EMPLOYMENT AGREEMENT
This AGREEMENT, made this 14th day of January, 1997, by and
between CONSOLIDATED HYDRO, INC. (the "Company"), a Delaware corporation with
its principal office at Stamford Towers, 680 Washington Boulevard, Stamford, CT
06901, and Mary V. Gilbert ("Executive"), an individual residing at 4007 Buckeye
Creek Road, Kingwood, TX 77339.
WHEREAS, the Company and Executive wish to enter into an
employment agreement whereby Executive will be employed by the Company in
accordance with the terms and conditions stated below;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
1. Employment. The Company agrees to employ Executive, and
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Executive agrees to enter the employ of the Company, for the period stated in
Section 3 hereof and upon the other terms and conditions herein provided.
2. Position and Responsibilities. The Company agrees to employ
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Executive in the position of Senior Vice President and Chief Financial Officer
and Executive agrees to serve for the term and on the conditions hereinafter set
forth. Executive agrees to perform such services not inconsistent with her
position as shall from time to time be assigned to her by the President or Chief
Executive Officer of the Company.
3. Term and Duties.
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(a) Term of Employment. This Agreement shall become effective
and the terms of employment pursuant to this Agreement shall commence on January
14, 1997, and will continue through June 30, 1999 unless earlier terminated in
accordance with the provisions hereof; provided, however, that, unless the
Company shall have delivered to Executive written notice of its intent not to
renew this Agreement prior to July 1, in any year, commencing with July 1, 1998,
the term of this Agreement shall be extended by twelve months from the then
effective expiration date.
(b) Duties. During the period of her employment hereunder
Executive shall serve the Company as its Senior
Vice President and Chief Financial Officer, and except for illnesses, vacation
periods, and reasonable leaves of absence, Executive shall devote all her
business time, attention, skill, and efforts to the faithful performance of her
duties hereunder; provided, however, that with the approval of the President of
the Company, from time to time, Executive may serve, or continue to serve, on
the boards of directors of, and hold any other offices or positions in,
companies or organizations, which, in the President of the Company's judgment,
will not present any conflict of interest with the Company or any of its
subsidiaries or affiliates or divisions, or materially affect the performance of
Executive's duties pursuant to this Agreement.
So long as Executive is Senior Vice President and Chief
Financial Officer of the Company, she will discharge all duties incidental to
such office and such further duties as may be reasonably assigned to her from
time to time by the President or Chief Executive Officer of the Company. Subject
to the authority of the Company's Board of Directors, Executive shall be
responsible for, inter alia, the management and direction of the Company's
accounting policies, procedures and control systems, tax compliance and
strategy, auditing requirements, treasury function, internal and external
financial reporting, management information systems design and implementation,
financial management and policy and the financial review of proposed new
business development opportunities for the Company.
4. Compensation and Reimbursement of Expenses.
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(a) Salary. For all services rendered by Executive as Senior
Vice President and Chief Financial Officer during her employment under this
Agreement, the Company shall pay Executive as compensation a salary at the rate
of $150,000 per year. Executive's salary shall be reviewed on June 30, 1997, and
at least annually thereafter during the term of this agreement. Such review
shall be conducted by the Board of Directors of the Company, or a committee
designated by the Board of Directors, and such Board or committee may increase
said salary. (The salary payable to Executive in any fiscal year is referred to
herein as the "Base Salary" for such fiscal year.)
(b) Incentive Compensation. For each fiscal year, commencing
with the fiscal year ending June 30, 1997, the Company shall pay Executive an
incentive bonus of up to
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50% of Executives Base Salary, at the discretion of the Board of Directors, upon
the achievement of certain goals and objectives to be agreed upon from time to
time by Executive and the President of the Company or his designee. Such bonuses
shalt be payable upon completion of the annual audit of the Company for the
applicable year.
(c) Equity Plan. It is the current intention of the Board of
Directors of the Company to adopt an equity plan for the Company's management as
part of the Company's plan of restructuring. It is the Board's current
intention, should such a plan be adopted, that options relating to the Company's
common stock would be granted to the management of the Company upon completion
of such restructuring, and that options would be awarded to the Executive,
should she still be employed hereunder at such time.
(d) Reimbursement of Expenses. The Company shall pay or
reimburse Executive for all reasonable travel and other expenses incurred by
Executive in performing her obligations under this Agreement. The Company
further agrees to furnish Executive with a private office, private secretary,
and such other assistance and accommodations as shall be suitable to the
character of Executive's position with the Company and adequate for the
performance of her duties.
