Document:

Exhibit 10.63

  
 Exhibit 10.63 
  
 Old Dominion Electric Cooperative 
 2002 Option Plan 
  
 1.  Purpose and Effective Date.    The purpose of the Old Dominion Electric Cooperative 2002 Option
Plan (the “Plan”) is to further the long-term stability and financial success of Old Dominion Electric Cooperative (the “Cooperative”) by retaining employees through the use of the Plan. The Cooperative believes that
participation in the Plan will stimulate the efforts of those persons upon whose judgment, interest and efforts the Cooperative is and will be largely dependent for the successful conduct of its business. 
  
 The Plan was adopted by the Board of Directors of the Cooperative on February 12, 2002, and shall become effective on March 1, 2002.

  
 2.  Definitions. 
  
 (a)  Board.    The Board of Directors of the Cooperative. 
  
 (b)  Cause.    Termination by the Cooperative of the Participant’s employment for “Cause” shall mean termination for:

  
 (i)  gross incompetence, gross negligence, willful misconduct in office,
insubordination, or breach of fiduciary duty owed to the Cooperative or any subsidiary or affiliate of the Cooperative or its Members; 
  
 (ii)  conviction of a felony, a crime of moral turpitude or commission of an act of embezzlement or fraud against the Cooperative or any subsidiary or affiliate of the Cooperative or its
Members; 
  
 (iii)  any material breach by the Participant of any material term of an
employment or severance agreement between the Participant and the Cooperative, including without limitation material failure to perform his or her assigned duties and responsibilities thereunder; or 
  
 (iv)  deliberate dishonesty of the Participant with respect to the Cooperative or any subsidiary or affiliate of
the Cooperative or its Members. 
  
 (c)  Code.    The Internal Revenue Code of
1986, as amended. 
  
 (d)  Committee.    The Executive Committee of the Board.

  
 (e)  Cooperative.    Old Dominion Electric Cooperative, an organization
exempt from tax under Code section 501(c)(12). 
  
 (f)  Date of Grant.    The
effective date of an Option granted by the Committee. 

  
 (g)  Disability or Disabled.    The
Committee shall determine whether a Disability exists and such determination shall be conclusive. 
  
 (h)  Fair Market Value. 
  
 (i)  If a Share is listed on
any established stock exchange or quoted on the NASDAQ stock market system, its Fair Market Value shall be the closing price for such Share on the Date of Grant as reported by such exchange or the NASDAQ stock market system, or, if there are no
trades on such date, the value shall be determined as of the last preceding day on which the Share was traded. 
  
 (ii)    If a Share is not publicly traded, the Fair Market Value shall be determined by the Committee using any reasonable method in good faith. 
  
 (iii)  Fair Market Value shall be determined as of the Date of Grant specified in the Option. 
  
 (i)  Option.    A right to purchase Shares granted under the Plan, at a price determined in
accordance with the Plan. All Options granted pursuant to the Plan shall be nonstatutory stock options that do not meet the requirements of Code Section 422. 
  
 (j)  Option Agreement.    An agreement between the Cooperative and a Participant setting forth the terms of an Option grant issued pursuant to Plan Section 4.

  
 (k)  Option Value.    The maximum dollar amount specified in an Option
Agreement that a Participant may spend to acquire Option Shares granted pursuant to the Option Agreement. 
  
 (l)  Participant.    Any individual who is granted an Option under the Plan. 
  
 (m)  Record Keeper.    Palmer & Cay Consulting, or any successor entity. 
  
 (n)  Shares.    Shares of mutual funds referenced in a Participant’s Option Agreement subject to purchase pursuant to the Option. Shares shall include any distributed earnings on the Shares,
reinvested in such Shares on the date of such distribution for any distributions occurring subsequent to the grant date but before the date of exercise. 
  
 3.  Eligibility. 
  
 (a)  The Committee
shall have the power and complete discretion to select eligible Participants and to determine for each Participant the terms, conditions and nature of the Option and the number of shares to be allocated as part of the Option; provided, however, that
any Option made to a member of the Committee must be 
 

 2 

 approved by the Board. The Committee is expressly authorized to make an Option to a Participant conditioned on the surrender for cancellation of
an existing Option. 
  
 (b)  The grant of an Option shall not obligate the Cooperative to pay an employee
any particular amount of remuneration, to continue the employment of the employee after the grant or to make further grants to the employee at any time thereafter. 
  
 4.  Options. 
  
 (a)  Whenever the Committee deems it appropriate to grant Options, notice shall be given to the Participant stating the Option Value for which Options are granted, the exercise price per share and the conditions to which
the grant and exercise of the Options are subject. This notice, when duly accepted in writing by the Participant, shall become an Option Agreement between the Cooperative and the Participant. 
  

