EXHIBIT 10.2

 

 

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”), Central Maine Power Company, a Maine corporation or its
successor (the “Company”), and Sara J. Burns (the “Executive”), amends and
restates that certain Agreement dated June 30, 1997 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 herself 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 Co., 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 Central Maine
Power 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 her 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

 

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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 her duties hereunder or violate her 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 $300,000. 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.

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 from 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

 

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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 her 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 her 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
her 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

 

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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

 

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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 that Gross-Up Payments which will not have been made
by the Company should have been made (“Underpayment”) consistent with the
calculations required to be made hereunder. In the event that Energy East
exhausts its remedies pursuant to Section 7.4(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.

(c)The Executive shall notify Energy East in writing of any claim by

the Internal Revenue Service that, if successful, would require the payment by
the Company of an Underpayment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise Energy East of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which she gives such notice to Energy East (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If Energy East notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall:

 

(i)

give Energy East any information reasonably requested by Energy East relating to
such claim;

 

 

(ii)

take such action in connection with contesting such claim as Energy East shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by Energy East;

 

 

(iii)

cooperate with Energy East in good faith in order to effectively contest such
claim; and

 

 

(iv)

permit Energy East to participate in any proceeding relating to such claim;

 

provided, however, that Energy East shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax,

 

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including interest and penalties with respect thereto, imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 7.4(c), Energy East shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as
Energy East shall determine; provided, however, that if Energy East directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or penalties with respect thereto,
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and provided, further that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, Energy East’s control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

(d)If, after the receipt by the Executive of an amount advanced by the

Company pursuant to Section 7.4(c) hereof, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
Energy East’s and the Company’s complying with the requirements of Section
7.4(c) hereof) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by the Executive of an amount advanced by the Company pursuant
to Section 7.4(c) hereof, a determination is made that the Executive shall not
be entitled to any refund with respect to such claim and Energy East does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid.

7.5.The payments provided for in Section 7.4 hereof (other than Section

7.4(c) and (d)) shall be made not later than the fifth (5th) day following each
Determination Date; provided, however, that if the amounts of such payments
cannot be finally determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined by the Executive, of the
minimum amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can
be determined but in no event later than the thirtieth (30th) day after each
Determination Date. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess shall
constitute a loan by the Company to the Executive, payable on the fifth (5th)
business day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).

7.6.The Company also shall pay to the Executive all reasonable legal fees and

expenses incurred by the Executive as a result of a termination which entitles
the Executive to

 

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the Severance Payments (including all such fees and expenses, if any, incurred
in disputing any such termination or in seeking in good faith to obtain or
enforce any benefit or right provided by this Agreement or in connection with
any tax audit or proceeding to the extent attributable to the application of
Section 4999 of the Code to any payment or benefit provided hereunder);
provided, however, the Company shall not be required to pay to the Executive
legal fees and expenses to the extent such legal fees and expenses were incurred
in connection with a contest controlled by Energy East pursuant to Section
7.4(c) hereof in connection with which Energy East complied with its obligations
under said Section 7.4(d). Such payments shall be made within five (5) business
days after delivery of the Executive’s written request for payment accompanied
with such evidence of fees and expenses incurred as Energy East reasonably may
require.

8.Termination Procedures.

 

8.1.Notice of Termination. During the Term of this Agreement, any

 

purported termination of the Executive’s employment (other than by reason of
death) shall be communicated by written Notice of Termination from one party
hereto to the other party hereto in accordance with Section 12 hereof. For
purposes of this Agreement, a “Notice of Termination” shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and, in the case of a termination by the Company for Cause or by the Executive
for Good Reason, shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated. Further, a Notice of Termination
for Cause is required to include a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board which was called and held for the purpose
of considering such termination (after reasonable notice to the Executive and an
opportunity for the Executive, together with the Executive’s counsel, to be
heard before the Board) finding that, in the good faith opinion of the Board,
the Executive was guilty of conduct set forth in clause (i) or (ii) of the
definition of Cause herein, and specifying the particulars thereof in detail.

 

8.2.Date of Termination. “Date of Termination”, with respect to any

 

purported termination of the Executive’s employment during the Term of this
Agreement, shall mean (i) if the Executive’s employment is terminated by her
death, the date of her death, (ii) if the Executive’s employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the substantial performance of the
Executive’s duties during such thirty (30) day period), and (iii) if the
Executive’s employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a termination by Energy East,
shall not be less than thirty (30) days (except in the case of a termination for
Cause) and, in the case of a termination by the Executive, shall not be less
than fifteen (15) days nor more than sixty (60) days, respectively, from the
date such Notice of Termination is given).

9.No Mitigation. Energy East and the Company agree that, if the Executive’s
employment hereunder is terminated during the Term, the Executive is not
required to seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by Energy East or the Company hereunder. Further, the
amount of any payment or benefit provided for hereunder (other than pursuant to
Section 7.4(d) hereof) shall not be reduced by any

 

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compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to Energy East or the Company, or otherwise.

10.Confidentiality and Noncompetition.

