EXHIBIT 10.3

 

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the "Agreement") is entered into by and among Central
Maine Power Company ("CMP"), Iberdrola USA, Inc., a New York corporation (the
"Company"), and Sara Burns (the "Executive") as of January 1, 2012.

1.Defined Terms. The definitions of capitalized terms used in this Agreement,
unless otherwise defined herein, are provided in the Section 15 hereof

2.Employment. CMP hereby agrees to employ the Executive, and the Executive
hereby agrees to serve the Company and CMP, on the terms and conditions set
forth herein, during the term of this Agreement (the "Term").

3.Term of Agreement. The Term will commence on the date hereof and continue
until the Date of Termination (as defined below).

4.Position and Duties. The Executive shall serve as President of CMP and such
other executive positions as may be assigned from time to time by the Company,
and 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
Company. Throughout the Term, the Executive shall be a member of the Company's
senior management team. The Executive shall report to the Chief Executive
Officer of the Company or such other executive as to whom the presidents of
operating subsidiaries of the Company shall be directed to report. The Executive
shall devote substantially all her working time and efforts to the business and
affairs of the Company and its subsidiaries and affiliates. The Executive
recognizes that her duties will require, at the Company's expense, travel to
domestic and international locations.

5.Compensation and Related Matters.

5.1.Base Salary. CMP shall pay the Executive a base salary ("Base

Salary") during the period of the Executive's employment hereunder, which shall
be at an initial rate of Three Hundred Twenty-Five Thousand Dollars
($325,000.00) per annum effective as of January 1, 2012. The Base Salary shall
be paid in accordance with the Company's standard payroll practices, except that
the Executive shall be entitled to receive a lump sum payment in respect of a
retroactive salary increase covering the period from January 1, 2012 through the
execution of this Agreement, such amount to be paid as soon as reasonably
practicable following execution of this Agreement. The Executive shall be
eligible to receive increases in the Base Salary from time to time as determined
by the Company in its sole discretion, and shall be reviewed for a merit
increase in connection in the Company's review of compensation of its executives
during the first quarter of 2013. The Base Salary shall not be decreased during
the Term.

5.2.Annual Bonus. During the Term, Executive shall be eligible to participate in
the Company's Annual Executive Incentive Plan (the "AEIP"). Executive's AEIP
opportunity at target under the AEIP shall be equal to 45% of her Base Salary at
the beginning for such year, and the maximum opportunity shall be equal to 90%
of the Base Salary.

 

1

 

--------------------------------------------------------------------------------

 

5.3.Strategic Bonus Program. Executive shall be eligible to participate in the
Iberdrola, S.A. Strategic Bonus Program (the "Program") covering the period from
January 1, 2011 through 2013. The Executive's maximum opportunity for the award
under the Program shall be decided upon approval of the new Program by the
Remuneration Committee of Iberdrola SA and will be set with reference to
Executive's level according to the Iberdrola Group classification system.
Participation in the Program shall be in lieu of any participation in the
Company's Performance Share Plan. Executive shall be eligible to be considered
for participation in any incentive compensation program that is a successor to
the Program or otherwise covers periods during the Term on or after January 1,
2014. 

5.4.Non-qualified Individual Account Balance Deferred Compensation

Arrangement.

 

(A)

As of the date first mentioned above, Executive will be a participant in the
Iberdola USA, Inc. Non-Qualified Individual Account Balance Deferred
Compensation Plan (the "Deferred Compensation Plan"). The Company shall make
contributions under the Deferred Compensation Plan for the Executive's benefit
in an annual amount equal to 10% of the Base Salary.

 

(B)

In addition, upon execution of this Agreement, the Company shall make a
contribution under the Deferred Compensation Plan for the Executive's benefit in
the amount of Twenty-Five Thousand Dollars ($25,000).

 

 

(C)

Executive shall not be eligible to participate in the Energy East Supplemental
Executive Retirement Plan (the "SERP") or the Energy East Excess Plan (the
"Excess Plan"), and Executive agrees to, and hereby does, waive, relinquish and
forfeit all rights to participation in the SERP and the Excess Plan.

