Exhibit 10-108
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this ________day of June, 1997, 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 XXXX X. XXXX of Augusta, Maine (hereinafter referred to as the "Executive").
WHEREAS, the Company recognizes that the Executive is a valued employee
because of her knowledge of the Company's affairs and her experience and
leadership capabilities, and desires to encourage her 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 her
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. Term. The term of this Agreement shall begin
on June 1, 1997 (hereinafter referred to as the "Effective Date") and shall
expire on May 31, 2000; provided, however, that if a Change of Control occurs
during the period commencing June 1, 1999 and ending May 31, 2000, this
Agreement shall be extended and shall thereafter expire 365 days after the date
of said Change of Control (the "Extended Expiration Date").
b. Expiration. Notwithstanding anything to the contrary in this Section
1, except as to vested benefits, this Agreement and all obligations of the
Company hereunder shall terminate on the earliest to occur of (i) the date of
the Executive's death, (ii) 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; or (iii) May 31, 2000 (or the Extended
Expiration Date specified in Section 1.a above, if applicable, if a Change of
Control occurs during the year prior to May 31, 2000.)
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) Any act of material dishonesty taken by, or committed at the
request of, the Executive.
(ii) Any illegal or unethical conduct which 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 her
responsibilities and duties under this Agreement in a
satisfactory manner, 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.
"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) The stockholders of the Company approve a merger or xxxxxxx-
dation 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, however, 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.
(iii)The stockholders of the Company approve a plan of complete
liqui- dation 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 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;
(iii)a material adverse change in the Executive's title or position;
or
(iv) relocation of the Executive's place of employment from the
Company's principal executive offices 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.
"Total Disability" means the complete and permanent inability of the
Executive to perform all of her duties under this Agreement on a full-time basis
for a period of at least six (6) consecutive months, as determined upon the
basis of such evidence, which may include independent medical reports and data.
3. Employment. a. Position. The Company hereby agrees to continue its
employment of the Executive in the capacity of Corporate Counsel and Secretary,
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 she deems
appropriate.
b. Performance. The Executive agrees that during the Employment Period
she shall devote substantially all her business attention and time to the
business and affairs of the Company, and use her 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. Job Duties. 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, serving as Corporate Secretary for meetings of
the Board and of shareholders; providing other Corporate Secretary functions to
the Company; advising the Board and management on corporate and Board governance
issues; serving as liaison on corporate governance issues with shareholder
organizations; overseeing compliance with and advising on corporate and
securities laws and New York Stock Exchange rules; preparing Securities and
Exchange Commission disclosure documents; and providing legal advice and
representation on corporate financing matters.
4. Compensation and Benefits. a. During the Employment Period, the
Executive shall be compensated as follows:
(i) Salary. The Executive shall receive an annual base salary, the
amount of which shall be reviewed regularly and determined
from time to time, but which shall not be less than
$109,000.00. Her salary shall be payable in accordance with
Company payroll practices.
(ii) Participation in Executive Plans. She 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 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) Participation in Salaried Employee Plans. The Executive 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) Other Fringe Benefits. The Executive 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.
b. Retention Bonus. If the Executive is actively employed by the
Company on the earlier to occur of (i) the date of the sale of the Transmission
and Distribution Business Unit, or (ii) May 31, 2000, the Executive shall be
entitled to receive a lump sum cash payment of one-half (1/2) of the Executive's
annual base salary then in effect, which shall be paid within fifteen (15)
working days after the applicable date specified in subsection (i) or (ii)
above. If the Executive's employment is terminated for any reason whatsoever
prior to the earlier of such dates, she shall not be entitled to receive the
retention bonus described herein, although she may be entitled to receive
Severance Benefits as provided in Section 5 below.
c. Withholding. 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. Change of Control. 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 lump sum cash pay-
ment, within sixty (60) days following the date of termination
of employment as defined in Section 6 below, an amount equal
to 2.0 times the Executive's then-current base salary.
(ii) The Company shall provide the Executive with so-called COBRA medi-
cal continuation coverage paid by the Company for a period up
to eighteen (18) months, or until the Executive obtains
coverage under another group medical plan with another
employer, whichever occurs first.
(iii) 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. Parachute Provision. 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 pay-
ments or benefits otherwise payable to the Executive would
constitute "parachute payments" within the meaning of Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (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. No Change of Control. If no Change of Control has occurred, and the
Executive's employment with the Company is terminated during the Employment
Period either (i) by the Company for any reason other than death, Total
Disability or Cause, or (ii) by the Executive within six (6) calendar months of
a Constructive Discharge, the Company shall pay the Executive, in one lump sum
payment within sixty (60) days following the date of termination of employment
as defined in Section 6 below, an amount 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.
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. x. Xxxxx-Up Amount. In the event that any portion of the
Severance Benefits provided in Section 5 is subject to tax under Code ss.4999,
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 of this Agreement.
b. Tax Withholding. 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. a. 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 a competitor of
the Company, 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; provided,
however, that this Section 8.a.(i) shall not apply after the
termination of the Executive's employment if the Executive
voluntarily terminates employment and is not eligible to receive
a Severance Benefit under Section 5.c. above.
(ii) During and after the Executive's employment with the Company, she
shall not divulge or appropriate to her 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 her employment with the Company.
(iii)During the Employment Period, she shall support the Company's
interests and efforts in all regulatory, administrative, judicial
or other proceedings affecting the Company and, after the
termination of her employment with the Company, she shall use
best efforts to comply with all reasonable requests of the
Company that she 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 she may be in a position adverse to that of the Company.
After the termination of employment, the Company shall reimburse
the Executive for her reasonable expenses and her time, at a
reasonable rate to be determined, for the Executive's cooperation
with the Company in any such proceeding.
(iv) The term "Company" as used in this Section 8 shall include
Central Maine Power Company, any Affiliate of Central Maine Power
Company (determined as of the date of termination), any successor
to the business or operations of Central Maine Power and any
business entity spun-off, divested, or distributed to
shareholders which shall continue the operations of Central Maine
Power Company.
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.
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 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. Singular Contract. This Agreement is a singular agreement between
the Executive and the Company, and is not part of a general "plan" or "program"
for employees as a group. This Agreement shall, under no circumstances, be
deemed to be an "employee welfare benefit plan" or an "employee pension benefit
plan" as defined in the Employee Retirement Income Security Act of 1974
(hereinafter referred to as "ERISA"). Notwithstanding, the Company may submit a
letter to the Department of Labor indicating the possible establishment of a
so-called unfunded "top hat" plan for the benefit of a select group of
management and highly compensated employees to avoid the costs and uncertainties
which may occur in the event of a Department of Labor audit and challenge
relative to compliance with any allegedly applicable provisions of ERISA. The
Executive specifically acknowledges and agrees that the filing of the so-called
"top hat" letter notice by the Company shall not be construed or interpreted as
an admission on the part of the Company that this Agreement constitutes an ERISA
plan, and the Company hereby categorically states, and the Executive hereby
agrees, that this Agreement is an ad hoc individual contract with the Executive.
14. 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 she has provided to the Company or, in the case of the Company, at its
principal executive offices to the attention of the Corporate Secretary.
15. Titles and Captions. The section and paragraph titles and captions
contained herein are for convenience only and shall not be held to explain,
modify, amplify, or aid in the interpretation, construction or meaning of the
provisions of this Agreement.
16. 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.
17. 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:
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Xxxx X. Xxxx
WITNESS: CENTRAL MAINE POWER COMPANY
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By: Xxxxx X. Xxxxxx
Chairman of the Board
of Directors
