. Change in Control.
(i) No benefits shall be payable hereunder unless there
shall have been a change in control of the Company, as
set forth below. For purposes of this Agreement, a
"change in control of the Company" shall be deemed to
have occurred if (A) any "person" (as such term is used
in sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), other than
a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a corporation
owned, directly or indirectly, by the shareholders of
the Company in substantially the same proportions as
their ownership of stock of the Company, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities
of the Company representing 25% or more of the combined
voting power of the Company's then outstanding
securities (a "25% Holder"); or (B) during any period of
two consecutive years (not including any period prior to
the execution of this Agreement), individuals who at the
beginning of such period constitute the Board of
Directors of the Company (the "Board") and any new
director (other than a director designated by a person
who has entered into an agreement with the Company to
effect a transaction described in clauses (A) or (C) of
this Subsection) whose election by the Board or
nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were
directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a majority
of the directors of the Company; or (C) the shareholders
of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger
or consolidation which would result in the voting
securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities
of the surviving entity) at least 80% of the combined
voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such
merger or consolidation, or the shareholders of the
Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by
the Company of all or substantially all the Company's
assets; provided, however, that a change in control of
the Company shall not be deemed to have occurred under
clauses (A) or (C) above if a majority of the Continuing
Directors (as defined below) determine within five
business days after the occurrence of any event
specified in clauses (A) or (C) above that control of
the Company has not in fact changed and it is reasonably
expected that such control of the Company in fact will
not change. Notwithstanding that, in the case of clause
(A) above, the Board shall have made a determination of
the nature described in the preceding sentence, if there
shall thereafter occur any material change in facts
involving, or relating to, the 25% Holder or to the 25%
Holder's relationship to the Company, including, without
limitation, the acquisition by the 25% Holder of l% or
more additional outstanding voting stock of the Company,
the occurrence of such material change in facts shall
result in a new "change in control of the Company" for
the purpose of this Agreement. In such event, the sec-
ond immediately preceding sentence hereof shall be
effective. As used herein, the term "Continuing
Director" shall mean any member of the Board on the date
of this Agreement and any successor of a Continuing
Director who is recommended to succeed the Continuing
Director by a majority of Continuing Directors. If,
following a change in control of the Company (as defined
in this Agreement), you are the beneficial owner of two
percent or more of the then-outstanding equity
securities of the Company, or its successor in interest,
a majority of the Continuing Directors may elect, within
five business days after such change in control of the
Company, to terminate any benefits payable to you under
this Agreement after the date of such an election by the
Continuing Directors.
(ii) For purposes of this Agreement, a "potential change in
control of the Company" shall be deemed to have occurred
if (A) the Company enters into an agreement, the
consummation of which would result in the occurrence of
a change in control of the Company, (B) any person
(including the Company) publicly announces an intention
to take or to consider taking actions which if
consummated would constitute a change in control of the
Company; (C) any person, other than a trustee or other
fiduciary holding securities under an employee benefit
plan of the Company or a corporation owned, directly or
indirectly, by the shareholders of the Company in
substantially the same proportion as their ownership of
stock of the Company, becomes the beneficial owner,
directly or indirectly, of securities of the Company
representing 5% or more of the combined voting power of
the Company's then outstanding securities; or (D) the
Board adopts a resolution to the effect that, for pur-
poses of this Agreement, a potential change in control
of the Company has occurred. You agree that, subject to
the terms and conditions of this Agreement, in the event
of a potential change in control of the Company, you
will remain in the employ of the Company until the ear-
liest of (i) a date which is six (6) months from the
occurrence of such potential change in control of the
Company, (ii) the termination by you of your employment
by reason of Disability or Retirement (at your normal
retirement age), as defined in Subsection 3(i), or (iii)
the occurrence of a change in control of the Company.