5. Participation in Benefit Plans. The payments provided in
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Sections 4 and 6 hereof are in addition to any benefits Executive is entitled to
under group hospitalization, health, dental care, disability insurance, surety
bond, death benefit plan, travel and/or accident insurance, other allowance
and/or executive compensation plan, including, without limitation, capital
accumulation and termination pay programs, restricted or non-restricted stock
purchase plan, stock option plan, retirement income or pension plan, or other
present or future group employee benefit plan or program of the Company for
which key executives are or shall become eligible, and Executive shall be
eligible to receive during the period of her employment under this Agreement,
and during any subsequent period for which she shall be entitled to receive
payment from the Company under Section 6(a) or Section 7(b) below, all benefits
and emoluments for which key executives are eligible under every such plan or
program to the extent permissible under the general terms and provisions of such
plans or programs and in accordance with the provisions thereof.
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6. Benefits Payable Upon Disability or Death.
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(a) Disability Benefits. In the event of the disability of
Executive, the Company shall, subject to Section 9 hereof, continue to pay
Executive the monetary compensation and provide the other benefits provided in
Section 4 hereof during the period of her disability for the remainder of the
term of this Agreement, except that after the date of Executive's disability (i)
Executive shall not be entitled to payment of any further bonuses under Section
4(b), and (ii) no further options or other awards shall be granted Executive
under Section 4(c) or shall vest, unless the plan or agreement under which such
options or awards are granted provides otherwise. To the extent that disability
insurance is available on Executive, the Company shall be permitted to purchase
and pay for such insurance. Receipt by Executive of such disability benefits
shall reduce by such amount the obligation of the Company set forth in the
preceding sentence.
As used in this Agreement, the term "disability" shall mean
the complete inability of Executive to perform her duties under this Agreement
as determined by an independent physician selected by the Company with the
approval of Executive.
(b) Death Benefits. In the event of the death of Executive
during a period of disability or otherwise during the term of this Agreement,
the Company shall pay, or cause to be paid, to Executive's designated
beneficiary or beneficiaries or legal representatives the payments set forth in
Section 7(b) below.
7. Payments to Executive Upon Termination of Employment.
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(a) Termination. Upon the death of Executive or the occurrence
of an event of termination (as hereinafter defined) during the period of
Executive's employment under this Agreement, the provisions of this Section 7(a)
and Section 7(b) shall apply. As used in this Agreement, an "event of
termination" shall mean and include any one or more of the following:
(i) The termination by the Company of Executive's full-time
employment hereunder for any reason other than pursuant to Section 7(c)
or as a
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result of a material breach by Executive of this
Agreement; or
(ii) Executive's resignation from the Company's employ,
pursuant to:
A. a material change by the Company in Executive's
function, duties or responsibilities, which change would cause
Executive's position with the Company to become one of less
dignity, responsibility, importance or scope from the position
and attributes as described in Section 2 above, and any such
material change shall be deemed a continuing breach of this
Agreement;
B. any liquidation, dissolution, consolidation or
merger of the Company which results in a change of control of
the Company or transfer of all or substantially all of its
assets;
C. failure to elect, re-elect or to appoint
Executive to the office of Senior Vice President
and Chief Financial Officer';
D. other material breach of this Agreement
by the Company.
Upon the occurrence of any event described in clauses (A),
(B), (C) or (D) above, Executive shall have the right to elect to
terminate her employment under this Agreement by resignation, upon not
less than thirty (30) days' prior written notice given within a
reasonable period of time not to exceed, except in case of a continuing
breach, three (3) calendar months after the event giving rise to said
right to elect.