 

10.1.The Executive will not, during or after the Term, disclose to any entity

or person any information which is treated as confidential by Energy East or the
Company or any of their subsidiaries or affiliates, and not generally known or
available in the marketplace, and to which the Executive gains access by reason
of her position as an employee or director of Energy East, the Company or any of
their respective subsidiaries (each, an “EE Entity”).

 

10.2.Except as permitted by Energy East or the Company upon its prior

written consent, the Executive shall not, during the Executive’s employment
hereunder, and, if at any time prior to the one year anniversary of the
Effective Time the Executive terminates her own employment for Good Reason or
the Company terminates her employment without Cause, for the period ending on
the one-year anniversary of the Effective Time, enter, directly or indirectly,
into the employ of or render or engage in, directly or indirectly, any services
to any person, firm or corporation within the “Restricted Territory,” which is a
major competitor of any EE Entity with respect to products which any EE Entity
is then producing or services which any EE Entity is then providing (a
“Competitor”). However, it shall not be a violation of the immediately preceding
sentence for the Executive to be employed by, or render services to, a
Competitor, if the Executive renders those services only in lines of business of
the Competitor which are not directly competitive with a primary line of
business of any EE Entity or are outside of the Restricted Territory. For
purposes of this Section 10.2, the “Restricted Territory” shall be the states
and/or commonwealths of Connecticut, Vermont, Massachusetts, New Hampshire,
Maine and Rhode Island.

11.Successors; Binding Agreement.

 

11.1.In addition to any obligations imposed by law upon any successor to

Energy East or the Company, Energy East and the Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of Energy
East or the Company, as the case may be, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that Energy
East and the Company would be required to perform it if no such succession had
taken place. Failure of Energy East or the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to compensation from Energy East
or the Company in the same amount and on the same terms as the Executive would
be entitled to hereunder if the Executive were to terminate the Executive’s
employment for Good Reason, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.

 

11.2.This Agreement shall inure to the benefit of and be enforceable by the

Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amount would still be

 

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payable to the Executive hereunder (other than amounts which, by their terms,
terminate upon the death of the Executive) if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the executors, personal
representatives or administrators of the Executive’s estate.

11.3.Except as provided herein, at the Effective Time, the Prior Agreement

shall be terminated and no longer in effect; and the Executive expressly waives
her rights to any payments under the Prior Agreement; provided, however, that
the Executive shall be entitled to receive timely all salary and benefits,
including, without limitation incentive compensation, due pursuant to the Prior
Agreement relating to all periods ending on or prior to the Effective Time, and
that Energy East and the Company shall be responsible for payment of such salary
and benefits. Notwithstanding any other provision of this Agreement, this
Agreement shall be null and void and of no further force or effect if the Merger
Agreement is terminated without consummation of the Merger or if the Executive’s
employment with the Company and/or its subsidiaries terminates for any reason
before the Effective Date.

12.Notices. For the purpose of this Agreement, notices and all other
communications

provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, addressed to the respective
addressees set forth below, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon actual receipt:

(a)To Energy East:

Energy East Corporation

One Canterbury Green

P.O. Box 1196

Stamford, Connecticut 06901

Attention: Mr. Kenneth M. Jasinski

Executive Vice President and General Counsel

Telephone: (203) 325-0690 Telecopy: (203) 325-1901

with a copy to:

Wachtell, Lipton, Rosen & Katz 51 West 52nd Street

New York, New York 10019 Attention: Seth A. Kaplan, Esq.

Telephone: (212) 403-1000 Telecopy: (212) 403-2000

(b)To the Company:

 

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CMP Group, Inc.

83 Edison Drive

Augusta, Maine 04336

Attention: Anne M. Pare, Esq.

Treasurer, Corporate Counsel and Secretary

Telephone: (207) 623-3521 Telecopy: (207) 621-4714

with a copy to:

Thelen Reid & Priest LLP

40 West 57th Street

New York, New York 10019

Attention: J. Michael Parish, Esq.

Telephone: (212) 603-2000 Telecopy: (212) 603-2001

(c)To the Executive:

At the Executive’s residence address as maintained by the Company in the regular
course of its business for payroll purposes.

13.Miscellaneous.

13.1.No provision of this Agreement may be modified, waived or discharged

unless such waiver, modification or discharge is agreed to in writing and signed
by the Executive and such officers as may be specifically designated by the
Board. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by any party
which are not expressly set forth in this Agreement. This Agreement sets forth
the entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto; and any
prior agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and canceled, except as otherwise provided in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York, without giving
effect to choice of law principles.

All references to sections of the Exchange Act or the Code shall be deemed also
to refer to any successor provisions to such sections. There shall be withheld
from any payments

 

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provided for hereunder any amounts required to be withheld under federal, state
or local law and any additional withholding amounts to which the Executive has
agreed. The obligations under this Agreement of Energy East, the Company or the
Executive which by their nature and terms require satisfaction after the end of
the Term shall survive such event and shall remain binding upon such party.

13.2.Notwithstanding any provision of this Agreement to the contrary, Energy

East and the Company shall be jointly and severally liable to the Executive and
her personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees or legatees for all payment obligations under this
Agreement.