3. Termination Following Change in Control. If any of the events
described in Subsection 2(i) hereof constituting a change in
control of the Company shall have occurred, you shall be
entitled to the benefits provided in Subsection 4(iii) hereof
upon the subsequent termination of your employment during the
term of this Agreement unless such termination is (A) because of
your death, Disability or Retirement, (B) by the Company for
Cause, or (C) by you other than for Good Reason.
(i) Disability; Retirement. If, as a result of your
incapacity due to physical or mental illness, you shall
have been absent from the full-time performance of your
duties with the Company for six (6) consecutive months,
and within thirty (30) days after written notice of
termination is given you shall not have returned to the
full-time performance of your duties, your employment
may be terminated for "Disability". Termination by the
Company or you of your employment based on "Retirement"
shall mean termination in accordance with the Company's
retirement policy, including early retirement, generally
applicable to its salaried employees or in accordance
with any retirement arrangement established with your
consent with respect to you.
(ii) Cause. Termination by the Company of your employment
for "Cause" shall mean termination upon (A) the willful
and continued failure by you to substantially perform
your duties with the Company (other than any such
failure resulting from your incapacity due to physical
or mental illness or any such actual or anticipated
failure after the issuance of a Notice of Termination,
by you for Good Reason as defined in Subsections 3(iv)
and 3(iii), respectively) after a written demand for
substantial performance is delivered to you by the
Board, which demand specifically identifies the manner
in which the Board _believes that you have not
substantially performed your duties, or (B) the willful
engaging by you in conduct which is demonstrably and
materially injurious to the Company, monetarily or
otherwise. For purposes of this Subsection, no act, or
failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you not in good
faith and without reasonable belief that your action or
omission was in the best interest of the Company.
Notwithstanding the foregoing, you shall not be deemed
to have been terminated for Cause unless and until there
shall have been delivered to you a copy of a resolution
duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the
Board at a meeting of the Board called and held for such
purpose (after reasonable notice to you and an opportu-
nity for you, together with your counsel, to be heard
before the Board), finding that in the good faith
opinion of the Board you were guilty of conduct set
forth above in clauses (A) or (B) of the first sentence
of this Subsection and specifying the particulars
thereof in detail.
(iii) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean, without your
express written consent, the occurrence after a change
in control of the Company of any of the following
circumstances unless, in the case of paragraphs (A),
(E), (F), (G), or (H), such circumstances are fully
corrected prior to the Date of Termination specified in
the Notice of Termination, as defined in Subsections
3(v) and 3(iv), respectively, given in respect thereof:
(A) the assignment to you of any duties inconsistent
with your status as General Counsel of Green
Mountain Power Corpor-ation or a substantial
adverse alteration in the nature or status of your
responsibilities from those in effect immediately
prior to the change in control of the Company;
(B) a reduction by the Company in your annual base
salary as in effect on the date hereof or as the
same may be increased from time-to-time except for
across-the-board salary reductions similarly
affecting all executives of the Company and all
executives of any person in control of the
Company;
(C) the relocation of the Company's principal
executive offices (presently located at Green
Mountain Drive, South Burlington, Vermont) to a
location more than fifty miles distant from the
present location prior to the change in control of
the Company, or the closing thereof, or the
Company's requiring you to be based anywhere other
than within fifty miles of the present location,
except for required travel on the Company's
business to an extent substantially consistent
with your present business travel obligations;
(D) the failure by the Company, without your consent,
to pay to you any portion of your current
compensation except pursuant to an across-the-
board compensation deferral similarly affecting
all executives of the Company and all executives
of any person in control of the Company;
(E) the failure by the Company to offer you any
compensation plan introduced to other executives
of similar responsibility or any substitute plans
adopted prior to the change in control, unless an
equitable arrangement (embodied in an ongoing sub-
stitute or alternative plan) has been made with
respect to such plan, or the failure by the
Company to continue your participation therein (or
in such substitute or alternative plan) on a basis
not materially less favorable, both in terms of
the amount of benefits provided and the level of
your participation relative to other participants,
as existed at the time of the change in control;
(F) the failure by the Company to continue to provide
you with benefits substantially similar to those
enjoyed by you under any of the Company's pension,
savings and thrift, group life insurance, medical,
dental or disability plans in which you were
participating at the time of the change in control
of the Company, the taking of any action by the
Company which would directly or indirectly
materially reduce any of such benefits or deprive
you of any material fringe benefit enjoyed by you
at the time of the change in control of the
Company, or the failure by the Company to provide
you with the number of paid vacation days to which
you are entitled on the basis of years of service
with the Company in accordance with the Company's
normal vacation policy in effect at the time of
the change in control of the Company;
(G) the failure of the Company to obtain a
satisfactory agreement from any successor company
to assume and agree to perform this Agreement, as
contemplated in Section 5 hereof; or
(H) any purported termination of your employment
which is not effected pursuant to a Notice of
Termination satisfying the requirements of
Subsection (iv) below (and if applicable, the
requirements of Subsection (ii) above); for
purposes of this Agreement, no such purported
termination shall be effective.
