Exhibit 10-96.5
EMPLOYMENT AGREEMENT
As Amended and Restated Effective December 9, 1994
THIS EMPLOYMENT AGREEMENT is made, effective as of the ninth (9th) day of
December, 1994, by and between Central Maine Power Company, a Maine corporation
with its principal place of business in Augusta, Maine (hereinafter referred to
as the "Company"), and Xxxxxx X. Xxxxxxxx (hereinafter referred to as the
"Executive").
WHEREAS, the Company recognizes that the Executive is a valued officer
because of his knowledge of the Company's affairs and his experience and
leadership capabilities, and desires to encourage his continued employment with
the Company to assure itself of the continuing advantage of that knowledge,
experience and leadership for the benefit of customers and shareholders,
particularly during a period of transition in various aspects of the Company's
business and in the event of a Change of Control of the Company; and
WHEREAS, the Executive desires to serve in the employ of the Company on a
full-time basis for a period provided in this Employment Agreement (hereinafter
referred to as the "Agreement") on the terms and conditions hereinafter set
forth; and
WHEREAS, to these ends the Company desires to provide the Executive with
certain payments and benefits in the event of the termination of his employment
in certain circumstances; and
WHEREAS, the Company and the Executive wish to set forth the terms and
conditions under which such employment and payments and benefits will occur.
NOW, THEREFORE, in consideration of the continued offer of employment by
the Company and the continued acceptance of employment by the Executive, and the
mutual promises and covenants contained herein, the Company and the Executive
hereby agree as follows:
1. Term of Agreement. a. The term of this Agreement shall begin on December
9, 1994 (hereinafter referred to as the "Effective Date") and shall expire on
December 31, 1997; provided, however, that on December 31, 1997 and on each
December 31 thereafter, the term of this Agreement shall automatically be
extended for one (1) additional year unless not later than the preceding October
31 either the Company or the Executive shall have given notice that such party
does not wish to extend the term of this Agreement.
b. If a Change of Control occurs during the original term of this Agreement
or any extension, then the term of this Agreement shall be automatically
extended for a thirty-six (36) calendar month period beginning on the first day
of the month following the month in which such Change of Control occurs.
c. Notwithstanding anything to the contrary in this Section 1, this
Agreement and all obligations of the Company hereunder shall terminate on the
date of the Executive's death, or thirty (30) days after the Company gives
notice to the Executive that the Company is terminating the Executive's
employment for reason of Total Disability or Cause.
2. Definitions. The following terms shall have the meanings set forth
below:
"Affiliate" means a person that directly or indirectly through one or more
intermediaries controls, is controlled by, or is under common control with the
Company.
"Board" means the Board of Directors of the Company.
"Cause" means any of the following events or occurrences:
(i) An act of material dishonesty taken by, or committed at the request of,
the Executive.
(ii) Any illegal or unethical conduct which, in the good faith judgment of
the Board, would impair the Executive's ability to perform his duties under this
Agreement or would impair the business reputation of the Company.
(iii) Conviction of a felony.
(iv) The continued failure of the Executive to perform substantially his
responsibilities and duties under this Agreement, after demand for performance
has been delivered in writing to the Executive specifying the manner in which
the Company believes that the Executive is not performing.
Notwithstanding any contrary provision of this Agreement, the Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Executive a certified copy of a resolution duly
adopted by the affirmative vote of two-thirds of the members of the Board who
are not employees of the Company at a meeting of the Board called and held for
such purpose (after reasonable notice to the Executive and an opportunity for
the Executive, together with his counsel, to be heard before the Board), finding
in good faith one of the events or occurrences set forth in parts(i) through
(iv) of the definition of "Cause" in this Agreement and specifying the
particulars thereof in detail.
"Change of Control" means the occurrence of any of the following events:
(i) 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 the
Company or any Affiliate or any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any Affiliate), is or becomes
the beneficial owner, as defined in Rule 13d-3 under the Exchange Act, directly
or indirectly, of stock of the Company representing thirty percent (30%) or more
of the combined voting power of the Company's then outstanding stock eligible to
vote.
(ii) During any period of two (2) consecutive years after the execution of
this Agreement, individuals who at the beginning of such period constitute the
Board, and any new director whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then 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 at least a majority
thereof.
(iii) The stockholders 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 stock 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) more than fifty
percent (50%) of the combined voting power of the outstanding voting stock of
the Company or such surviving entity immediately after such merger or
consolidation; provided, that a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no "person"
(as hereinabove defined) acquires more than thirty percent (30%) of the combined
voting power of the Company's then outstanding securities shall not constitute a
Change of Control of the Company.