(b)  The Committee shall establish the exercise price of Option Shares. The exercise price of an Option shall be not less than 25% of the Fair Market Value
of such Shares on the Date of Grant. 
  
 (c) Subject to subsection (d) below, Options may be exercised in whole or in
part at such times as may be specified by the Committee in the Participant’s Option Agreement; provided, however, that Participants may exercise Options only during the last two weeks of any calendar quarter within the exercise period. The
Committee may impose such vesting conditions and other requirements as the Committee deems appropriate, and the Committee may include such provisions regarding a change in control as the Committee deems appropriate. 
  
 (d)  The Committee shall establish the term of each Option in the Participant’s Option Agreement. No Option may be
exercised after the expiration of its term. The Committee shall set forth in the Participant’s Option Agreement when, and under what circumstances, an Option may be exercised after termination of the Participant’s employment or period of
service. The Committee may, in its sole discretion, amend a previously granted Option to provide for more liberal exercise provisions. 
  
 (e)  If a Participant dies and if the Participant’s Option Agreement provides that part or all of the Option may be exercised after the Participant’s death, then such portion may be exercised by the
personal representative of the Participant’s estate during the time period specified in the Option Agreement. 
  
 (f)  If a Participant’s employment or services is terminated by the Cooperative for Cause, the Participant’s Options shall terminate as of the date of the misconduct. 
 

 3 

  
 5.  Substitution of Options.    If a
Participant has been granted an Option to purchase Shares under an Option Agreement, then except as limited by the terms of the Option Agreement, the Participant may direct that the Option be converted into an Option to purchase other Shares as
permitted by the Option Agreement. Such substitution shall only be allowed to the extent that, immediately following the substitution, the difference between the fair market value of the Shares subject to the substituted Option and the exercise
price of the substituted Option is no greater than the difference which existed immediately prior to the substitution between the fair market value of the Shares subject to the original Option and the exercise price of the original Option. The right
of substitution is available at such times determined by the Board, in its sole discretion. 
  
 6.  Method of Exercise of Options.    Options may be exercised by giving written notice of the exercise to the Record Keeper, stating the number of shares the Participant has elected to purchase
under the Option. Such notice shall be effective only if accompanied by the exercise price in full in cash; provided that, if the terms of an Option so permit, the Participant may surrender Shares the Participant is acquiring (valued at Fair Market
Value on the date of exercise) in satisfaction of the purchase price. 
  
 7.  Taxes.    Each Participant shall agree, as a condition of receiving an Option, to pay to the Cooperative, or make arrangements satisfactory to the Cooperative regarding the payment of, any and
all federal and state taxes with respect to the Option exercise. 
  
 8.  Nontransferability of
Options. 
  
 (a)  In general, Options, by their terms, shall not be transferable by the Participant
except by will or by the laws of descent and distribution or except as described below. Options shall be exercisable, during the Participant’s lifetime, only by the Participant or by his guardian or legal representative. 

 
 (b)  Notwithstanding the provisions of (a) and subject to federal and state securities laws, the Committee may grant
or amend Options that permit a Participant to transfer the Options to one or more immediate family members, to a trust for the benefit of immediate family members, or to a partnership, limited liability company, or other entity the only partners,
members, or interest-holders of which are among the Participant’s immediate family members. Consideration may not be paid for the transfer of Options. The transferee of an Option shall be subject to all conditions applicable to the Option prior
to its transfer. The agreement granting the Option shall set forth the transfer conditions and restrictions. The Committee may impose on any transferable Option and on stock issued upon the exercise of an Option such limitations and conditions as
the Committee deems appropriate. 
  
 9.  Termination, Modification,
Change.    The Board may terminate the Plan at any time or may amend the Plan in such respects as it shall deem advisable. No Options shall be made under the Plan after its termination. A termination or amendment of the Plan
shall 
 

 4 

 not, without the consent of the Participant, adversely affect a Participant’s rights under an Option previously granted to him.

  
 10.  Change in Control.    In the event of a change in control of the
Cooperative, the Committee may take such actions with respect to Options as the Committee deems appropriate. These actions may include, but shall not be limited to, the following: 
  
 (a)  At the time the Option is made, provide for the acceleration of the vesting schedule relating to the exercise or realization of the Option so
that the Option may be exercised or realized in full on or before a date initially fixed by the Committee; 
  
 (b)  Provide for the purchase or settlement of any such Option by the Cooperative for any amount of cash equal to the amount which could have been obtained upon the exercise of such Option or realization of a
Participant’s rights had such Option been currently exercisable or payable. 
  