Your right to terminate your employment pursuant to this
Subsection shall not be affected by your incapacity due
to physical or mental illness. Your continued
employment shall_not constitute consent to, or a waiver
of rights with respect to, any circumstance constituting
Good Reason hereunder.
(iv) Notice of Termination. Any purported termination of
your employment by the Company or by you shall be
communicated by written Notice of Termination to the
other party hereto in accordance with Section 6 hereof.
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 and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of your employment under the provision so
indicated.
(v) Date of Termination, etc. "Date of Termination" shall
mean (A) if your employment is terminated for
Disability, thirty (30) days after Notice of Termination
is given (provided that you shall not have returned to
the full-time performance of your duties during such
thirty (30) day period), and (B) if your employment is
terminated pursuant to Subsection (ii) or (iii) above or
for any other reason (other than Disability), the date
specified in the Notice of Termination (which, in the
case of a termination pursuant to Subsection (ii) above
shall not be less than thirty (30) days, and in the case
of a termination pursuant to Subsection (iii) above
shall not be less than fifteen (15) nor more than sixty
(60) days, respectively, from the date such Notice of
Termination is given); provided that if within fifteen
(15) days after any Notice of Termination (as determined
without regard to this provision), the party receiving
such Notice of Termination notifies the other party that
a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement
of the parties, by a binding arbitration award, or by a
final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no
appeal has been perfected); provided further that the
Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding
the pendency of any such dispute, the Company will
continue to pay you your full compensation in effect
when the notice giving rise to the dispute was given
(including, but not limited to, base salary) and
continue you as a participant in all compensation,
benefit and insurance plans in which you were
participating when the notice giving rise to the dispute
was given, until the dispute is finally resolved in
accordance with this Subsection. Amounts paid under
this Subsection are in addition to all other amounts due
under this Agreement and shall not be offset against or
reduce any other amounts due under this Agreement except
to the extent otherwise provided in paragraph (E) of
Subsection 4(iii).
4. Compensation Upon Termination or During Disability. Following a
change in control of the Company, as defined by Subsection 2(i),
upon termination of your employment or during a period of
disability you shall be entitled to the following benefits:
(i) During any period that you fail to perform your full-
time duties with the Company as a result of incapacity
due to physical or mental illness, you shall continue to
receive your base salary at the rate in effect at the
commencement of any such period, together with all
compensation payable to you under any other plan in
effect during such period, until this Agreement is ter-
minated pursuant to Section 3(i) hereof. Thereafter, or
in the event your employment shall be terminated by the
Company or by you for Retirement, or by reason of your
death, your benefits shall be determined under the
Company's retirement, insurance and other compensation
programs then in effect in accordance with the terms of
such programs.