5.5.Amounts Owed Pursuant to Agreement and Release. Executive and the Company
acknowledge and agree that the Agreement and Release between Executive and the
Company executed on November 25, 2009 shall remain in full force and effect (to
the extent not previously satisfied) except as amended herein. Executive and the
Company agree that the amount payable to Executive pursuant to Paragraph 2(B) of
the Agreement and Release shall be increased by an amount equal to the amount
earned by the Central Maine Company Benefit Trust on its investment of
$4,074,646.35 in a financial vehicle to be selected by the Company in a
commercially reasonable manner consistent with the goal of obtaining a net
guaranteed level of interest without risk of loss of principal. In the event
Executive's employment hereunder is terminated by the Company for Cause or by
Executive without Good Reason and early termination or redemption fees are
incurred in connection with the financial vehicle referenced in this Section,
the amount of such early termination or redemption fees shall be deducted from
the amount otherwise payable to Executive hereunder, provided that the Company
shall use reasonable commercial efforts to avoid the imposition of such fees; in
any other circumstances, no such early termination or redemption fees may be
deducted from the amount otherwise payable to the Executive hereunder. Under no
circumstances will any losses with respect to any such investment be passed
along to Executive; rather, the Company guarantees that Executive shall receive
not less than $4,074,646.35 (subject to any early termination or redemption fees
pursuant to the preceding sentence) at the time payment is due.

 

 

 

2

 

--------------------------------------------------------------------------------

 

5.6.Benefit and Long-Term Incentive Plans. The Executive shall 

continue to be entitled to participate in or receive compensation and/or
benefits, as applicable, under all "employee benefit plans" (as defined in
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
from time to time ("ERISA")) subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements;
provided, however, that Executive shall not be eligible to participate in any
compensation plans (except as explicitly referenced in this Agreement) or
nonqualified pension benefit plans; and provided further that there shall be no
duplication of the compensation and benefits created by this Agreement.

5.7.Expenses. Upon presentation of reasonably adequate

documentation to CMP, the Executive shall receive prompt reimbursement from CMP
for all reasonable and customary business expenses incurred by the Executive in
accordance with CMP policy in performing services hereunder or prior to the date
hereof. In addition, CMP shall pay Executive's reasonable attorneys' fees
incurred in connection with the negotiation and drafting of this agreement in an
amount not to exceed $5,000.

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
with the Company and CMP as a result of incapacity due to physical or mental
illness, CMP shall pay the Executive's Base Salary to the Executive 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 the Company or any affiliate
during such period, until the Executive's employment is terminated by the
Company for Disability; provided, however, that such Base Salary 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 Base Salary payment under disability benefit plans
of the Company or under the Social Security disability insurance program, which
amounts were not previously applied to reduce any such Base Salary payment.

7.Compensation Related to Termination.

7.1. Termination by the Company Without Cause or by Executive for  Good Reason
or by Reason of Executive's Death or Disability. If the Executive's employment
shall be terminated during the Term by the Company without Cause, by Executive
for Good Reason, or by Reason of Executive's Death or Disability, Executive
shall be entitled to receive (a) a lump sum payment payable six months and one
day after the Date of Termination equal to the sum of (i) the Base Salary and
(ii) an amount equal to Executive's AEIP award for the prior year; (b) amounts
payable under the AE1P, the Program, and the Performance Share Plan in
accordance with their terms; and (c) all compensation and benefits payable to
the Executive through the Date of Termination under any compensation or benefit
plan, program or arrangement maintained by the Company or IUMC during such
period and in which Executive participated as of the Date of Termination. In
addition, following any such termination Executive shall be entitled to receive
retiree medical and prescription benefits she would have been entitled to
receive had she completed thirty years of service as of such Date of
Termination.

 

 

 

3

 

--------------------------------------------------------------------------------

 

 

7.2. Termination by the Company for Cause; Termination by Executive Without Good
Reason. If the Executive's employment shall be terminated by the Company for
Cause or by Executive without Good Reason, CMP shall pay (a) the Executive's
Base Salary through the Date of Termination at the rate in effect at the time
the Notice of Termination is given; and (b) all compensation and benefits
payable to the Executive through the Date of Termination under the terms of the
Agreement or any compensation or benefit plan, program or arrangement maintained
by the Company or CMP during such period and in which Executive participated as
of the Date of Termination.

7.3.No Further Liability; Release. Other than providing the

compensation and benefits provided for in accordance with this Section 7, the
Company and its directors, officers, employees, subsidiaries, affiliates,
stockholders, successors, assigns, agents and representatives shall have no
further obligation or liability to Executive or any other person under this
Agreement. The payment of any amounts pursuant to this Section 7 (other than
payments required by law) is expressly conditioned upon the delivery by
Executive to the Company of a release in form and substance reasonably
satisfactory to the Company of any and all claims Executive may have against the
Company and its directors, officers, employees, subsidiaries, affiliates,
stockholders, successors, assigns, agents and representatives arising out of or
related to Executive's employment by the Company and the termination of such
employment. The Company shall provide such release to Executive not more than
fifteen days after the Date of Termination. Executive must return the release
not later than sixty days after the Date of Termination in order to be eligible
to receive any payment hereunder.