(iv) The stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale, lease, exchange or other
disposition by the Company of all or substantially all of the Company's assets
(or any transaction having a similar effect). "Constructive Discharge" means, so
long as no Change of Control has occurred, any reduction in the Executive's
annual base salary in effect as of the Effective Date of this Agreement, or as
the same may be increased from time to time, other than any across-the-board
base salary reduction for a group or all of the executive officers of the
Company, and also means, on or after a Change of Control,
(i) any reduction in the Executive's annual base salary in effect as of the
Effective Date of this Agreement, or as the same may be increased from time to
time;
(ii) a failure to increase the Executive's annual base salary commensurate
with any across-the-board percentage increases in the compensation of other
executive officers of the Company;
(iii) a substantial reduction in the nature or scope of the Executive's
responsibilities, duties or authority from those described in Section 3.c of
this Agreement;
(iv) a material adverse change in the Executive's title or position; or
(v) relocation of the Executive's place of employment from the Company's
principal executive offices or to a place more than twenty-five (25) miles from
Augusta, Maine without the Executive's consent.
"Severance Benefits" means the benefits set forth in Section 5.a or 5.c of
this Agreement, as applicable.
"Severance Period" means, in the case of a Change of Control, the period
from the date of termination as determined in accordance with Section 6 of this
Agreement until the third anniversary of such date.
"Total Disability" means the complete and permanent inability of the
Executive to perform all of his duties under this Agreement on a full-time basis
for a period of at least six (6) consecutive months, as determined by the Board
upon the basis of such evidence, which may include independent medical reports
and data, as the Board deems appropriate or necessary.
3. Employment. a. The Company hereby agrees to continue its employment of
the Executive in the capacity of Vice President, Law and Power Supply, and the
Executive hereby agrees to remain in the employ of the Company for the period
beginning on the Effective Date and ending on the date on which the Executive's
employment is terminated in accordance with this Agreement (the "Employment
Period"). This Agreement shall not restrict in any way the right of the Company
to terminate the Executive's employment at whatever time and for whatever reason
it deems appropriate, nor shall it limit the right of the Executive to terminate
employment at any time for whatever reason he deems appropriate.
b. The Executive agrees that during the Employment Period he shall devote
substantially all his business attention and time to the business and affairs of
the Company and its Affiliates, and use his best efforts to perform faithfully
and efficiently the duties and responsibilities of the Executive under this
Agreement. It is expressly understood that (i) the Executive may devote a
reasonable amount of time to such industry associations and charitable and civic
endeavors as shall not materially interfere with the services that the Executive
is required to render under this Agreement, and (ii) the Executive may serve as
a member of one or more boards of directors of companies that are not affiliated
with the Company and do not compete with the Company or any of its Affiliates.
c. The following listing of job duties shall represent the Executive's
primary responsibilities. Such responsibilities may be expanded, and so long as
no Change of Control has occurred may be decreased, as the business needs of the
Company require. The Executive's primary job responsibilities shall include, but
not be limited to:
participation in the development and general oversight of corporate
policies, strategies and business initiatives as a member of the Company's
Executive Committee;
the development and implementation of strategies to control non-utility
generation costs; and
the development, implementation and general oversight of corporate
strategies in legislative and regulatory matters and wholesale power and
transmission marketing issues.
The departments reporting directly to the Executive shall be as follows: Law;
Power Supply; Government Relations; Legislative Affairs; Community Relations;
Internal Audit; and Regulatory Services.
4. Compensation and Benefits.
a. During the Employment Period, the Executive shall be compensated as
follows:
(i) He shall receive an annual base salary, the amount of which shall be
reviewed regularly and determined from time to time by the Board, but which
shall not be less than $153,450. His salary shall be payable in accordance with
Company payroll practices.
(ii) He shall be entitled to participate in any and all plans and programs
maintained by the Company from time to time to provide benefits for its
executives, including without limitation any short-term or long-term incentive,
pension, or supplemental pension plan or program, in accordance with the terms
and conditions of any such plan or program or the administrative guidelines
relating thereto, as may be amended from time to time.
(iii) He shall be entitled to participate in any and all plans and programs
maintained by the Company from time to time to provide benefits for its salaried
employees generally, including without limitation any savings and investment,
stock purchase or group medical, dental, life, accident or disability insurance
plan or program, subject to all eligibility requirements of general
applicability, to the extent that executives are not excluded from participation
therein under the terms thereof or under the terms of any executive plan or
program or any approval or adoption thereof.
(iv) He shall be entitled to all fringe benefits generally provided by the
Company at any time to its full-time salaried employees, including without
limitation paid vacation, holidays and sick leave but excluding severance pay,
in accordance with generally applicable Company policies with respect to such
benefits.