(ii) If your employment shall be terminated by the Company
for Cause or by you other than for Good Reason,
Disability, death or Retirement, the Company shall pay
you your full base salary through the Date of
Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which
you are entitled under any compensation or benefit plan
of the Company at the time such payments are due, and
the Company shall have no further obligations to you
under this Agreement.
(iii) If your employment by the Company shall be terminated
(a) by the Company other than for Cause, Retirement or
Disability or (b) by you for Good Reason, then you shall
be entitled to the benefits provided below:
(A) The Company shall pay you your full base salary
through the Date of Termination at the rate in
effect at the time Notice of Termination is given,
plus all other amounts to which you are entitled
under any compensation or benefit plan of the
Company, at the time such payments are due, except
as otherwise provided below.
(B) In lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the
Company shall pay as severance pay to you a lump
sum severance payment (the "Severance Payment")
equal to 2.99 times your "base amount," as defined
in section 280G of the Internal Revenue Code of
1986, as amended (the "Code"). Such base amount
shall be determined in accordance with temporary
or final regulations, if any, promulgated under
section 280G of the Code and based upon the advice
of the tax counsel referred to in paragraph (C),
below.
(C) The Severance Payment shall be reduced by the
amount of any other payment or the value of any
benefit received or to be received by you in
connection with a change in control of the Company
or your termination of employment (whether
pursuant to the terms of this Agreement or any
other plan, agreement or arrangement with the
Company, any person whose actions result in a
change of control, or any person affiliated with
the Company or such person) unless (i) you shall
have effectively waived your receipt or enjoyment
of such payment or benefit prior to the date of
payment of the Severance Payment, (ii) in the
opinion of tax counsel selected by the Company's
independent auditors and acceptable to you, and
who may rely, without independent examination,
upon the report of an independent consultant
(Compensation Consultant) engaged in the practice
of preparing compensation studies and rendering
advice concerning compensation issues, such other
payment or benefit does not constitute a
"parachute payment" within the meaning of section
280G(b)(2) of the Code, or (iii) in the opinion of
such tax counsel who may rely upon any
Compensation Consultant's report, the Severance
Payment (in its full amount or as partially re-
duced under this paragraph (C), as the case may
be) plus all other payments or benefits which
constitute "parachute payments" within the meaning
of section 280G(b)(2) of the Code are reasonable
compensation for services actually rendered,
within the meaning of section 280G(b)(4) of the
Code or are otherwise not subject to disallowance
as a deduction by reason of section 280G of the
Code. The value of any non-cash benefit or any
deferred payment or benefit shall be determined by
the Company's independent auditors in accordance
with the principles of sections 280G(d)(3) and (4)
of the Code.
(D) The Company shall pay to you all legal fees and
expenses incurred by you as a result of such
termination (including all such fees and expenses,
if any, incurred in contesting or disputing any
such termination or in seeking to obtain or
enforce any right or benefit provided by this
Agreement or in connection with any tax audit or
proceeding to the extent attributable to the
application of section 4999 of the Code to any
payment or benefit provided hereunder), such
payment to be made at the later of the times
provided in paragraph (E), below or within five
(5) days after your request for payment accom-
panied with such evidence of fees and expenses
incurred as the Company reasonably may require.
(E) The payments provided for in paragraphs (B) and
(D), above, shall (except as otherwise provided
therein) be made not later than the fifth day
following the Date of Termination, provided,
however, that if the amounts of such payments, and
the limitation on such payments set forth in
paragraph (C) above, cannot be finally determined
on or before such day, the Company shall pay to
you on such day an estimate, as determined in good
faith by the Company, of the minimum amount of
such payments and shall pay the remainder of such
payments (together with interest at the rate
provided in section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but
in no event later than the thirtieth day after the
Date of Termination. In the event that the amount
of the estimated payments exceeds the amount
subsequently determined to have been due, such
excess shall constitute a loan by the Company to
you, payable on the fifth day after demand by the
Company (together with interest at the rate pro-
vided in section 1274(b)(2)(B) of the Code).