(b) Continuation of Salary. Upon the death of Executive or the
occurrence of an event of termination under Section 7(a), the Company shall,
subject to the provisions of Section 9 below, monthly for the duration of the
Severance Period, as defined below, pay Executive, or in the event of subsequent
death, her beneficiary or beneficiaries or her estate, as the case may be, as
severance pay or liquidated damages, or both, the monthly Base Salary paid to
Executive at the time of termination of her employment (the "Severance
Payments"); shall continue to provide the other benefits provided in Sections 5
and 6 hereof for a period of
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twelve months from the date of the event of termination; and shall continue to
provide the benefits provided for in Section 4(d) for a period of six months
from the date of such event of termination. For purposes of this Agreement, the
"Severance Period" shall commence on the date of termination of Executive's
employment with the Company and expire on the earlier of (i) the date Executive
obtains subsequent employment, and (ii) the later of (A) the second anniversary
of the date of termination of Executive's employment with the Company and (B)
the expiration of the term of this Agreement. Absent an election as described in
the next sentence, the Severance Payments shall commence on the last day of the
month in which the event of termination occurs; provided, that the first such
payment shall be reduced by the amount of any Base Salary received by Executive
for the portion of such month prior to the event of termination. If within 30
days of the event of termination Executive (or, in the case of her death or
incapacity, her beneficiary or legal representative) so elects by written notice
to the Company, the Severance Payments shall be paid by the Company, in lieu of
the monthly payments described above, in a single lump sum as soon as
practicable after the date of such election. Such lump sum payment shall be in
an amount equal to the sum of the monthly Severance Payments that would have
been paid under this Section but for such election (assuming Executive never
obtains subsequent employment), discounted to present value using an interest
rate of 5%, and reduced by the amount of any Severance Payments received by
Executive prior to the date of such lump sum payment.
(c) Other Termination of Employment. Notwithstanding Sections
7(a) and (b) or any other provision of this Agreement to the contrary, if on or
after the date of this Agreement and prior to the end of the term hereof:
(i) Executive has been convicted of any crime or
offense constituting a felony under applicable law, including,
without limitation, any act of dishonesty such as
embezzlement, theft or larceny;
(ii) Executive shall act or refrain from acting in
respect of any of the duties and responsibilities which have
been assigned to her in accordance with this Agreement and the
Board of Directors of the Company determines that such action
or inaction constituted gross negligence or
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a willful act of malfeasance or misfeasance of
Executive in respect of such duties;
(iii) Executive shall breach any material term of
this Agreement and shall fail to correct such breach within
ten days (or such longer period of time, not exceeding 90
days, as Executive shall in good faith and the exercise of
reasonable efforts require to cure such breach) after
Executive's receipt of notice from the Company of such breach;
or
(iv) any willful or continuous neglect of or refusal
to perform Executive's duties or responsibilities or the
willful taking of actions which directly and materially impair
Executive's ability to perform her duties and responsibilities
hereunder which continues after detailed written notice
thereof has been given to Executive;
then, and in each such case, the Company shall have the right to give notice of
termination of Executive's services hereunder as of a date (not earlier than 10
days from such notice) to be specified in such notice and this Agreement (other
than the provisions of Sections 8 and 9 hereof) shall terminate on such date. In
the case of any such termination, Executive shall be entitled to Base Salary
accrued through the date of termination, and to no further compensation or
benefits hereunder.
8. Duties Upon Termination. Executive agrees that she will,
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upon termination of her employment with the Company for any reason whatsoever,
deliver to the Company any and all records, forms, contracts, memoranda, work
papers, lists of names or other customer data and any other articles or papers
which have come into her possession by reason of her employment with the Company
or which she holds for the Company, irrespective of whether or not any of said
items were prepared by him, and she shall not retain memoranda or copies of any
of said items.
9. Post-Termination Obligations. All payments and benefits to
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Executive under this Agreement shall be subject to Executive's compliance with
the following provisions during the Compliance Period, as defined in Section
9(b) below.
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(a) Confidential Information and Competitive Conduct.
Executive shall not, to the detriment of the Company, disclose or
reveal to any unauthorized person any trade secret or other
confidential information relating to the Company, its subsidiaries or
affiliates, or to any businesses operated by them, including, without
limitation, any customer lists; and Executive confirms that such
information constitutes the exclusive property of the Company.
Executive shall not otherwise act or conduct herself to the material
detriment of the Company, its subsidiaries or affiliates, or in a
manner which is inimical or contrary to the interests thereof, and
shall not, directly or indirectly, engage in, enter the employ of or
render any service to any person, firm or business within the United
States or Canada in competition with any part of the business being
conducted by the Company; provided, however, that Executive's ownership
of less than 5 percent of the outstanding stock of a corporation (other
than a corporation engaged primarily in a business that directly
competes with the Company) shall not by itself be deemed to constitute
such competition. Executive recognizes that the possible restrictions
on her activities which may occur as a result of her performance of her
obligations under this Section 9(a) are required for the reasonable
protection of the Company and its investments.
