EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement') is entered into by and between Bradley W. Evans ("Evans") and Chugach Electric Association, Inc., an Alaska electrical cooperative association headquartered in Anchorage, Alaska ("Chugach" or "Employer"), retroactive as of July 1, 2008.

WITNESSETH:

WHEREAS, Chugach is engaged in the business of production, transmission and distribution of electricity in Alaska;

WHEREAS, Evans has skills and experience in electric utility management transmission and distribution of electricity; and

WHEREAS, Chugach desires to obtain Evans' services as the Chief Executive Officer of its business, and Evans desires to be employed in that position by Chugach;

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein set forth, the parties hereto agree as follows:

1.           Employment. Chugach hereby employs Evans as its Chief Executive Officer and Evans hereby accepts such employment upon the terms and conditions hereinafter set forth.

2.           Duties

a. Evans shall serve as Chugach's Chief Executive Officer and shall perform his services as such within the framework of Chugach's Bylaws, policies, procedures and goals as Chugach's Board of Directors shall from time to time determine, including but not limited to the following:

In such capacity, Evans (i) shall exercise general supervisory responsibility and management authority over Chugach and all of its controlled affiliates, and (ii) shall perform such other duties commensurate with his position as may be assigned to him from time to time by the Chugach Board of Directors.

b. Evans shall devote substantially all his business time, attention and energies to the performance of his duties and functions under this Agreement and shall not during the term of his employment hereunder be engaged in any other substantial business activity for gain, profit or other pecuniary advantage. Evans shall faithfully, loyally and diligently perform his assigned duties and functions and shall not engage in any activities whatsoever that conflict with his obligations to Chugach during the term of his employment hereunder. Notwithstanding the foregoing, nothing in the foregoing shall be construed so as to limit or prohibit personal investments by Evans; provided that such investments shall not amount to a controlling interest in any entity (other than trusts, limited partnerships or other entities adopted by Evans for estate planning purposes). Evans also agrees that he will not participate in any political activity that will or may reflect adversely upon Chugach without obtaining the prior consent of Chugach's Board of Directors.

c. Chugach shall furnish Evans with an office and other facilities at Chugach's headquarters location and services that are suitable to his position and adequate for the performance of his duties and functions hereunder.

3.           Term of Agreement. The term of this Agreement shall be for a period of three (3) years commencing retroactively on July 1, 2008. This Agreement may be extended by mutual written agreement of the parties reached on or before July 1, 2011, for a minimum of a one (1) year term, and thereafter for additional terms of one or more years on mutual written agreement reached not less twelve (12) months prior to expiration of the then remaining term. Notwithstanding the foregoing, this Agreement will automatically be extended for successive one year terms if the Board of Directors does not take formal action otherwise on or before July 1, 2011, and annually thereafter, or unless terminated as provided in Section 10 of this Agreement.

4.           Compensation. Chugach shall pay to Evans, in consideration of and as compensation for the services agreed to be rendered by Evans hereunder, the following:

a. Salary. During the first year of this Agreement (July 1, 2008 - June 30, 2009), Chugach shall pay to Evans an annual salary of two hundred fifty thousand Dollars ($250,000.00 US) (the "Base Salary"), payable in regular installments on Chugach's normal paydays, less withholdings required by law and as authorized by Evans. On each July 1 anniversary date thereafter, the Chugach Board of Directors, in its sole discretion, may increase the Base Salary. However, the Base Salary shall not be decreased during the term of this Agreement.

b. Discretionary Performance-Based Bonus Program. The Board of Directors may, in its sole discretion, establish annual or other performance-based objectives for Evans and assign a fixed dollar amount or percentage of Base Salary bonuses for the successful achievement of those objectives. The stated objective(s) will be set forth in Appendix D hereto, to be updated from time to time as the Board sees fit. For each objective met, Evans will be awarded the bonus associated with that objective, said payment(s) to be made within thirty (30) days of the Board's determination, less

withholdings required by law or as authorized by Evans. The parties acknowledge that such bonus payments to Evans, if any, are not considered compensation under any of the retirement plans offered by Chugach and therefore will not be considered in determining Evans' retirement benefits.

c. Use of Company Vehicles. During the Employment Term, Evans shall be permitted to use Chugach vehicles on company business on a de minimus basis. Evans shall not be entitled to a company vehicle for personal use.

5.           Chugach Provided Benefits. During the term of this Agreement and if available then, Evans shall be entitled to participate in all group health, pension, 401(k), deferred compensation plans, employer-paid long-term disability insurance and life insurance coverage and other fringe benefit programs maintained by Chugach and provided to its salaried administrative personnel, on the same terms as apply to participation therein by such personnel generally (except as otherwise provided herein).