(F) In the event that any payment or benefit received
or to be received by you in connection with a
change in control of the Company or the
termination of your employment (whether pursuant
to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any
person whose actions result in a change in control
or any person affiliated with the Company or such
person) (collectively with the Severance Payments,
"Total Payments") would not be deductible (in
whole or part) as a result of section 280G of the
Code by the Company, an affiliate or other person
making such payment or providing such benefit, the
Severance Payments shall be reduced until no
portion of the Total Payments is not deductible,
or the Severance Payments are reduced to zero.
For purposes of this limitation (i) no portion of
the Total Payments the receipt or enjoyment of
which you shall have effectively waived in writing
prior to the date of payment of the Severance
Payments shall be taken into account, (ii) no por-
tion of the Total Payments shall be taken into
account which in the opinion of tax counsel
selected by the Company's independent auditors and
acceptable to you does not constitute a "parachute
payment" within the meaning of section 280G(b)(2)
of the Code, (iii) the Severance Payments shall be
reduced only to the extent necessary so that the
Total Payments (other than those referred to in
clauses (i) or (ii)) in their entirety constitute
reasonable compensation for services actually
rendered within the meaning of section 280G(b)(4)
of the Code or are otherwise not subject to
disallowance as deductions, in the opinion of the
tax counsel referred to in clause (ii); and (iv)
the value of any non-cash benefit or any deferred
payment or benefit included in the Total Payments
shall be determined by the Company's independent
auditors in accordance with the principles of
sections 280G(d)(3) and (4) of the Code.
(G) If it is established pursuant to a final
determination of a court or an Internal Revenue
Service proceeding that, notwithstanding the good
faith of you and the Company in applying the terms
of this Subsection 4(iii), the aggregate
"parachute payments" paid to or for your benefit
are in an amount that would result in any portion
of such "parachute payments" not being deductible
by reason of section 280G of the Code, then you
shall have an obligation to pay the Company upon
demand an amount equal to the sum of (1) the
excess of the aggregate "parachute payments" paid
to or for your benefit over the aggregate
"parachute payments" that could have been paid to
or for your benefit without any portion of such
"parachute payments" not being deductible by
reason of section 280G of the Code; and (2) in-
terest on the amount set forth in clause (1) of
this sentence at the rate provided in section
1274(b)(2)(B) of the Code from the date of your
receipt of such excess until the date of such
payment.
(iv) If your employment shall be terminated (A) by the
Company other than for Cause, Retirement or Disability
or (B) by you for Good Reason, then for a twenty-four
(24) month period after such termination, the Company
shall arrange to provide you with group life,
disability, medical and dental insurance benefits
substantially similar to those which you are receiving
immediately prior to the Notice of Termination.
Benefits otherwise receivable by you pursuant to this
Subsection 4(iv) shall be reduced to the extent
comparable benefits are actually received by you during
the twenty-four (24) month period following your
termination, and any such benefits actually received by
you shall be reported to the Company. If the benefits
provided to you under this Subsection shall result in a
decrease, pursuant to paragraph (E) of Subsection
4(iii), in the Severance Payments and such benefits are
thereafter reduced pursuant to the immediately preceding
sentence, the Company shall, at the time of such
reduction, pay to you the lesser of (a) the amount of
such decrease in the Severance Payments or (b) the
maximum amount which can be paid to you without being,
or causing any other payment to be, nondeductible by
reason of section 280G of the Code.
