EXHIBIT 10.114
EMPLOYMENT AGREEMENT
This AGREEMENT, made this 31st day of October, 1997, by and
between CONSOLIDATED HYDRO, INC. (the "Company"), which will be renamed CHI
ENERGY, INC., a Delaware corporation with its principal office at 680 Washington
Boulevard, Stamford, CT 06901, and MICHAEL I. STORCH ("Executive"), an
individual residing at 169 Mill Brook Road, Stamford, CT 06902.
WHEREAS, the Company and Executive have entered into an
employment agreement, dated January 1, 1997 (the "Prior Agreement"); and
WHEREAS, in connection with the plan of reorganization of the
Company, the Company and Executive wish to enter into a revised 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 Executive Vice President and Executive agrees to
serve for the term and on the conditions hereinafter set forth. Executive agrees
to perform such services not inconsistent with his position as shall from time
to time be assigned to him by the President or Chief Executive Officer of the
Company, the Company's Board of Directors, or by their respective designees.
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 the
effective date of the plan of reorganization with respect to the Company under
Chapter 11 of the United States Bankruptcy Code (the "Effective Date"), and will
continue through December 31, 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 January 1, in any year, commencing with January 1, 1999, the term of
this Agreement shall be
automatically extended by twelve (12) months from the then effective expiration
date.
(b) Duties. During the period of his employment hereunder
Executive shall serve the Company as an Executive Vice President, and except for
illnesses, vacation periods and reasonable leaves of absence, Executive shall
devote all his business time, attention, skill and efforts to the faithful
performance of his duties hereunder; provided, however, that with the approval
of the Board of Directors 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 Board'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 an Executive Vice President of the
Company, he will discharge all duties incidental to such office and such further
duties as may be reasonably assigned to him from time to time by the President
or Chief Executive Officer of the Company, the Company's Board of Directors, or
by their respective designees.
(c) Primary Place of Employment. Executive shall perform his
duties hereunder at the Company's Fairfield County, Connecticut office, and
shall travel to the Company's other offices as may be necessary or appropriate
to perform his duties hereunder.
4. Compensation and Reimbursement of Expenses.
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(a) Salary. For all services rendered by Executive as
Executive Vice President during his employment under this Agreement, the Company
shall pay Executive as compensation a salary at the annual rates of $249,900 in
1997, and $250,000 per calendar year thereafter. During the period of this
Agreement following 1998, Executive's salary shall be reviewed at least
annually, with the first such annual review in December, 1998. Such review shall
be conducted by the Board of Directors of the Company, or a committee designated
by the Board of Directors (the "Compensation Committee"), and the Board or
Compensation Committee may increase said salary. (The salary payable to
Executive in any year is referred to herein as the "Base Salary" for such year.)
(b) Incentive Compensation. For each year during the term of
this Agreement following 1997, the Company shall pay Executive an incentive
bonus of up to 100% of Executive's Base Salary, at the discretion of the
Compensation Committee, upon the achievement of certain targets (which for 1998
shall be set by
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the Compensation Committee by December 31, 1997, and for each year following
1998, shall be set by February 15 of such year). Executive's maximum bonus
opportunity of 100% of Base Salary shall be calculated as follows: (i) 33.33%
for meeting budget targets in the Industrial Infrastructure Business ("IIB"),
(ii) 33.33% for exceeding budget targets in the IIB and (iii) 33.33% for meeting
general operating targets set by the Compensation Committee. Bonuses shall be
payable upon completion of the annual audit of the Company for the applicable
year. In its discretion, the Compensation Committee may pay Executive by
December 31, 1997 an "emergence bonus" of up to 25% of Executive's Base Salary
for 1997.
(c) Equity Plan. The Company shall grant to Executive on the
Effective Date a non-qualified stock option to purchase 35,000 shares of the
Company s Series A Common Stock (the "Common Stock") and an incentive stock
option to purchase 20,000 shares of Common Stock, each at an exercise price
equal to $10.00 per share, pursuant to the terms and conditions of the stock
option agreements attached hereto as Exhibits A and B.
