Exhibit 10-24
EXECUTION COPY
EMPLOYMENT
AGREEMENT
This AMENDED AND RESTATED
EMPLOYMENT AGREEMENT, dated as of June 14, 1999 (the "Agreement"),
by and among Energy East Corporation, a New York corporation
("Energy East"), CMP Group, Inc., a Maine corporation or its
successor (the "Company"), and F. Michael McClain, Jr. (the
"Executive"), amends and restates that certain Agreement dated
August 26, 1998 and amended March 18, 1999, by and between the
Company and the Executive (the "Prior Agreement").
The Board of Directors of
Energy East (the "Board") and the Board of Directors of the Company
desire to provide for the employment of the Executive as a member
of the management of the Company and certain of its subsidiaries
and affiliates, and the Executive is willing to commit himself to
serve the Company and its subsidiaries and affiliates, on the terms
and conditions herein provided.
In order to effect the
foregoing, Energy East, the Company and the Executive wish to enter
into an employment agreement on the terms and conditions set forth
below. Accordingly, in consideration of the premises and the
respective covenants and agreements of the parties herein
contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Defined Terms
. The definitions of capitalized terms used in this
Agreement, unless otherwise defined herein, are provided in the
last Section hereof.
2. Employment
. The Company hereby agrees to employ the Executive, and
the Executive hereby agrees to serve Energy East, the Company and
their subsidiaries and affiliates, on the terms and conditions set
forth herein, during the term of this Agreement (the "Term").
3. Term of Agreement
. The Term will commence at the Effective Time of the
Merger as those terms are defined in the Agreement and Plan of
Merger dated as of June 14, 1999, by and among the Company, Energy
East and EE Merger Corp., a Maine corporation and wholly owned
subsidiary of Energy East (the "Merger Agreement"), and end on the
third anniversary of the day on which the Effective Time occurs,
unless further extended as hereinafter provided. Commencing on the
first day of the month following the Effective Time and each
succeeding month thereafter, the Term of this Agreement shall
automatically be extended for one (1) additional month unless
Energy East, the Company, or the Executive shall have given prior
written notice not to extend this Agreement.
4. Position and Duties
. The Executive shall serve as President of one or more
of the nonutility subsidiaries of Energy East, XENERGY Enterprises,
Inc. and/or the Company and shall also serve in any such executive
officer position of the Company or its subsidiaries and affiliates
if so appointed by the Board, and shall report to the President of
Energy East. The Executive shall have such responsibilities, duties
and authority that are consistent with such positions as may from
time to time be assigned to the Executive by the President of
Energy East. The Executive shall devote substantially all his
working time and efforts to the business and affairs of the Company
and its subsidiaries and affiliates; provided ,
however , that the Executive may also serve on the boards of
directors or trustees or otherwise participate in the affairs of
other non-affiliated companies and organizations, including,
without limitation, industry associations and charitable and civic
endeavors, as long as such service does not substantially interfere
with the performance of his duties hereunder or violate his
obligations under Section 10 hereof.
5. Compensation and
Related Matters .
5.1 Base Salary
. The Company shall pay, or cause to be paid, to the
Executive an annual base salary ("Base Salary") during the period
of the Executive's employment hereunder, which shall be at an
initial rate which is no less than the rate of $200,000. The Base
Salary shall be paid in substantially equal bi-weekly installments,
in arrears. The Base Salary may be discretionarily increased by the
Board from time to time as the Board deems appropriate in its
business judgment. The Base Salary in effect from time to time
shall not be decreased during the Term. During the period of the
Executive's employment hereunder, the Board shall make an annual
review of the Executive's compensation.
Compensation
of the Executive by Base Salary payments shall not be deemed
exclusive and shall not prevent the Executive from participating in
any other compensation or benefit plan of Energy East or the
Company. The Base Salary payments (including any increased Base
Salary payments) shall not in any way limit or reduce any other
obligation of Energy East or the Company hereunder, and no other
compensation, benefit or payment hereunder shall in any way limit
or reduce the obligation of the Company to pay the Executive's Base
Salary.