(v) If your employment shall be terminated (A) by the
Company other than for Cause, Retirement or Disability
or (B) by you for Good Reason, then in addition to the
retirement benefits to which you are entitled under the
Company's Retirement Plan and Supplemental Retirement
Plan or any successor plans thereto, the Company shall
pay you in cash at the time and in the manner provided
in paragraphs (E), (F) and (G) of Subsection 4(iii), a
lump sum equal to the actuarial equivalent of the excess
of (x) the retirement pension (determined as a straight
life annuity commencing at age sixty-five) which you
would have accrued under the terms of the Company's
Retirement Plan and Supplemental Retirement Plan without
regard to any amendment to the Company's Retirement Plan
and Supple-mental Retirement Plan made subsequent to a
change in control of the Company and on or prior to the
Date of Termination, which amendment adversely affects
in any manner the computation of retirement benefits
thereunder, determined as if you were fully vested
thereunder and had accumulated (after the Date of
Termination) twenty-four (24) additional months of
service credit thereunder at your highest annual rate of
compensation during the twelve (12) months immediately
preceding the Date of Termination over (y) the
retirement pension (determined as a straight life
annuity commencing at age sixty-five) which you had then
accrued pursuant to the provisions of the Company's
Retirement Plan and Supplemental Retirement Plan. For
the purposes of this Subsection, "actuarial equivalent"
shall be determined using the same methods and assump-
tions utilized under the Company's Retirement Plan and
Supplemental Retirement Plan immediately prior to the
change in control of the Company.
(vi) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other
employment or otherwise, nor shall the amount of any
payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as the result
of employment by another employer, by retirement
benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise.
(vii) In addition to all other amounts payable to you under
this Section 4, you shall be entitled to receive all
benefits payable to you under the Company's Retirement
Plan, Savings and Thrift Plan, Supplemental Retirement
Plan and any other plan or agreement relating to retire-
ment benefits.
5. Successors; Binding Agreement.
(i) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and
agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to
perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall
entitle you to compensation from the Company in the same
amount and on the same terms as you would be entitled to
hereunder if you terminate your employment for Good
Reason following a change in control of the Company,
except that for purposes of implementing the foregoing,
the date on which any such succession becomes effective
shall be deemed the Date of Termination. As used in
this Agreement, "Company" shall mean the Company as
herein before defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or
otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives,
executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die
while any amount would still be payable to you hereunder
if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee,
legatee or other designee or, if there is no such
designee, to your estate.
6. Subsidiary Corporations. Upon approval of the Board of
Directors of the appropriate wholly-owned subsidiary, this
Agreement shall apply to an executive of any wholly-owned
subsidiary of the Company with the same force and effect as if
said executive were employed directly by the Company. Upon
approval by said subsidiary's Board of Directors, the executive
of the wholly-owned subsidiary shall be entitled to the same
benefits from the Company as those granted to executives of the
Company. For purposes of this Agreement the transfer of an
employee from the Company to any wholly-owned subsidiary of the
Company, or from any wholly-owned subsidiary to the Company, or
from one wholly-owned subsidiary to another shall not constitute
a termination of such employee's employment. As applied to an
executive of a wholly-owned subsidiary, the duties and
obligations of the Company shall, wherever appropriate, refer to
the duties and obligations of the Company's wholly-owned
subsidiary which employs the executive; provided, however, that
the Company rather than the wholly-owned subsidiary shall remain
liable to the executive for payment of benefits due hereunder.
7. Notice. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement,
provided that all notice to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the
Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon
receipt.
8. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification, or
discharge is agreed to in writing and signed by you and such
officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or 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. This
Agreement supersedes any previous agreements between the Company
and you on the matters herein addressed. 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. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Vermont.
All reference to sections of the Exchange Act or the Code shall
be deemed also to refer to any successor provisions to such
sections. Any payments provided for hereunder shall be paid net
of any applicable withholding required under federal, state or
local law. The obligations of the Company under Section 4 shall
survive the expiration of the term of this Agreement.
9. Validity. 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.
10. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original
but all of which together will constitute one and the same
instrument.
11. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by
arbitration in Burlington, Vermont in accordance with the rules
of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that you shall be entitled to
seek specific performance of your right to be paid until the
Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
ACKNOWLEDGMENT OF ARBITRATION
The parties hereto understand that this Agreement contains an agreement to
arbitrate. After signing this document, the parties understand that they
will not be able to bring a lawsuit concerning any dispute that may arise
which is covered by the arbitration agreement, unless it involves a
question of constitutional or civil rights. Instead the parties agree to
submit any such dispute to an impartial arbitrator.