(d) Reimbursement of Expenses. The Company shall pay or
reimburse Executive for all reasonable travel and other expenses incurred by
Executive in performing his obligations under this Agreement. The Company
further agrees to furnish Executive with a private office, 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 his
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 any group hospitalization, health, dental care, disability insurance,
surety bond, death benefit plan, travel and/or accident insurance, any other
allowance and/or executive compensation plan, including, without limitation,
capital accumulation and termination pay program, 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 his employment under this Agreement,
all benefits and emoluments for which key executives are eligible under every
such plan or program in accordance with the provisions thereof. Notwithstanding
the foregoing, except as specifically provided in Section 4 or 6 hereof (or as
provided by the Company as of the Effective Date) Executive shall not be
entitled to receive any additional benefits or awards under discretionary plans
or programs of the Company unless the Board of Directors of the Company (or the
Compensation Committee)
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exercises the necessary discretion to provide Executive with such
benefits or awards.
6. Benefits Payable Upon Disability or Death.
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(a) Disability Benefits. In the event of the disability of
Executive during the term of this Agreement, the Company shall, prior to
Executive's termination of employment and subject to Section 9 hereof, continue
to pay Executive his Base Salary and the other benefits provided in Sections 4
and 6 hereof during the period of his disability; provided, however, that
Executive's disability shall be taken into account by the Compensation Committee
in determining Executive's incentive compensation under Section 4 hereof. In the
event of Executive's termination of employment for "permanent disability", the
Company shall pay Executive his Base Salary and continue to provide the health
and welfare insurance benefits provided to Executive under Section 5 hereof as
of immediately prior to his date of termination (provided Executive continues to
make all required employee contributions) through the remainder of the term of
this Agreement (pursuant to the Company's benefit plans or otherwise), but (i)
Executive shall not be entitled to payment of any further bonuses under Section
4(b), (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, and (iii) Executive shall be
treated as a terminated employee with respect to the Company's other benefit
plans. 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 to continue Executive's Base Salary under this Section 6(a).
The Company may terminate Executive's employment for
"permanent disability" in the event Executive is unable to perform his duties
under this Agreement as a result of physical or mental illness or injury for an
aggregate of six (6) or more months during any twelve-month period.
(b) Death Benefits. In the event of the death of Executive
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
a death benefit of $500,000. Such death benefit shall be payable in cash in one
lump sum. The Company will purchase one or more term or other similar insurance
policies in amounts to provide for its obligation. To the extent that the life
of Executive is otherwise insured under any employee benefit plan of the Company
(other than any travel/accident or double indemnity coverage) the obligation of
the Company under this paragraph shall be reduced
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by such insurance benefits. If the Company has not previously insured the life
of Executive to the extent of the death benefit described above, this Section
6(b) will only become effective fifteen (15) days after a determination has been
made that Executive's life is insurable.
7. Payments to Executive Upon Termination of Employment. Upon
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termination of Executive's employment during the term of this Agreement,
Executive (or in the event of his death, his beneficiary, beneficiaries or legal
representatives) shall be entitled to no further compensation hereunder other
than (i) Executive's Base Salary through the date of termination, (ii) any
benefits accrued and vested under the terms of the Company's employee benefit
plans and programs and (iii) any other payments or benefits specifically
provided by this Agreement.
(a) Termination. Upon the occurrence of an event of
termination (as hereinafter defined) during the term of 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 result of permanent disability or mandatory
retirement; or
(ii) Executive's resignation from the Company's employ,
as a result of any of the following:
A. a material and adverse change by the Company
in Executive's function, duties or responsibilities, without
Executive's written consent, 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;
B. any liquidation or dissolution of the
Company, unless the voting common equity interests of an
ongoing entity (other than a liquidating trust) are
beneficially owned, directly or indirectly, by the Company's
stockholders in substantially the same proportions as such
stockholders owned the Company's outstanding voting common
equity interests immediately prior to such liquidation or
dissolution, and such ongoing entity assumes all existing
obligations of the Company to Executive under this Agreement;
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C. a failure to elect, re-elect or appoint
Executive to the office of Executive Vice President
(other than as a result of Executive's disability or
his termination of employment pursuant to Section
7(c));
D. any other material breach of this Agreement
by the Company (other than a breach of Section 3(c));
or
E. prior to December 31, 1999, Executive being
required to relocate from Fairfield County, Connecticut,
without Executive's written consent.