 11.  Administration
of the Plan. 
  
 (a)  The Plan shall be administered by the Committee, who shall be appointed by the
Board. If no Committee is appointed, the Plan shall be administered by the Board. 
  
 (b)  The Committee
shall have the authority to impose such limitations or conditions upon an Option as the Committee deems appropriate to achieve the objectives of the Option and the Plan. Without limiting the foregoing and in addition to the powers set forth
elsewhere in the Plan, the Committee shall have the power and complete discretion to determine (i) which eligible persons shall receive an Option and the nature of the Option, (ii) the Shares to be covered by each Option, (iii) the Option Value,
(iv) the Fair Market Value of the Shares, (v) the time or times when an Option shall be granted, (vi) whether an Option shall become vested over a period of time, according to a performance-based vesting schedule or otherwise, and when it shall be
fully vested, (vii) the terms and conditions under which restrictions imposed upon an Option shall lapse, (viii) whether a change in control exists, (ix) when Options may be exercised, and (x) any additional requirements relating to Options that the
Committee deems appropriate. 
  
 (c)  The Committee shall have the power to amend the terms of previously
granted Options so long as the terms as amended are consistent with the terms of the Plan. The consent of the Participant must be obtained with respect to any amendment that would adversely affect the Participant’s rights under the Option,
except that such consent shall not be required if such amendment is for the purpose of complying with any requirement of the Code or state and federal securities laws applicable to the Option Shares. 
 

 5 

  
 (d)  The Committee may adopt rules and regulations for carrying out the
Plan. The Committee shall have the express discretionary authority to construe and interpret the Plan and the Option Agreements, to resolve any ambiguities, to define any terms, and to make any other determinations required by the Plan or an Option
Agreement. The interpretation and construction of any provisions of the Plan or an Option Agreement by the Committee shall be final and conclusive. The Committee may consult with counsel, who may be counsel to the Cooperative, and shall not incur
any liability for any action taken in good faith in reliance upon the advice of counsel. 
  
 (e)  A
majority of the members of the Committee shall constitute a quorum, and all actions of the Committee shall be taken by a majority of the members present. Any action may be taken by a written instrument signed by all of the members, and any action so
taken shall be fully effective as if it had been taken at a meeting. 
  
 12.  Notice.    All notices and other communications required or permitted to be given under this Plan shall be in writing and shall be deemed to have been duly given if delivered personally,
electronically, or mailed first class, postage prepaid, as follows: (a) if to the Cooperative—at its principal business address to the attention of the Committee; (b) if to any Participant—at the last address of the Participant known to
the sender at the time the notice or other communication is sent; and (c) to the Record Keeper, to its principal business address. 
  
 13.  Interpretation and Governing Law.    The terms of this Plan and Options granted pursuant to the Plan shall be governed, construed and administered in accordance with the laws of the
Commonwealth of Virginia. The Plan and Options are subject to all present and future applicable provisions of the Code and, to the extent applicable, federal and state securities laws. If any provision of the Plan or an Option conflicts with any
such Code provision or securities laws, the Committee shall cause the Plan to be amended, and shall modify the Option, so as to comply, or if for any reason amendments cannot be made, that provision of the Plan or the Option shall be void and of no
effect. 
  
 IN WITNESS WHEREOF, the Cooperative has caused this Plan to be adopted this 1st day of March, 2002.

  
 
	 
	 OLD DOMINION ELECTRIC
COOPERATIVE
 
	 
	 By
 	 	   /s/  VERNON N. BRINKLEY
 

	  	 	 Vernon N. Brinkley
 Chairman of
the Board
 

 

 
 6Exhibit 10.64

 Exhibit 10.64 
  
 Old Dominion Electric Cooperative 
 Option Agreement 
  
 THIS AGREEMENT is between Old Dominion Electric Cooperative (the “Cooperative”) and DANIEL M. WALKER (the “Optionee”), and is dated as of March 1, 2002
(the “Date of Grant”). 
  
 The Cooperative hereby grants the Optionee an option to purchase shares of
mutual funds selected by the Board, subject to the terms and conditions of this Agreement. 
  
 The grant of this
Option is made pursuant to the Old Dominion Electric Cooperative 2002 Option Plan (the “Plan”), a copy of which has been provided to the Optionee, receipt of which is hereby acknowledged. The terms of the Plan are incorporated into this
Agreement by reference. In the case of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control. Any term used in this Agreement that is defined in the Plan shall have the same meaning given to that term in the
Plan. 
  