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 parties hereto in accordance with Section 11 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, if the
termination is purported to be by the Company for Cause or by 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.

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 by reason of
her Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the fulltime 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 shall not (except in the case of a termination
for Cause) be less than thirty or more than sixty days (except in the case of a
termination without Cause, in which event such date shall be no more than ninety
days) from the date such Notice of Termination is given.

 

 

 

4

 

--------------------------------------------------------------------------------

 

9.Confidentiality.  

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

or person any information which is treated as confidential by the Company, CMP,
or any of their subsidiaries or affiliates and not generally known or available
in the marketplace, and to which Executive gains access in connection with her
position as an employee of the Company, CMP, or any of their subsidiaries or
affiliates.

9.2.Except as permitted by the Company upon its prior written

consent, Executive shall not, during the Term and for one year after the
termination of Executive's employment hereunder, 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 the Company, CMP, or any of their subsidiaries or affiliates
with respect to products or services which of the Company, CMP, or any of their
subsidiaries or affiliates is then producing or providing within such Restricted
Territory (a "Competitor"). However, it shall not be a violation of the
immediately preceding sentence for Executive to be employed by, or rendered
services to, a Competitor if Executive renders those services only in lines of
business of the Competitor that are not directly competitive with a primary line
of business of the Company, CMP, or any of their subsidiaries or affiliates or
are outside of the Restricted Territory. For purposes of this Section 9.2, the
"Restricted Territory" shall be the states and/or commonwealths of Connecticut,
New York, Massachusetts, and Maine.

10.Successors; Binding Agreement.

10.1. In addition to any obligations imposed by law upon any successor to the
Company or CMP, the Company or CMP 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 the Company or CMP, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company or CMP would be required to perform it if no
such succession had taken place.

10.2. 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 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.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 addresses 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:

 

 

5

 

--------------------------------------------------------------------------------

 

To the Company and CMP:

Iberdrola USA, Inc.

Central Maine Power Company

18 Link Drive, P.O. Box 5224

Binghamton, New York 13902-5224

Attention: Vice President Human Resources

With a copy to:

Robert N. Holtzman, Esq.

Kramer Levin Naftalis & Frankel LLP

1177 Avenue of the Americas New York, New York 10036

To the Executive:

Sara Burns

189 Benson Road

Manchester, Maine 04351

With a copy to:

Wayne N. Outten, Esq. Outten & Golden LLP 3 Park Avenue, 29th Floor New York,
New York 10016

12.Miscellaneous.

12.1. The Executive and CMP hereby agree that the Employment Agreement dated as
of June 14, 1999 (the "Prior Agreement") is null, void, and of no further force
and effect, and that neither the Executive nor CMP has any rights or obligations
under the Prior Agreement, except that Sections 7.4, 7.5, and 7.6 (in the latter
case, to the extent related to a claim arising under Section 7.4 of the
Agreement) shall continue in full force and effect. The Parties further agree
that the Employment Agreement dated as of November 24, 2009 is superseded as of
January 1, 2012 in all respects by this Agreement.

12.2. 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. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York. There shall be withheld from any payments
provided for hereunder any amounts required to be withheld under

6

 

--------------------------------------------------------------------------------

 

federal, state or local law and any additional withholding amounts to which the
Executive has agreed. The obligations under this Agreement of the Company, CMP
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.  

12.3. References in this Agreement to employee benefit plans, compensation
plans, incentive plans, pension plans, disability policies or similar plans,
programs or arrangements of the Company include such plans, programs or
arrangements of CMP if maintained for the benefit of the Company's executives or
employees of CMP.

12.4. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument. Facsimile or electronically transmitted signatures
shall be treated as original signatures for all purposes.

12.5. his Agreement contains the entire agreement and understanding between the
parties hereto in respect of Executive's employment and supersedes, cancels and
annuls any prior or contemporaneous written or oral agreements, understandings,
commitments and practices between them respecting Executive's employment,
including but not limited to the Prior Agreement, except as specifically
referenced herein.

13.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.

14.Arbitration. Any dispute or controversy arising under or in connection with
this Agreement or otherwise related to the Executive's employment by CMP or
affiliation with the Company shall be settled exclusively by arbitration in New
York, New York in accordance with the Employment Dispute Resolution rules of the
American Arbitration Association then in effect. The arbitrator shall award
attorneys' fees and costs to the prevailing party in any such arbitration
proceeding. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.