(v) He shall be entitled to all rights and benefits under the Split-Dollar
Life Insurance Agreement between the Company and the Executive in effect as of
the Effective Date of this Agreement in accordance with the terms of such
Split-Dollar Life Insurance Agreement.
b. Notwithstanding any contrary provision of this Agreement, any
compensation or benefits which are vested in the Executive or which the
Executive is otherwise entitled to receive under any plan or program of the
Company or any agreement between the Company and the Executive before, at or
subsequent to the Executive's termination of employment shall be furnished and
paid in accordance with the terms and provisions of such plan, program or
agreement.
c. All compensation payable under this Section 4 shall be subject to normal
payroll deductions for withholding income taxes, social security taxes and the
like.
5. Severance Benefits. a. If, on or after a Change of Control, the
Executive's employment with the Company is terminated during the Employment
Period by the Company and/or any successor for any reason other than death,
Total Disability or Cause, or by the Executive within twelve (12) calendar
months of a Constructive Discharge, Severance Benefits shall be provided as
follows:
(i) The Company shall pay the Executive, in one cash lump sum within sixty
(60) days following the date of termination of employment as determined under
Section 6 of this Agreement, an amount equal to 2.99 times the Executive's "base
amount," as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986,
as amended (the "Code").
(ii) Core coverage for the Executive under the Company's group medical,
life, accident and disability plans or programs shall continue for the Severance
Period on the same terms and conditions, as if the Executive's employment had
not terminated. In the event that the Executive's participation in any such plan
or program is barred, the Company shall arrange at its expense to provide him
during the Severance Period with core benefits substantially similar to those
which he would otherwise be entitled to receive under such plans and programs.
(iii) The Severance Period shall count as service for all purposes
(including benefit accrual and eligibility) under any benefit plan of the
Company applicable to the Executive immediately prior to the Executive's
termination of employment, for which service with the Company is taken into
account, including without limitation any pension or supplemental pension plan,
and all benefits under such plans that are subject to vesting shall vest as of
the date of such termination of employment.
(iv) The Company shall pay a fee to an independent outplacement firm
selected by the Executive for outplacement services in an amount equal to the
actual fee for such services up to a total of $10,000.
b. Notwithstanding the provisions of Section 5.a hereof, if, in the opinion
of tax counsel selected by the Company's independent auditors,
(i) the Severance Benefits set forth in said Section 5.a and any payments
or benefits otherwise payable to the Executive would constitute "parachute
payments" within the meaning of Section 280G(b)(2) of the Code (said Severance
Benefits and other payments or benefits being hereinafter collectively referred
to as "Total Payments"), and
(ii) the aggregate present value of the Total Payments would exceed 2.99
times the Executive's base amount, as defined in Section 280G(b)(3) of the Code,
then, such portion of the Severance Benefits described in Section 5.a hereof as,
in the opinion of said tax counsel, constitute "parachute payments" shall be
reduced as directed by tax counsel so that the aggregate present value of the
Total Payments is equal to 2.99 times the Executive's base amount. The tax
counsel selected pursuant to this Section 5.b may consult with tax counsel for
the Executive, but shall have complete, sole and final discretion to determine
which Severance Benefits shall be reduced and the amounts of the required
reductions. For purposes of this Section 5.b, the Executive's base amount and
the value of the Total Payments shall be determined by the Company's independent
auditors in accordance with the principles of Section 280G of the Code and based
upon the advice of tax counsel selected thereby.
c. If no Change of Control has occurred and the Executive's employment with
the Company is terminated during the Employment Period by the Company for any
reason other than death, Total Disability or Cause, or by the Executive within
six (6) calendar months of a Constructive Discharge, the Company shall pay the
Executive, in twelve (12) equal monthly cash installments beginning not later
than sixty (60) days following the date of termination of employment as
determined under Section 6 of this Agreement, Severance Benefits equal to one
(1) times the Executive's annual base salary in effect on the date immediately
preceding the date of termination, or preceding the date of a Constructive
Discharge attributable to a base salary reduction if applicable; provided,
however, that each of the last six (6) monthly cash installments shall be
reduced by an amount equal to any base salary or other base pay or commissions
earned through other employment or any fees earned as a consultant for the
particular month, such that an installment shall not be paid or payable by the
Company for any month for which such other base salary, base pay, commissions or
fees equal or exceed the amount of the installment.
6. Date of Termination. For purposes of this Agreement, the date of
termination of the Executive's employment shall be the date notice is given to
the Executive by the Company and/or any successor or, in the case of a
Constructive Discharge, the date set forth in a written notice given to the
Company by the Executive, provided that the Executive gives such notice within
twelve (12) calendar months of the Constructive Discharge in the case of a
Change of Control, and within six (6) calendar months of the Constructive
Discharge in other cases, and specifies therein the event constituting the
Constructive Discharge.