 1.  Grant of Option. 
  
 (a)  The Cooperative grants the Optionee a nonstatutory stock option (the “Option”) to purchase from the Cooperative option shares (the
“Shares”) listed in Appendix A to this Agreement. The price paid by the Optionee to exercise the Option shall be equal to twenty-five percent (25%) of the total vested Option Value (as defined in the Plan) as of the applicable vesting date
listed in Section 2(a). The total Option Value assigned to this Option is $408,000. The Optionee will become vested in the Option Value pursuant to Section 2 of this Agreement. 
  
 (b)  The grant of this Option shall not obligate the Cooperative to pay the Optionee any particular amount of remuneration, to continue the employment of the
Optionee after the grant or to make further grants to the Optionee at any time thereafter. 
  
 2.  Entitlement to Exercise Option. 
  
 (a)  The Optionee must be an
employee of the Cooperative on the applicable vesting date listed below in order to become vested in his Option Value. The Optionee will become vested in the Option Value as follows: 
  
 
	 Vesting Date
 
	 	 Vested Option
 Value
 
	 	 Total Vested
 Option
Value
 

	 March 1, 2002
 	 	 $68,000
 	 	 $  68,000
 
	 January 1, 2003
 	 	 $68,000
 	 	 $136,000
 
	 January 1, 2004
 	 	 $68,000
 	 	 $204,000
 
	 January 1, 2005
 	 	 $68,000
 	 	 $272,000
 
	 January 1, 2006
 	 	 $68,000
 	 	 $340,000
 
	 January 1, 2007
 	 	 $68,000
 	 	 $408,000
 

 
 

  
 This vesting schedule shall accelerate and the Option shall become fully
exercisable upon the first to occur of (i) a “Change in Control,” (ii) the Optionee’s “Disability,” or (iii) the Optionee’s death. For purposes of this Agreement, the terms “Change in Control” and
“Disability” shall have the same meaning, and shall be interpreted in the same manner, as the definition of those terms used in the Executive Severance Agreement between the Optionee and the Cooperative, dated as of January 1, 2000.

  
 (b)  Except as otherwise stated in this paragraph, the Option may be exercised on or after the date the
Optionee both (x) has attained retirement age pursuant to the Cooperative’s retirement age policy in effect as of the date the Optionee terminates employment, and (y) has terminated employment with the Cooperative. 
  
 (i)  If the Optionee retires or ceases to be employed by the Cooperative for any reason, including a termination
because of his death or Disability and at a time when all or a portion of this Option was vested pursuant to paragraph (a) above, the Optionee (or his beneficiary or personal representative) may exercise any or all of his vested Option within
fifteen (15) years after the Date of Grant. 
  
 (ii)  If the Optionee is terminated by the
Cooperative for Cause (as defined in the Plan), this Option will expire immediately (with respect to both the vested and unvested Option Value) as of the date of the misconduct. 
  
 (c)  In no event may this Option be exercised after the fifteenth (15th) anniversary of the Date of Grant. 
  
 3.  Method of Exercise and Payment. 
  
 (a)  The Optionee may exercise his
Option by delivering a written notice to the Record Keeper in the form attached as Exhibit A. Exercise of the Option may be made only within the 10 business days before the end of a calendar quarter. The exercise date will be (i) in the case of
notice by mail, the date of postmark; or (ii) if delivered in person, the date of delivery. The notice must be signed and state the number of shares the Optionee has elected to purchase. The Optionee may exercise the Option in whole or in part, but
only with respect to whole shares of stock. 
  
 (b)  The exercise notice must be accompanied by payment of
the Option Price in full by cash (which shall include payment by check, bank draft or money order payable to the Cooperative). Instead of paying cash, the Optionee may agree to surrender Shares being acquired for all or part of the cash payment (for
this purpose, Shares will be valued at their Fair Market Value on the date of exercise). 
  
 4.  Tax
Obligations Upon Exercise.    The difference between the Fair Market Value of the shares purchased when this Option is exercised and the Option price is compensation taxable to the Optionee as ordinary income and is subject
to applicable federal and state taxes. 
 

 2 

 By signing the Agreement, the Optionee agrees to make arrangements satisfactory to the Cooperative to comply with applicable tax withholding
requirements, if any. 
  
 5.  Nontransferability.    In general, this Option
shall not be transferable by the Optionee other than by will or by the laws of descent and distribution. Notwithstanding the preceding sentence and subject to federal and state securities laws, the Optionee may transfer this all or a portion of this
Option to one or more immediate family members, to a trust for the benefit of immediate family members, or to a partnership, limited liability company, or other entity the only partners, members, or interest-holders of which are among the
Optionee’s immediate family members. Consideration may not be paid for the transfer of this Option. 
  