This letter is submitted in duplicate. If it sets forth our agreement on
the subject matter hereof, kindly sign both copies and return one copy to
me within thirty (30) days (after which this offer of severance benefits
will lapse). These letters will then constitute our agreement on this
subject.
By: /s/Thomas P. Salmon
Thomas P. Salmon, Chairman
Board of Directors
Green Mountain Power Corporation
Agreed to this 2nd day of February, 1995.
/s/Peter H. Zamore
Peter H. Zamore
<TABLE>
Exhibit 12
Green Mountain Power Corporation
Computation of Ratio of Earnings to Fixed Charges
<CAPTION>
Year Ended December 31,
Three Months Ended Twelve Months Ended ---------------------------------------------
March 31, 1995 March 31, 1995 1994 1993 1992 1991 1990
------------------- ----------------- ---------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Net earnings $3,290 $10,306 $11,052 $10,764 $12,296 $10,260 $9,090
Income taxes 1,829 6,087 5,917 5,922 6,451 5,795 4,691
Fixed charges 2,539 9,838 9,777 9,370 9,332 9,303 9,373
------------------- ------ ---------------------------------------------
Total earnings $7,658 $26,231 $26,746 $26,056 $28,079 $25,358 $23,154
=================== ====== =============================================
Fixed Charges:
Interest $2,110 $8,109 $8,043 $7,590 $7,518 $7,517 $7,600
Amortization of debt premium and discount 35 138 138 102 85 48 44
Interest portion of rental payments 394 1,591 1,596 1,678 1,729 1,738 1,729
------------------- ------ ---------------------------------------------
Total fixed charges $2,539 $9,838 $9,777 $9,370 $9,332 $9,303 $9,373
=================== ====== =============================================
Ratio of earnings to fixed charges 3.02 2.67 2.74 2.78 3.01 2.73 2.47
=================== ====== =============================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet as of March 31, 1995 and the related Statements
of Income and Cash Flows for the three months ended March 31, 1995, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 176,224
<OTHER-PROPERTY-AND-INVEST> 20,620
<TOTAL-CURRENT-ASSETS> 27,094
<TOTAL-DEFERRED-CHARGES> 37,219
<OTHER-ASSETS> 35,260
<TOTAL-ASSETS> 296,417
<COMMON> 15,717
<CAPITAL-SURPLUS-PAID-IN> 60,819
<RETAINED-EARNINGS> 26,283
<TOTAL-COMMON-STOCKHOLDERS-EQ> 102,819
8,280
855
<LONG-TERM-DEBT-NET> 74,967
<SHORT-TERM-NOTES> 14,515
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 3,500
0
<CAPITAL-LEASE-OBLIGATIONS> 10,278
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 81,203
<TOT-CAPITALIZATION-AND-LIAB> 296,417
<GROSS-OPERATING-REVENUE> 40,023
<INCOME-TAX-EXPENSE> 1,805
<OTHER-OPERATING-EXPENSES> 33,736
<TOTAL-OPERATING-EXPENSES> 35,541
<OPERATING-INCOME-LOSS> 4,482
<OTHER-INCOME-NET> 583
<INCOME-BEFORE-INTEREST-EXPEN> 5,065
<TOTAL-INTEREST-EXPENSE> 1,838
<NET-INCOME> 3,227
194
<EARNINGS-AVAILABLE-FOR-COMM> 3,033
<COMMON-STOCK-DIVIDENDS> 2,477
<TOTAL-INTEREST-ON-BONDS> 1,686
<CASH-FLOW-OPERATIONS> 10,952
<EPS-PRIMARY> 0.65
<EPS-DILUTED> 0.65
</TABLE>