6.           Holidays, Sick Leave and Annual Leave. Evans shall be entitled to such holidays, sick leave and annual leave as are provided to Chugach's salaried administrative personnel generally.

7.           Expenses. During the term of this Agreement, Chugach shall reimburse Evans for all reasonable travel, entertainment and other business expenses incurred or paid by Evans in performing his duties and functions hereunder, subject to Evans' accounting for and reporting such expenses pursuant to applicable Chugach policies.

8.            Non-Competition. During the term of this Agreement, during any extension thereof, and for a period of one year after termination of this Agreement, Evans shall not enter into or participate in any business competitive to the business carried on by Chugach in Southcentral Alaska or at such additional locations, if any, outside Southcentral Alaska at which Chugach conducts business. As used herein, the term "business competitive to the business carried on by Chugach" means any business that involves the production, transmission or distribution of electricity, and the words "Southcentral Alaska" mean a business conducted in whole or in part within the boundaries of the Municipality of Anchorage, the Kenai Peninsula Borough, or the Matanuska-Susitna Borough. The provisions of this paragraph 8 shall survive the expiration and/or termination of this Agreement. If a court of competent jurisdiction or arbitrator, as the case may be, should declare any or all of this provision unenforceable because of any unreasonable restriction of duration and/or geographical area, then such court or arbitrator shall have the express authority to reform this provision to provide for reasonable restrictions and/or to grant Chugach such other relief, at law or in equity, as is reasonably necessary to protect its interests.

9.           Confidential Information. During the term of this Agreement and for so long thereafter as the information remains confidential, Evans will not use for his own advantage or disclose to any unauthorized person any confidential information relating to the business operations or properties of Chugach and any affiliate of Chugach. Upon the expiration or termination of this Agreement, upon Chugach's request, Evans will

 
surrender and deliver to Chugach all documents and information of every kind relating to or connected with Chugach and its affiliates. As used herein "confidential information" means all information, whether written or oral, tangible or intangible, of a private, secret, proprietary or confidential nature, of or concerning Chugach and its business and operations, including without limitation, any trade-secrets or know-how, computer software programs in both source code and object code, information regarding any product or service, development, technology, technique, process or methodology, any sales, promotional or marketing plans, programs, techniques, practices or strategies, any expansion or acquisition plans, any operational and management guidelines, any cost, pricing or other financial data or projections, and any other information which is to be treated as confidential because of any duty of confidentiality owed by Chugach to any third party or any other information that Chugach shall, in the ordinary course of its business, possess or use and not release externally without restriction on use or disclosure. The foregoing confidential information provision shall not apply to information which: (i) is or becomes publicly known through no wrongful act of Evans, (ii) is rightfully received from any third party without restriction and without breach by Evans of this Agreement; or (iii) is independently developed by Evans after the term of his employment hereunder or is independently developed by a competitor of Chugach at any time. The provisions of this paragraph 9 shall survive the expiration and/or termination of this Agreement.

a. Termination for Cause. Chugach may terminate Evans' employment for "cause" immediately upon written notice to Evans, provided, however, that if the Board in its reasonable discretion determines that the cause for termination is capable of being corrected, Evans must be given ten (10) days written notice of cause for termination and the opportunity to cure such cause within that time. Such notice shall specify in reasonable detail the acts or omissions that constitute cause for termination. For purposes of this Agreement, "cause" means a business-related reason that is not arbitrary, capricious or illegal and which is based on facts (i) supported by substantial evidence, and (ii) reasonably believed by the Board of Directors to be true. Examples of "cause" for termination of employment are provided in Chugach Operating Policy 013 dated September 19, 2001, and are incorporated herein by reference to the extent they are consistent with this Agreement, and may also include the following: willful and repeated failure or refusal to carry out reasonable orders, instructions, or directives of the board of directors; material acts of dishonesty, disloyalty or competition related to the business of the company or its relationships with employees, suppliers, contractors, customers or others with whom the company does business; refusal or failure to furnish material information concerning the company's affairs as reasonably requested by or under the authority of the board of directors, or falsification or misrepresentation of such information; conviction of a crime constituting fraud, intentional dishonesty, moral turpitude, or other conduct that materially compromises the reputation of the employee or the company; or any other act, course of conduct, or omission that has or is reasonably likely to have a material adverse effect on Chugach, its business or financial position, or its goodwill or reputation.