(b) Compliance Period. For purposes of this Agreement, the
"Compliance Period" shall commence on the effective date of this
Agreement under Section 3(a). If an event of termination under Section
7(a) hereof occurs prior to the expiration of the term of this
Agreement, the Compliance Period shall end: (i) if Executive elects to
receive Severance Payments in lump sum form under Section 7(b), on the
second anniversary of the termination of Executive's employment; and
(ii) otherwise, on the later of (A) the expiration of six months from
the date of termination of Executive's employment and (B) the end of
the period for which Executive is entitled to receive Severance
Payments. If Executive's employment by the Company is terminated in
accordance with Section 7(c) hereof prior to the expiration of the term
of this Agreement, the Compliance Period shall end on the later of the
expiration of the term of this Agreement and the first anniversary of
the termination of Executive's employment. In all cases other than
those described in
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the two preceding sentences, the Compliance Period
shall end on the expiration of the term of this
Agreement.
(c) Failure of Executive to Comply. If for any reason other
than death or disability, Executive shall, without written consent of
the Company, fail to comply with the provisions of Section 9(a) above,
her rights to any future payments or other benefits hereunder shall
terminate, and the Company's obligations to make such payments and
provide such benefits shall cease; provided, however, that no failure
to comply with any provision of Section 9(a) above shall be deemed to
have occurred unless and until Executive receives written notice from
the Company, specifying the conduct alleged to constitute such failure,
and Executive has thereafter continued to engage in such conduct after
a reasonable opportunity and a reasonable period to refrain from such
conduct. In no event shall Executive be under any obligation to repay
the Company any amounts theretofore paid her hereunder.
(d) Remedies. Executive agrees that monetary damages would not
be adequate compensation for any loss incurred by the Company by reason
of a breach of the provisions of Sections 8 and 9 of this Agreement and
hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
10. Effect of Prior Agreements. This Agreement contains the
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entire understanding between the parties hereto and, upon effectiveness of this
Agreement pursuant to Section 3(a) hereof, supersedes all prior employment
agreements between the Company and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to Executive
of a kind elsewhere provided and not expressly provided in this Agreement.
11. General Provisions.
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(a) Binding Agreement. This Agreement shall be binding upon,
and inure to the benefit of Executive and the Company and their respective
permitted successors and assigns.
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(b) Legal Expenses. In the event that Executive incurs legal
expenses in contesting any provision of this Agreement and such contest results
in a determination that the Company has breached any of its obligations
hereunder, Executive shall be reimbursed by the Company for such legal expenses.
12. Successors and Assigns.
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(a) Assignment by the Company. This Agreement shall be binding
upon and inure to the benefit of the successor and assigns of the Company and,
unless clearly inapplicable, reference herein to the Company shall be deemed to
include its successors and assigns.
(b) Assignment by Executive. Executive may not assign this
Agreement in whole or in part.
13. Modification and Waiver.
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(a) Amendment of Agreement. Except for increases in
compensation made as provided in Section 4(a), this Agreement may not be changed
or modified except by an instrument in writing signed by both of the parties
hereto.
(b) Waiver. No term or condition of this Agreement shall be
deemed to have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement, except by written instrument of
the party charged with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver unless specifically stated therein, and each such
waiver shall operate only as to the specific term or condition waived and shall
not constitute a waiver of such term or condition for the future or as to any
act other than that specifically waived.
14. Beneficiaries. This Agreement shall be for the express
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benefit of the Company, Executive and for so long as The Morgan Stanley
Leveraged Equity Fund II, L.P. or its successor ("MSLEFII") or Madison Group,
L.P. ("MGLP") shall be a holder of equity of the Company, MSLEFII or MGLP, as
the case may be.
15. Severability. In the event any provision of this Agreement
------------
or any part hereof is held invalid, such invalidity shall not affect any
remaining part of such provision or any other provision, and to this end, the
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provisions of this Agreement are intended to be and shall be deemed severable.
If any court construes any provision of this Agreement to be illegal, void or
unenforceable because of the duration or the area or matter covered thereby,
such court shall reduce the duration, area or matter of such provision, and, in
its reduced form, such provision shall then be enforceable and shall be
enforced.
16. Withholding. Employer may withhold from any amounts
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payable under this Agreement such taxes and governmentally required withholdings
as may be required to be withheld pursuant to any applicable law or regulation.
17. Governing Law. The parties hereto intend
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that this Agreement shall be governed by the laws of the
State of Connecticut.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer, and Executive has signed this
Agreement, all as of the day and year first above written.
CONSOLIDATED HYDRO, INC.
By: /s/ James T. Stewart
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James T. Stewart
Its: Chief Executive Officer
/s/ Mary V. Gilbert
--------------------------------
Mary V. Gilbert
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