 6.  Adjustments.    If the number of outstanding shares of mutual fund Shares is increased or decreased as a result of a subdivision or consolidation of shares, the payment of a stock dividend,
stock split, or any other change in capitalization, the number of unexercised Option Shares and the Option Price shall be appropriately adjusted by the Cooperative, whose determination shall be binding. 
  
 7.  Employment Rights.    Neither the Plan nor this Agreement confers upon the Optionee any
right to continue as an employee of the Cooperative or limits in any respect the right of the Cooperative to terminate the Optionee’s employment. 
  
 8.  Limitation of Liability. 
  
 (a)  The
Optionee agrees that the Cooperative and its Members’ officers, directors, employees, agents, licensors, contractors, or representatives will not be liable for any incidental, indirect, special, exemplary or consequential damages, including but
not limited to, damages or costs incurred as a result of loss of time, loss of savings, loss of data, loss of profits, or loss of goodwill, whether foreseeable or unforeseeable, that may arise out of or in connection with this Agreement, and whether
such liability is based on contract, tort, negligence, strict liability, products liability or otherwise. 
  
 (b)  In no event will the collective liability of the Record Keeper and its affiliates for any damages incurred by the Optionee ever exceed the fees received by the Record Keeper under this Agreement during the twelve
months prior to the time at which the damages arose regardless of the form of action, whether based on contract, tort, negligence, strict liability, products liability or otherwise. 
  
 9.  Governing Law.    This Agreement shall be governed by the laws of the Commonwealth of Virginia. 
  
 10.  Acceptance of Option.    This Agreement deals only with the Option the Optionee has been granted
and not its exercise. The Optionee’s acceptance of the Option places no obligation or commitment on the Optionee to exercise the Option. By signing below, the Optionee indicates acceptance of the Option and his or her agreement to the terms and
conditions set forth in this Agreement, which, together with the terms of the Plan, shall become the 
 

 3 

  
 Cooperative’s Stock Option Agreement with the Optionee. The Optionee also acknowledges receipt of a
copy of the Plan and agrees to all of the terms and conditions of the Plan. 
  
 11.  Entire Agreement,
Amendment.    This Agreement constitutes the entire agreement between the Optionee and the Cooperative with respect to the Option granted herein and shall be binding upon your legatees, distributees, and personal
representatives and the successors of the Cooperative. This Agreement may only be amended by a writing signed by both the Optionee and the Cooperative. 
  
 
	 OLD DOMINION ELECTRIC COOPERATIVE
 
	 
	 By:
 	 	       /s/  VERNON N.
BRINKLEY
 

	  	 	 Vernon N. Brinkley
 Chairman of
the Board
 
	 
	 Date:
 	 	     March 1, 2002
 

 
  
 
	 DANIEL M. WALKER
 
	 
	 Signature:
 	 	   /s/  DANIEL M. WALKER
 

	  	 	  
	 Date:
 	 	 March 1, 2002
 

 

 
 4 

 

                                                                     Appendix A

                              Option Strategy Plan

                               Investment Options

 

 

[ ]  Understanding Your Investment Options
--------------------------------------------------------------------------------

Controlling your investments is an important feature of the Palmer & Cay Option
Strategy Plan (PCOS). For that reason, investment alternatives with varying
degrees of risk and reward are available.

This packet provides the information you need to make informed investment
decisions. It's important to review the performance of your investments and your
investment strategy on a regular basis.

The company provides alternative investment funds to allow you:

        o  To create an investment program that is responsive to your particular
           financial goals and needs
        o  The opportunity to affect your investment return and control the risk
           of loss

Keep in mind that this brochure provides general educational information; it
does not in any way constitute specific investment advice. For advice about how
to invest, contact a professional financial advisor. Also, before you invest in
any fund, you should read the prospectus and other descriptive material provided
by each fund, available through your employee benefits department.

Other Information Available to You

Contact your employee benefits department if you would like a copy of:

        o  Prospectuses on the Plan's investment options
        o  Copies of financial statements, to the extent that they are available
        o  Information on underlying assets
        o  Share value of investment alternatives

Please note that some funds may have voting rights for issues like the election
of directors and selection of auditors. These rights are exercised on behalf of
this Plan by its trustees and are not available to participants.