15.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)

"Board" shall mean the Board of Directors of the Company.

 

(C)"Cause" for termination by 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 with the Company
and CMP (other than any such failure resulting from the Executive's incapacity

 

 

7

 

--------------------------------------------------------------------------------

 

due to physical or mental illness or Executive's resignation for Good Reason)
after a written demand for substantial performance is delivered to the Executive
by the Board, which demand identifies in reasonable detail the manner in which
the Board believes that the Executive has not substantially performed the
Executive's duties, and Executive's failure to cure such failure within fifteen
(15) days of the delivery of such written demand, or (ii) the willful engaging
by the Executive in conduct which is demonstrably and materially injurious to
the Company 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 the Company.

(D)

"Company" shall mean Iberdrola USA, Inc. and any successor to its business
and/or assets which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

 

(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 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 the
full-time performance of the Executive's duties with the Company and CMP for a
period of at least four months, the Company 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
full-time performance of the Executive's duties.

(G)

"Executive" shall mean the individual named in the first paragraph of this
Agreement.

 

(H)"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 of the following acts by the Company, unless such act is corrected prior to
the Date of Termination specified in the Notice of Termination given in respect
thereof:

 

(a)

the removal from Executive of her title of President of CMP, provided that CMP
may assign that title to another individual, and remove such title from
Executive, during a transition period not to exceed two months; or

 

 

(b)

the assignment to Executive of duties, responsibilities, or authorities
inconsistent with, or failure (other than during a transition period not to
exceed two months) to assign to Executive duties, responsibilities, or
authorities consistent with, her status as a member of the Company's senior
management team; or

 

 

 

 

8

 

--------------------------------------------------------------------------------

 

 

(c)

the Company or CMP requires Executive, without her consent, to move her
principal office to a location more than fifty (50) miles from the location of
her principal office on the date hereof; or 

 

 

(d)

a material breach by the Company or CMP of any of its obligations to Executive
under this Agreement.

 

Provided, however, that Good Reason shall not exist unless the Executive shall
have provided written notice to the Company and CMP identifying in reasonable
detail the conduct alleged to constitute Good Reason and such Good Reason is not
cured within fifteen (15) days of the delivery of such written notice.

(I)"Notice of Termination" shall have the meaning stated in Section 8.1 hereof.

(J)"Term" shall have the meaning stated in Section 3 hereof.

16.Section 409A of the Code. It is the intention of the parties that this
Agreement comply with the requirements of Section 409A of the Internal Revenue
Code of 1986, as amended, and applicable guidance issued thereunder ("Section
409A"), and this Agreement will be interpreted in a manner intended to comply
with Section 409A. All payments under this Agreement are intended to be excluded
from the requirements of Section 409A or be payable on a fixed date or schedule
in accordance with Section 409A(a)(2)(iv). Executive shall be solely responsible
and liable for the satisfaction of all taxes and penalties that may be imposed
on Executive in connection with this Agreement (including any taxes and
penalties under Section 409A), and shall indemnify and hold the Company (or any
beneficiary) harmless from any or all of such taxes or penalties.
Notwithstanding anything in this Agreement to the contrary, in the event that
Executive is deemed to be a "specified employee" within the meaning of Section
409A(a)(2)(B)(i) and is not "disabled" within the meaning of Section
409A(a)(2)(C), no payments hereunder that are "deferred compensation" subject to
Section 409A shall be made to Executive prior to the date that is six (6) months
after the date of Executive's "separation from service" (as defined in Section
409A and any Treasury Regulations promulgated thereunder) or, if earlier,
Executive's date of death. Following any applicable six (6) month delay, all
such delayed payments will be paid in a single lump sum on the earliest
permissible payment date. For purposes of this Agreement, with respect to
payments of any amounts that are considered to be "deferred compensation"
subject to Section 409A, references to "termination of employment" (and
substantially similar phrases) shall be interpreted and applied in a manner that
is consistent with the requirements of Section 409A.

[Remainder of the page intentionally left blank.]

 

 

9

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement. 

 

 

IBERDROLA USA, INC.

 

 

By:

/s/ Robert D. Kump

Name:  

Robert D. Kump

Title:  

Chief Executive Officer

 

 

CENTRAL MAINE POWER COMPANY

 

 

By:

/s/ Robert D. Kump

Name:  

Robert D. Kump

 

 

EXECUTIVE

 

 

By:

/s/ Sara J. Burns

Name:  

Sara J. Burns

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10