14.Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

15.Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

16.Settlement of Disputes; Arbitration. All claims by the Executive for benefits
under this Agreement shall be directed to and initially determined by the Board
and shall be in writing. Any denial by the Board of a claim for benefits under
this Agreement shall be delivered to the Executive in writing within thirty (30)
days of submission to the Board and shall set forth the specific reasons for the
denial and the specific provisions of this Agreement relied upon. The Board
shall afford a reasonable opportunity to the Executive for a review of the
decision denying a claim and shall further allow the Executive to appeal to the
Board a decision of the Board within sixty (60) days after notification by the
Board that the Executive’s claim has been denied. Any denial by the Board of any
such subsequent appeal by the Executive shall be delivered to the Executive in
writing within thirty (30) days of submission to the Board and shall set forth
the specific reasons for the denial and the specific provisions of this
Agreement relied upon. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
New York, New York in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction.

17.Definitions. For purposes of this Agreement, the following terms shall have
the meaning indicated below:

(a)“Base Salary” shall have the meaning stated in Section 5.1 hereof.

(b)“Cause” for termination by Energy East or the Company of the Executive’s
employment, for purposes of this Agreement, shall mean (i) the willful and
continued failure by the Executive to substantially perform the Executive’s
duties hereunder (other than any such failure resulting from the Executive’s
incapacity due to physical or mental illness or any such actual or anticipated
failure after the issuance of a Notice of Termination for Good Reason by the
Executive pursuant to Section 8.1) after a written demand for substantial
performance is delivered to the Executive by the Board, which demand
specifically identifies the

 

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manner in which the Board believes that the Executive has not substantially
performed the Executive’s duties, or (ii) the willful engaging by the Executive
in conduct which is demonstrably and materially injurious to Energy East or its
subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of
this definition, no act, or failure to act, on the Executive’s part shall be
deemed “willful” unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive’s act, or failure to
act, was in the best interest of Energy East or the Company.

(c)“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

(d)“Company” shall mean Central Maine Power Compny, or any successor to its
business and/or assets.

(e)“Date of Termination” shall have the meaning stated in Section 8.2 hereof.

(f)“Disability” shall be deemed the reason for the termination by Energy East or
the Company of the Executive’s employment, if, as a result of the Executive’s
incapacity due to physical or mental illness, the Executive shall have been
absent from  substantial performance of the Executive’s duties hereunder for the
maximum number of months applicable to the Executive under the Company’s
Disability Policy for Salaried Employees (or any successor policy) (but in no
event for less than six (6) consecutive months), Energy East shall have given
the Executive a Notice of Termination for Disability, and, within thirty (30)
days after such Notice of Termination is given, the Executive shall not have
returned to the substantial performance of the Executive’s duties.

(g)“Energy East” shall mean Energy East Corporation and any successor to its
business and/or assets.

(h)“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended
from time to time.

(i)“Excise Tax” shall have the meaning stated in Section 7.5(A) hereof.

(j)“Executive” shall mean the individual named in the first paragraph of this
Agreement.

(k)“Good Reason” for termination by the Executive of the Executive’s employment
shall mean the occurrence (without the Executive’s express written consent), of
any one of the following acts by Energy East or the Company, or failures by
Energy East or the Company to act, unless, in the case of any act or failure to
act described in paragraphs (i) or (ii) below, such act or failure to act is
corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:

(i)the assignment to the Executive of any duties inconsistent

with the Executive’s status as an executive officer of the

 

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Company or a substantial alteration in the nature or status of the Executive’s
responsibilities consistent with the titles set forth in Section 4;

 

(ii)

any material breach of any provision of this Agreement by Energy East or the
Company;

 

 

(iii)

the relocation of the Company’s principal executive offices to a location within
the 25-mile radius of Augusta, Maine or Energy East or the Company’s requiring
the Executive to be based anywhere other than the Company’s principal executive
offices except for required travel on the business of Energy East or the Company
or CMP Group, Inc. to the extent such travel obligations are substantially
consistent with the Executive’s present business travel obligations; or

 

 

(iv)

any purported termination of the Executive’s employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section 8.1;
for purposes of this Agreement, no such purported termination shall be
effective.

 

The Executive’s right to terminate the Executive’s employment for Good Reason
shall not be affected by the Executive’s incapacity due to physical or mental
illness. The Executive’s continued employment shall not constitute consent to,
or a waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder.

(l)“Gross-Up Payment” shall have the meaning stated in Section 7.4(a) hereof.

(m)“Notice of Termination” shall have the meaning stated in Section 8.1 hereof.

(n)“Severance Payments” shall mean those payments described in Section 7.2
hereof.

(o)“Term” shall have the meaning stated in Section 3 hereof.

 

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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first above written.

 

 

ENERGY EAST CORPORATION

 

 

By:

/s/ Kenneth M. Jasinski

Name:  

Kenneth M. Jasinski

 

 

CENTRAL MAINE POWER COMPANY

 

 

By:

/s/ David T. Flanagan

Name:  

David T. Flanagan

Title:

President and CEO

 

 

EXECUTIVE

 

 

By:

/s/ Sara J. Burns

Name:  

Sara J. Burns

 

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