Exhibit 10-105
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 26th day of August, 1998, 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 F. MICHAEL McCLAIN, JR. (hereinafter referred to as the "Executive").
WHEREAS, the Company desires to and has employed the Executive to
provide strategic services to the Company and to receive the advantage of his
business expertise during a period of transition and adjustment; 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 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 February 23, 1998 (hereinafter referred to as the "Effective Date") and shall
expire on December 31, 2000; provided, however, that on December 31, 2000 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. Automatic Extension of Term. 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. Expiration. 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) Any 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 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 consoli-
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.
"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 commen-
surate 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 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.
"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 upon the
basis of such evidence, which may include independent medical reports and data,
as the Board deems appropriate or necessary.
3. Employment. a. Position. The Company hereby agrees to continue its
employment of the Executive in the capacity of Vice President, Corporate
Development, of the Company, and the Executive hereby agrees to accept
employment from 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. Performance. 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. 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, overseeing investments in new subsidiaries and
affiliated businesses; development and implementation of business plans for new
subsidiaries; direction and oversight of regulatory approvals for such new
subsidiaries; and participation in operational decisions and strategic planning
for new subsidiaries and business ventures.
4. Compensation and Benefits. a. During the Employment Period, the
Executive shall be compensated as follows:
(i) Salary. 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
$175,000.00. His salary shall be payable in accordance with
Company payroll practices.
(ii) Participation in Executive Plans. 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) Participation in Salaried Employee Plans. 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) Other Fringe Benefits. 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.
b. Vested Benefits. 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. 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 determined under Section 6 of this Agreement,
an amount equal to 2.99 times (a) the Executive's base salary
earned during the twelve (12) months immediately preceding the
Change of Control and (b) the three (3) year average of
amounts earned under the Company's 1987 Executive Incentive
Plan or any successor short-term executive incentive plan for
the three (3) years preceding the Change of Control.
(ii) Core coverage for the Executive and his dependents 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 the Executive
and his dependents during the Severance Period with core
benefits substantially similar to those which he would
otherwise be entitled to receive under such plans and
programs; provided, however, that the obligation of the
Company to provide continuation of any insured long-term
disability benefits shall be limited to the conversion rights
available under such disability insurance products, and the
Company hereby agrees to pay the conversion premium due
thereon for the Severance Period.
(iii)To the extent allowed by law, but without violating any non-
discrimination or other applicable restrictions, the Severance
Period shall count as service for all purposes (including benefit
accrual and eligibility) under any welfare benefit or
non-qualified 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 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. 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 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, commission 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. Gross-Up Amount. 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. 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. The Executive agrees
that: (i) During the Employment Period and for one (1) year after the termi-
nation 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;
(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.
(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. 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 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 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.
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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F. Michael McClain, Jr.
WITNESS: CENTRAL MAINE POWER COMPANY
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By: David M. Jagger
Chairman of the Board
of Directors