5.2 Benefit Plans
. The Executive shall be entitled to participate in or
receive benefits under any "employee benefit plan" (as defined in
section 3(3) of the Employee Retirement Income Security Act of
1974, as amended from time to time ("ERISA")) or employee benefit
arrangement made available by Energy East or the Company now or
during the period of the Executive's employment hereunder to their
executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of
such plans and arrangements; provided , however ,
that there shall be no duplication of the benefits created by this
Agreement. The Executive's participation in such employee benefit
plans and arrangements shall be on an appropriate level, as
determined by the Board. If the Executive's service with the
Company and its subsidiaries from February 1, 1998 exceeds five
full years, the Company shall pay to the Executive a monthly
pension supplement, beginning at the time the Executive's
retirement benefits commence under the Company's Retirement Income
Plan for Non-Union Employees of Central Maine Power Company (the
"Basic Plan") and any supplemental defined benefit pension plan in
which the Executive participates, or any successor or replacement
plans thereof, equal to the excess of (i) the total monthly payment
that would be due to the Executive under the Basic Plan as if the
Executive's monthly benefit under the Basic Plan and any such
supplemental defined benefit pension plan were calculated by giving
the Executive credit for two years of service for each of the
Executive's first five years of service with the Company over (ii)
the actual total monthly amount due under the Basic Plan and any
such supplemental defined benefit pension plan.
5.3 Incentive
Compensation . The Executive shall be entitled to
participate in or receive benefits under any short or long-term
incentive compensation plan made available by Energy East now or
during the period of the Executive's employment hereunder to their
executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of
such plans and arrangements; provided , however ,
that the value of the Executive's incentive compensation
opportunity shall not be less than the value of the Executive's
incentive compensation opportunity in effect immediately prior to
the Effective Time; and provided , further that the
Executive shall not be eligible to receive benefits pursuant to any
incentive compensation plan, policy or arrangement of Energy East
to the extent the Executive is receiving a similar benefit pursuant
to an incentive compensation plan, policy or arrangement of the
Company or any of its subsidiaries.
5.4 Fringe Benefits
. The Executive shall be entitled to receive any fringe
benefits which are made available by Energy East or the Company now
or during the period of the Executive's employment hereunder to
their executives and key management employees including, without
limitation, executive physical examinations as provided in
accordance with the Company's policies and practices immediately
prior to the Effective Time.
5.5 Expenses
. Upon presentation of reasonably adequate documentation
to Energy East, the Executive shall receive prompt reimbursement
from Energy East or a subsidiary thereof for all reasonable and
customary business expenses incurred by the Executive in accordance
with Energy East's policy in performing services hereunder.
5.6 Vacation
. The Executive shall be entitled to five (5) weeks of
vacation during each year of this Agreement, or such greater period
as the Board shall approve, without reduction in salary or other
benefits.
6. Compensation Related to
Disability . During the Term of this Agreement,
during any period that the Executive fails to perform the
Executive's full-time duties hereunder as a result of incapacity
due to physical or mental illness, Energy East shall pay, or cause
to be paid, to the Executive his Base Salary at the rate in effect
at the commencement of any such period, together with all
compensation and benefits payable to the Executive under the terms
of any compensation or benefit plan, program or arrangement
maintained by Energy East or the Company during such period, until
the Executive's employment is terminated by Energy East for
Disability; provided , however , that such payments
shall be reduced by the sum of the amounts, if any, payable to the
Executive at or prior to the time of any such payment under
disability benefit plans of Energy East or the Company or under the
Social Security disability insurance program, which amounts were
not previously applied to reduce any such payment.
7. Termination
Compensation and Benefits .
7.1 If the Executive's
employment shall be terminated for any reason during the Term of
this Agreement, the Company shall pay the Executive's Base Salary
(to the Executive or in accordance with Section 11.2 if the
Executive's employment is terminated by his death) through the Date
of Termination at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits
(other than severance compensation and benefits) payable to the
Executive through the Date of Termination under the terms of any
compensation or benefit plan, program or arrangement maintained by
Energy East or the Company during such period.