7. Taxes. a. In the event that any portion of the Severance Benefits is
subject to tax under Section 4999 of the Internal Revenue Code of 1986, as
amended, or any successor provision thereto (the "Excise Tax"), the Company
shall pay to the Executive an additional amount (the "Gross-Up Amount") which,
after payment of all federal and State income taxes thereon (assuming the
Executive is at the highest marginal federal and applicable State income tax
rate in effect on the date of payment of the Gross-Up Amount) and payment of any
Excise Tax on the Gross-Up Amount, is equal to the Excise Tax payable by the
Executive on such portion of the Severance Benefits. Any Gross-Up Amount payable
hereunder shall be paid by the Company coincident with the payment of the
Severance Benefits described in Section 5.a(i) of this Agreement.
b. All amounts payable to the Executive under this Agreement shall be
subject to applicable withholding of income, wage and other taxes.
8. Non-Competition, Confidentiality and Cooperation. The Executive agrees
that:
(i) during the Employment Period and for one (1) year after the termination
of the Executive's employment with the Company for any reason other than a
Change of Control, the Executive shall not serve as a director, officer,
employee, partner or consultant or in any other capacity in any business that is
involved in the generation, transmission or distribution of electric energy
within the New England states, or solicit Company employees for employment or
other participation in any such business, or take any other action intended to
advance the interests of such business;
(ii) during and after the Executive's employment with the Company, he shall
not divulge or appropriate to his own use or the use of others any secret,
proprietary or confidential information or knowledge pertaining to the business
of the Company, or any of its Affiliates, obtained during his employment with
the Company; and
(iii) during the Employment Period, he shall support the Company's
interests and efforts in all regulatory, administrative, judicial or other
proceedings affecting the Company and, after the termination of his employment
with the Company, he shall use best efforts to comply with all reasonable
requests of the Company that he cooperate with the Company, whether by giving
testimony or otherwise, in regulatory, administrative, judicial or other
proceedings affecting the Company except any proceeding in which he may be in a
position adverse to that of the Company. After the termination of employment,
the Company shall reimburse the Executive for his reasonable expenses and his
time, at a reasonable rate to be determined, for the Executive's cooperation
with the Company in any such proceeding.
The provisions of this Section 8 shall survive the expiration or termination of
this Agreement. The Executive agrees that the Company shall be entitled to
injunctive relief to prevent any breach or threatened breach of these
provisions. In the event of a failure to comply with part (i), (ii) or (iii) of
this Section 8, the Executive agrees that the Company shall have no further
obligation to pay the Executive any Severance Benefits under Section 5.c of this
Agreement. In the event of a failure to comply with part (i) or (ii) hereof, the
Executive agrees that he shall repay to the Company any such Section 5.c
Severance Benefits paid to him. The Company shall have the right to offset any
amounts payable to the Executive under this Agreement or otherwise against any
Severance Benefits which he is obligated to repay to the Company.
9. No Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment.
10. Assignment. This Agreement and the rights and obligations of the
Company hereunder shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company, including without limitation any
corporation or other entity acquiring all or substantially all of the business
or assets of the Company whether by operation of law or otherwise. This
Agreement and the rights of the Executive hereunder shall not be assignable by
the Executive, and any assignment by the Executive shall be null and void.
11. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Augusta,
Maine, in accordance with the rules of the American Arbitration Association then
in effect. The pendency of any such dispute or controversy shall not affect any
rights or obligations under this Agreement. Judgment may be entered on the
arbitrator's award in any court having
jurisdiction.
12. Waiver; Amendment. The failure of either party to enforce, or any delay
in enforcing, any rights under this Agreement shall not be deemed to be a waiver
of such rights, unless such waiver is an express written waiver which has been
signed by the waiving party. Waiver of any one breach shall not be deemed to be
a waiver of any other breach of the same or any other provision hereof. This
Agreement can be amended only by a written instrument signed by each party
hereto and no course of dealing or practice or failure to enforce or delay in
enforcing any rights hereunder may be claimed to have effected an amendment of
this Agreement.
13. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by first-class, registered
or certified mail or hand-delivered to the Executive at the last residence
address he has provided to the Company or, in the case of the Company, at its
principal executive offices to the attention of the Corporate Secretary.
14. Miscellaneous. This Agreement shall be construed and enforced in
accordance with the laws of the State of Maine. In the event that any provisions
of this Agreement shall be held to be invalid, the other provisions hereof shall
remain in full force and effect.
15. Entire Agreement. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to the
employment of the Executive by the Company and may not be contradicted by
evidence of any prior or contemporaneous oral or written agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
WITNESS:
Xxxxxx X. Xxxxxxxx
CENTRAL MAINE POWER COMPANY
By:
Xxxxx X. Xxxxxx
Chairman of the Board of Directors