In the event of the involuntary termination of his employment for cause, Evans shall not be entitled to receive any compensation hereunder other than his Salary and employee benefits and leave as accrued through the effective date of such termination. Evans' obligations under Paragraphs 8 and 9 shall continue under the terms and conditions of this Agreement.

b. Termination Without Cause. Chugach may terminate Evans' employment without cause at any time during the term of this Agreement or any extension thereof, provided however, that Chugach shall continue to pay Evans his Base Salary and shall provide him all benefits that he would have received had his employment not been terminated then, said payments and benefits to continue without interruption for a period of one year or through the end of the then remaining term of this Agreement, whichever is less.

c. Voluntary Termination. Evans may voluntarily terminate his employment under this Agreement at any time upon sixty (60) days' prior written notice to Chugach's Board of Directors, whereupon Chugach's employment of Evans shall terminate at the end of the sixty (60) day notice period. In the event of Evans' voluntary termination of employment, he shall not be entitled to receive any compensation hereunder other than his Salary and employee benefits as accrued through the effective date of such termination. Evans' obligations under Paragraphs 8 and 9 shall continue under the terms and conditions of this Agreement.

d. Disability. Chugach may terminate Evans' employment after having established Evans' disability, subject to applicable state and/or federal law. For purposes of this Agreement, "Disability" means a physical or mental disability which impairs Evans' ability to substantially perform his duties under this Agreement and which results in Evans becoming eligible for long-term disability benefits under Chugach's long-term disability plan (or, if Chugach has no such plan in effect, which impairs Evans' ability to substantially perform his duties under this Agreement for a period of 180 consecutive days). Evans shall be entitled to the compensation and benefits provided for under this Agreement for (i) any period during the term of this Agreement and prior to the establishment of Evans' Disability during which Evans is unable to work due to a physical or mental disability, or (ii) any period of Disability which is prior to Evans' termination of employment pursuant to this paragraph.

e. Death. This Agreement shall automatically terminate the day after Evans' death if it has not already terminated prior to that date.

f. Miscellaneous. In the event of any termination or attempted termination hereof: (i) if multiple events, occurrences or circumstances are asserted as bases for such termination or attempted termination, the event, occurrence or circumstance that is earliest in time, and any termination or attempted termination found to be proper hereunder based thereon, shall take precedence over the others; (ii) no termination of this Agreement shall relieve or release either party from liability hereunder based on any breach of the terms hereof by such party occurring prior to the termination date; and (iii) the terms of this Agreement relevant to performance or satisfaction of any obligation

hereunder expressly remaining to be performed or satisfied in whole or in part at the termination date shall continue in force until such full performance or satisfaction has been accomplished and otherwise neither party hereto shall have any other or further remaining obligations to the other party hereunder.

g. No Duty of Mitigation. In the event of any termination of Evans' employment under subparagraph 10(b), Evans shall be under no obligation to seek other employment and shall be entitled to all payments or benefits required to be made or provided to Evans hereunder, without any duty of mitigation of damages and regardless of any other employment obtained by Evans.

11.           Injunctive Relief. It is agreed that the services of Evans are unique and that any breach or threatened breach by Evans of any provision of this Agreement cannot be remedied solely by damages. Accordingly, in the event of a breach by Evans of his obligations under this Agreement, Chugach shall be entitled to seek and obtain interim restraints and permanent injunctive relief, restraining Evans and any business, firm, partnership, individual, corporation or entity participating in such breach or attempted breach. Nothing herein, however, shall be construed as prohibiting either party from seeking injunctive relief to require resolution of disputes or controversies arising out of or relating to this Agreement to be resolved pursuant to paragraph 12 below.

12.           Arbitration. Any dispute or controversy arising out of or relating to this Agreement or any claimed breach hereof shall be resolved, at the request of either party, by a private arbitration proceeding. The request for arbitration shall be made in writing no later than thirty (30) days after the alleged act or omission on which it is based. The arbitration proceeding shall be conducted pursuant to the Alaska Revised Uniform Arbitration Act, AS 09.43.300 - 09.43.595 (the "Act") and the most current version of the employment arbitration rules published by the dispute resolution organization whose services are used by these parties (the "Arbitration Rules"), each of which is incorporated herein by this reference to the extent that the Act and the Arbitration Rules are consistent with this Agreement. The arbitrator shall be an impartial arbitrator qualified to serve in accordance with the Arbitration Rules. The arbitrator shall be selected by mutual agreement of the parties. If the parties are unable to agree to a mutually acceptable arbitrator within twenty-one (21) days of the request for arbitration, Chugach shall select an impartial dispute resolution organization to provide the parties a list of seven (7) arbitrators. After a coin toss to determine who makes the first strike, the parties shall strike names from the list alternately until the name of one arbitrator remains. That arbitrator shall be deemed mutually acceptable to both parties unless the arbitrator is unavailable, in which case the last arbitrator whose name was struck shall be deemed acceptable to the parties, and so on. The arbitration hearing shall be held in Anchorage, Alaska, or in such other place as may be mutually agreed upon by the parties, at a time and location determined by the arbitrator. Within thirty (30) days of the close of the arbitration hearing, the arbitrator shall hand down a written decision and award. The decision shall explain the basis for the arbitrator's award. The arbitrator shall have authority to interpret and enforce this Agreement, but shall not have authority to alter, amend or supersede any provision of this Agreement. The decision and award

shall be final and binding on the parties, subject only to such appeal rights as are available under the Act. Either party may seek entry of judgment upon such decision and award in any court having jurisdiction over the parties. The expenses of the arbitration proceeding shall be borne by Chugach. Each party shall pay for and bear the cost of its own experts, witnesses and legal counsel in such arbitration proceeding.