Changing Your Investments

You may make changes to how your account is invested, including:

        o  Where you invest future contributions
        o  How past contributions are invested, by transferring or realigning
           your existing assets

If you want to make changes, contact your employee benefits department. Changes
are made as soon as administratively possible after requests are received. Check
plan highlights for how often changes are permitted.

--------------------------------------------------------------------------------
Palmer & Cay Investment Services, Inc.                                         1

 

 

[ ]  Your Investment Program

--------------------------------------------------------------------------------

Risk Versus Return

The PCOS Plan offers a broad range of investment funds selected to help you meet
your investment needs. All of the fund strategies are shown on the risk and
return graph below. You can see that the Schwab Money Market Fund has the lowest
expected return and lowest level of risk. On the other hand, the Rockland Small
Cap Growth Fund has the highest expected return and highest level of risk.

    |
    |                        Aggressive       [ ] Rockland Small Cap Growth
    |
    |
    |                                    [ ] Artisan International
    |
    |
    |               Moderate          [ ] Managers Capital Appreciation
    |
    |
Risk|                            [ ] Ameristock
    |
    | Conservative
    |
    |                       [ ] Met West Total Return
    |
    |                 [ ] Schwab Money Market
    |---------------------------------------------------------------------------
                                     Reward

[ ]  Fund Performance

--------------------------------------------------------------------------------

     Information and Performance from Morningstar as of September 30, 2001

                                Morningstar     Prospectus       Morningstar                         Annualized     Expense   Mgr
Fund Name                       Category        Objective        3 Yr Rating  Month    YTD    1 Year 3 Year  5 Year  Ratio   Tenure
-----------------------------------------------------------------------------------------------------------------------------------
Schwab Money Market             Money Market    Capital              -         0.24    3.20    4.75   4.97    4.99    0.75
Salomon Smith Barney 3 Month                      Preservation
  T-Bill Index                                                                 0.90    3.41    5.03   5.12    5.16

Metropolitan West Total Return  Intermediate-   Corp Bond-           5         4.01    9.42   12.15   8.13     -      0.65    4.00
Lehman Brothers Aggregate         term Bond       General
  Bond Index                                                                   4.62    8.38   12.95   6.38    8.06

Ameristock                      Large Value     Equity Income        4       (10.10)  (5.74)   0.43  11.65   17.73    0.99    6.00
Russell 1000 Value Index                                                     (10.96) (12.08)  (8.91)  5.61   11.67

Managers Capital Appreciation   Large Growth    Growth               3       (20.58) (41.29) (55.42)  6.76   11.48    1.30    2.00
Russell 1000 Growth Index                                                    (19.41) (30.89) (45.64) (3.28)   6.50

Rockland Small Cap Growth       Small Growth    Aggressive Growth    5        (8.06) (28.92) (41.94) 27.82     -      1.53    4.00
Russell 2000 Growth Index                                                    (28.09) (28.06) (42.59) (0.43)  (1.75)

Artisan International           Foreign Stock   Foreign Stock        5       (14.08) (23.38) (27.17) 15.75   13.31    1.22    6.00
MSCI EAFE Index                                                              (14.00) (26.56) (28.53) (1.16)  (0.14)

Note: This performance information has been prepared by Palmer & Cay Investment
Services, Inc. (PCIS) from data gathered primarily from Morningstar, Inc. While
the data gathered for use are considered to be from reliable sources, PCIS
cannot guarantee its completeness or its accuracy. In addition, past performance
should not be construed as a guarantee of future performance. Anyone using this
information to determine suitability of the represented fund for investment
purposes is strongly advised to read the fund prospectus before investing.

--------------------------------------------------------------------------------
Palmer & Cay Investment Services, Inc.                                         2

 

 

[ ]  The Fund Program

--------------------------------------------------------------------------------

How Funds Compare

The fund or funds you choose will depend on your personal investment objectives.
The key to smart financial planning is to match your investment objectives to
the funds' investment objectives. The following chart provides a comparison of
the six options.