7.2 In the event the
Executive's employment is terminated prior to the expiration of the
Term of the Agreement by the Executive for Good Reason or by Energy
East or the Company for reasons other than Cause (other than the
death or Disability of the Executive), the Executive shall receive
(i) continuation of his Base Salary and the benefits provided for
in Sections 5.2 and 5.3 of this Agreement for the remainder of the
Term, (ii) payment of a fee to an independent outplacement firm
selected by the Executive for outplacement services in an amount
equal to the actual fee for such service up to a total of $10,000
and (iii) a lump sum payment equal to (A) the value of the fringe
benefits that would have been provided to the Executive through the
remainder of the Term in accordance with the Company's policies as
of the date one year prior to the Date of Termination and (B) any
unreimbursed expenses payable pursuant to Section 5.5 of this
Agreement. For purposes of determining equivalent value of
incentive compensation, the value of short-term incentive
compensation shall be the amount of short-term compensation
received by the Executive in the fiscal year ended immediately
prior to the Date of Termination and the value of long-term
incentive compensation shall be the value of long-term incentive
compensation awards outstanding on the Date of Termination for
performance periods ending after the Date of Termination, such
value being determined based upon the projected target value of the
applicable long-term incentive compensation award as determined by
the Company in connection with the grant thereof. Continuation of
the pension benefits provided under Section 5.3 shall consist of
continued accrual of benefits for the remainder of the Term under
any employee pension benefit plans (as that term is defined in
Section 3(2) of ERISA), and any plan, program or arrangement
providing supplemental retirement income payments, in which the
Executive was participating at the time of termination of
employment. Notwithstanding the foregoing, to the extent the
Company and/or Energy East determines not to continue the
retirement and welfare benefits provided under Sections 5.2 and
5.3, respectively, pursuant to the respective plan, program or
arrangement, the Executive shall receive equivalent benefits
outside such plan, program or arrangement at no additional cost
(including, without limitation, tax costs) to the Executive.
Notwithstanding any other provision in this Agreement, benefits
provided under this Section 7.2 shall not be provided to the
Executive to the extent such benefits would be duplicative of
benefits provided elsewhere in this Agreement.
7.3 If the Executive's
employment shall be terminated for any reason during the Term of
this Agreement, the Company shall pay the Executive's normal
post-termination compensation and benefits (other than severance
compensation and benefits) to the Executive as such payments become
due. Such post-termination compensation and benefits (other than
severance compensation and benefits) shall be determined under, and
paid in accordance with, Energy East's or the Company's retirement,
insurance and other compensation or benefit plans, programs and
arrangements (other than this Agreement), as applicable.
7.4
(a) Anything in this
Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment, benefit, or distribution by Energy
East, the Company or their affiliates to or for the benefit of the
Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise (a "Payment"),
would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties with respect to such excise tax
(such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment
("Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including, without limitation, any
income taxes and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(b) Subject
to the provisions of Section 7.4(c) hereof, all determinations
required to be made under this Section 7.4, including whether a
Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be used in arriving at such
determinations, shall be made by Energy East's principal outside
accounting firm (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Board and the
Executive within fifteen (15) business days of the Date of
Termination and/or such earlier date(s) as may be requested by
Energy East or the Executive (each such date and the Date of
Termination shall be referred to as a "Determination Date" for
purposes of this Section 7.4(b) and Section 7.5 hereof). All fees
and expenses of the Accounting Firm shall be borne solely by the
Company. The initial Gross-Up Payment, if any, as determined
pursuant to this Section 7.4(b), shall be paid by the Company to
the Executive within five (5) days of the receipt of the Accounting
Firm's determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise
Tax on the Executive's applicable federal income tax return would
not result in the imposition of a negligence or similar penalty.
Any determination by the Accounting Firm under this Section 7.4(b)
shall be binding upon Energy East, the Company and the Executive.
As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible tha