a. Chugach shall indemnify Evans (as a "protected person") to the fullest extent permitted by AS 10.25.145 (the terms of which are incorporated herein by this reference) against all costs, expenses, liabilities and losses (including, without limitation, attorneys' fees, judgments, penalties and amounts paid in settlement) reasonably incurred by Evans in connection with any action, suit or proceeding, whether civil, criminal, administrative or investigative in which Evans is made, or is threatened to be made, a party to or a witness in such action, suit or proceeding by reason of the fact that he is or was an officer or agent of Chugach or of any of Chugach's controlled affiliates or is or was serving as an officer, trustee, agent or fiduciary of any other entity at the request of Chugach (a "Proceeding").

b. Chugach shall advance to Evans all reasonable costs and expenses incurred by him in connection with a Proceeding within twenty (20) days after receipt by Chugach of a written request for such advance, accompanied by an itemized list of the actual or anticipated costs and expenses and Evans' written undertaking to repay to Chugach on demand the amount of such advance if it shall ultimately be determined that Evans is not entitled to be indemnified against such costs and expenses. Evans shall periodically account to Chugach for all such costs and expenses incurred by Evans in connection with his defense of the Proceeding.

c. The indemnification provided to Evans hereunder is in addition to, and not in lieu of, any additional indemnification to which he may be entitled pursuant to Chugach's Certificate of Incorporation or Bylaws, any insurance maintained by Chugach from time to time providing coverage to Evans and other officers and directors of Chugach, or any separate written agreement with Evans. The provisions of this paragraph 13 shall survive any termination of this Agreement.

14.           Amendment and Modification. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof, and supersedes any and all prior agreements, arrangements or understandings between the parties hereto with respect to the subject matter hereof, whether written or oral, including but not limited to the parties' Memorandum of Agreement in Principle and the agreements under which Evans served as Chugach's interim Chief Executive Officer. Subject to applicable law and upon the consent of Chugach's Board of Directors, this Agreement may be amended, modified and supplemented by written agreement of Chugach and Evans with respect to any of the terms contained herein.

15.         Waiver of Compliance. Any failure of either party to comply with any obligation, covenant, agreement or condition on its part contained herein may be

expressly waived in writing by the other party, but such waiver or failure to insist upon strict compliance shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party, such consent shall be given in writing.

16.           Notices. All notices, requests, demands and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand, sent by registered or certified U.S. Mail, postage prepaid, commercial overnight courier service or transmitted by facsimile and shall be deemed served or delivered to the addressee at the address for such notice specified below when hand delivered, upon confirmation of sending when sent by fax, on the day after being sent when sent by overnight delivery, or five (5) days after having been mailed, certified or registered, with postage prepaid:

Or, in the case of either such party, to such substitute address as such party may designate from time to time for purposes of notices to be given to such party hereunder, which substitute address shall be designated as such in a written notice given to the other party addressed as aforesaid.

17.           Assignment. This Agreement shall inure to the benefit of Evans and Chugach and be binding upon the successors and general assigns of Employer. This Agreement shall not be assignable by either party except to the extent set forth in paragraph 20.

18.           Enforceability. In the event it is determined that this Agreement is unenforceable in any respect, it is the mutual intent of the parties that it be construed to apply and be enforceable to the maximum extent permitted by applicable law.

19.           Applicable Law. This Agreement shall be construed and enforced in accordance with the laws applicable to contracts executed, delivered and fully to be performed in the State of Alaska.

20.           Beneficiaries; Executive's Representative. Evans shall be entitled to select (and to change, from time to time, except to the extent prohibited under any applicable law) a beneficiary or beneficiaries to receive any payments, distributions or benefits to be made or distributed hereunder upon or following Evans' death. Any such designation shall be made by written notice to Chugach. In the event of Evans' death or of a judicial determination of Evans' incompetence, references in this Agreement to Evans shall be deemed, as appropriate, to refer to his designated beneficiary, to his

estate or to his executor or personal representative ("Evans' Representative") solely for the purpose of providing a clear mechanism for the exercise of Evans' rights hereunder in the case of Evans' death or disability.

IN WITNESS WHEREOF, the parties have executed this Agreement to be effective on and as of the day and year first above written.

CHUGACH ELECTRIC ASSOCIATION, INC.

/s/ Rebecca Logan

Name: Rebecca Logan

Title: Chairman of the Board