Investment            Fund Objective               Risk/Reward                                    This Fund Invests in...
Strategy (Fund)
------------------------------------------------------------------------------------------------------------------------------------
Money Market           Seeks current income      Should provide the least amount of               A short-term investment fund
(Schwab Money          and capital               investment risk over the short-term;             invested in money market
Market)                preservation              however, over longer periods of time, the        instruments.
                                                 investment income generated by the fund
                                                 often has been only moderately higher than
                                                 the rate of inflation.
------------------------------------------------------------------------------------------------------------------------------------
Bonds                  Seeks high current        Should provide current income with some          A diversified portfolio of fixed
(Metropolitan West     income and long-term      capital appreciation consistent with an          income securities of varying
Total Return)          total return              actively managed bond portfolio.                 maturities issued by domestic and
                                                                                                  foreign corporations and
                                                                                                  governments.  At least 80% of
                                                                                                  assets will be invested in
                                                                                                  investment grade securities.
------------------------------------------------------------------------------------------------------------------------------------
Value Equity           Seeks capital             Should provide more stability than growth        The common stocks of primarily
(Ameristock)           appreciation and          funds.  Emphasis on value and stability          domestic large capitalization
                       current income            could prevent the Fund from achieving high       companies that pay dividends.  In
                                                 returns in growth rallies.                       addition, maintaining a value
                                                                                                  focus, the companies usually have
                                                                                                  low P/E's and high dividend
                                                                                                  yields.
------------------------------------------------------------------------------------------------------------------------------------
Growth Equity          Seeks long-term           Growth emphasis makes the Fund more              The common and preferred stocks
(Managers Capital      capital appreciation      volatile than value equity. Should provide       of medium and large domestic
Appreciation)          from equity               high returns during growth rallies but could     companies that are expected to
                       securities.               lag during market down turns.                    grow at accelerated or sustained
                                                                                                  levels.
------------------------------------------------------------------------------------------------------------------------------------
International          Seeks long-term           More volatile than a domestic equity fund        Common stocks of non-US
Equity                 growth with little        because of currency and country risk and         companies with superior earnings
(Artisan               regard for current        growth emphasis.  Long-term performance          growth in developed and emerging
International)         income.                   should be better than domestic equity funds.     countries.
------------------------------------------------------------------------------------------------------------------------------------
Small-Cap Equity       Seeks aggressive          Should provide higher long-term return than      Common stocks of small
(Rockland Small        long-term growth of       international equity, but at more                companies that have expanding
Cap Growth)            capital by investing      short-term risk.                                 profit margins and whose earnings
                       primarily in the                                                           have far exceeded Wall Street's
                       common stocks of                                                           expectations.  Management
                       small sized                                                                attempts to capitalize on market
                       companies.                                                                 trends.
------------------------------------------------------------------------------------------------------------------------------------

Note: Keep in mind that returns on any fund may vary from month to month and may
include both gains and losses to your account. While the potential return on
investment is greater in the equity funds than in the bond and money market
funds, the risk is also greater. However, equity funds typically produce larger
total investment returns than bond and money market funds when the returns are
compounded over a five- to ten-year period.

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Palmer & Cay Investment Services, Inc.                                         3

 

 

[ ]  Model Portfolios

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Constructing Your Own Portfolio

You may choose from six different funds to construct your own portfolio. You may
invest your assets in multiples of any whole number totaling 100%. Following are
three different portfolio models that you may use as a guide to construct your
own portfolio. Each reflects a different investment philosophy and strategy. In
reviewing the models, please understand that the company does not suggest any of
these models are necessarily appropriate for you or any other participant.

Conservative Model                            Moderate Model                              Aggressive Model
This model is for participants who are        This model is for participants who are      This model is for participants who are
seeking current income, have a low            seeking growth opportunities at moderate    seeking strong growth opportunities and
tolerance for risk and want to preserve       risk. By combining the strong growth        have a higher level of risk tolerance. It
the value of their fund while still           qualities of stocks with the lower risk     allows investors the potential for the
maintaining the possibility for some          profile of bonds and money market funds,    high return generated by a diversified
growth.                                       this model rewards investors with           array of equity classes, including small-
                                              moderate growth characteristics at          cap and international.
                                              moderate risk.

[Graph appears here]                          [Graph appears here]                        [Graph appears here]

Allocation by fund:                           Allocation by fund:                         Allocation by fund:
Ameristock                         10%        Ameristock                        20%       Ameristock                           25%
Managers Capital Appreciation      10%        Managers Capital Appreciation     20%       Managers Capital Appreciation        25%
Rockland Small Cap Growth           5%        Rockland Small Cap Growth         10%       Rockland Small Cap Growth            15%
Artisan International               5%        Artisan International             10%       Artisan International                15%
Metropolitan West Total Return     30%        Metropolitan West Total Return    30%       Metropolitan West Total Return       15%
Schwab Money Market                40%        Schwab Money Market               10%       Schwab Money Market                   5%

Allocation by style:                          Allocation by style:                        Allocation by style:
Equities                                      Equities                                    Equities
--------                                      --------                                    --------
Large Value                        10%        Large Value                       20%       Large Value                          25%
Large Growth                       10%        Large Growth                      20%       Large Growth                         25%
Small Cap Growth                    5%        Small Cap Growth                  10%       Small Cap Growth                     15%
International                       5%        International                     10%       International                        15%
Fixed Income                                  Fixed Income                                Fixed Income
------------                                  ------------                                ------------
Core                               30%        Core                              30%       Core                                 15%
Cash                               40%        Cash                              10%       Cash                                  5%

Allocation by asset class:                    Allocation by asset class:                  Allocation by asset class:
Money market instruments           40%        Stocks                            60%       Stocks                              100%
Stocks                             30%        Money market instruments          10%
Bonds                              30%        Bonds                             30%

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Palmer & Cay Investment Services, Inc.                                         4

 

 

                        Old Dominion Electric Cooperative

                      Executive Option Plan Enrollment Form

--------------------------------------------------------------------------------
Participant Information
--------------------------------------------------------------------------------

Participant:                                           SSN:
            --------------------------------------------------------------------

Address:                                   City:         State / ZIP:
        -----------------------------------     ---------            -----------

Option Grant Number:                       Work Phone:

--------------------------------------------------------------------------------

  As a Participant of the Executive Option Plan, I elect to allocate the
  underlying investment in the following securities. I understand that I may
  reallocate my investments under this Plan on a quarterly basis and I agree to
  not hold Old Dominion Electric Cooperative liable for market fluctuations
  resulting in loss of principal and interest.

                            Fund Allocation Selection

--------------------------------------------------------------------------------
                                              Investment     Allocation
Fund Name                           Ticker    Strategy       Percentage
                                                             (In 10% Increments)
--------------------------------------------------------------------------------
Metropolitan West Total Return      MWTRX     Conservative                     %
--------------------------------------------------------------------------------
Schwab Money Market                 SWMXX     Conservative                     %
--------------------------------------------------------------------------------
Ameristock                          AMTX      Moderate                         %
--------------------------------------------------------------------------------
Managers Capital Appreciation       MGCAX     Moderate                         %
--------------------------------------------------------------------------------
Artisan International               ARTIX     Aggressive                       %
--------------------------------------------------------------------------------
Rockland Small Cap Growth           RKGRX     Aggressive                       %
--------------------------------------------------------------------------------
                                                                      ----------
                                                                            100%
                                                                      ----------

Participants Signature: _____________________________     Date: ________________

By signing this enrollment form, I have acknowledged receipt of prospectuses for
each of the above funds.

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Palmer & Cay Investment Services, Inc.                                         5

 

 

                                                                       Exhibit A

                                                             [PALMER & CAY LOGO]

                        OLD DOMINION ELECTRIC COOPERATIVE
                         2002 Option Plan Exercise Form

--------------------------------------------------------------------------------------------------------------
                                     Personal Information
--------------------------------------------------------------------------------------------------------------
Company Name:                                                 Work Phone:
             -------------------------------------------------           -------------------------------------
Participant's Name:                                           Home Phone:
                   -------------------------------------------           -------------------------------------
Number of Options to be exercised:                   Grant Number:               Option Price:
                                  -------------------             ---------------             ----------------
--------------------------------------------------------------------------------------------------------------

                    COMPLETE ONE OF THE FOLLOWING TWO BOXES
                             ---
--------------------------------------------------------------------------------
                           Exercise Method - Cashless
--------------------------------------------------------------------------------

|_| Check here if you wish to use the cashless method to settle exercise cost
    and applicable tax.

Complete Cash-out - All private options will be exercised and shares immediately
sold on the market. You will receive the net proceeds in cash less the amount to
cover the exercise price and the applicable federal, state and FICA taxes.

--------------------------------------------------------------------------------

                                       OR

--------------------------------------------------------------------------------
                             Exercise Method - Cash
--------------------------------------------------------------------------------

|_| Check here if you wish to use the cash method to settle exercise cost and
    applicable taxes.

A check, made payable to _______________, for the exercise price of the private
options must accompany this form.

|_|   Check - Immediately following the exercise, you will be notified of an
      additional amount needed to cover the applicable federal, state and
      FICA taxes. A check is immediately due upon notification. If the check
      is not received within 30 days, taxes will be taken from your next
      paycheck.

--------------------------------------------------------------------------------

Participant's Signature: _____________________      Date: ______________________

Administrator's Confirmation: ________________      Date: ______________________

NOTE: Exercise date will be deemed to be the Participant Signature Date.
However, market values of underlying mutual funds are likely to fluctuate from
the exercise date to the date of sale. By signing above, the Participant agrees
the Old Dominion Electric Cooperative shall not be held responsible for those
market fluctuations.

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