(Upon the occurrence of any event described in clauses A., B., C., D. or E.
above, Executive shall have the right to elect to terminate his 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 three (3)
calendar months after the event giving rise to said right to elect); or
(iii) Executive's resignation from the Company's employ
during the 30-day period commencing upon the first anniversary of a
Change in Control of the Company, if such Change in Control occurs
subsequent to a Public Offering (or during the 30-day period commencing
upon the sixth month anniversary of a Change in Control of the Company,
if such Change in Control occurs prior to a Public Offering). For
purposes of this Agreement, a Change in Control of the Company means
the occurrence of one of the following events:
A. any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) becomes, after the
Effective Date, the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing more than 50% of the
Company's then outstanding securities eligible to vote for the
election of the Company's Board of Directors (the "Company
Voting Securities"); provided, that an event described in this
paragraph A. shall not be a Change in Control if any of the
following becomes such a beneficial owner: (1) the Company or
any majority-owned subsidiary of the Company (a "Subsidiary"),
(2) any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, (3) any
underwriter temporarily holding securities pursuant to an
offering of such securities, (4) any person pursuant to a
Non-Qualifying Transaction (as defined in
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paragraph B.), (5) Executive or any group of persons including
Executive (or any entity controlled by Executive or any group
of persons including Executive), or (6) Morgan Stanley & Co.
or Swiss Bank Corporation or any entity controlled by,
controlling or under common control with either of such
entities; or
B. the consummation of a merger, consolidation or
reorganization of the Company (a "Business Combination"),
unless, following such Business Combination, the owners of the
Company Voting Securities immediately prior to such Business
Combination (or their affiliates) beneficially own, directly
or indirectly, 50% or more of the combined voting power of the
then outstanding voting securities entitled to vote generally
in the election of the directors of the corporation resulting
from such Business Combination (a "Non-Qualifying
Transaction").
The initial public offering of common stock of the Company pursuant to a
registration statement filed under the Securities Act of 1933, as amended (a
"Public Offering"), shall not be treated as a Change in Control for purposes of
this Agreement.
The expiration of the term of this Agreement as a result of the failure to renew
this Agreement shall not be treated as an event of termination under this
Section 7(a).
(b) Severance Upon an Event of Termination. Upon 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
Executive's subsequent death, his beneficiary or beneficiaries or his estate, as
the case may be, as severance pay and liquidated damages the monthly Base Salary
paid to Executive at the time of termination of his employment (the "Severance
Payments"). In addition, following an event of termination under Section 7(a),
the Company shall continue to provide the health and welfare insurance benefits
provided to Executive under Section 5 hereof as of immediately prior to his date
of termination for a period of twelve (12) months following the date of
termination (provided Executive continues to make all required employee
contributions). For purposes of this Agreement, the "Severance Period" shall
commence on the date of termination of Executive's employment with the Company
and expire upon the earlier of (i) eighteen (18) months from the date of
termination and (ii) six (6) months following the date on which the term of this
Agreement (as in effect as of Executive's date of termination) would have
otherwise expired; provided, that in no event shall the Severance Period be
longer than twelve (12) months in the event of a termination of
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employment pursuant to Section 7(a)(ii)E. hereof. 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. Notwithstanding the foregoing, the Company's obligation to provide
severance benefits hereunder shall be reduced by the present value of any cash
compensation paid to (or deferred by) Executive with respect to employment or
consulting services performed by Executive during the Severance Period. In the
event Executive receives twelve (12) months of continued welfare benefit
insurance as described above, and the Company's level of self-insurance for
medical benefits (with respect to individual claims in any given year) as of
Executive's date of termination is not more than 10% greater than it is as of
the Effective Date, Executive's coverage period for "COBRA" continuation health
coverage (to the extent Executive is otherwise eligible for coverage) shall
begin upon the expiration of such 12-month period.
(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, or plead guilty or
nolo contendere to, 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's commission of a material act of fraud
or dishonesty against the Company or any of its subsidiaries or
Executive's willful engaging in conduct which is significantly
injurious to the Company or any of its subsidiaries, monetarily or
otherwise;
(iii) Executive's abuse of illegal drugs and other
controlled substances or Executive's habitual intoxication, which
conduct continues after written demand for cessation of such conduct is
delivered to Executive by the Board; 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 his 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
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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.
8. Duties Upon Termination. Executive agrees that he will,
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upon termination of his 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 his possession by reason of his employment with the Company
or which he holds for the Company, irrespective of whether or not any of said
items were prepared by him, and he shall not retain memoranda or copies of any
of said items. Executive shall assign to the Company all rights to trade secrets
and the products relating to the Company's business developed by him alone or in
conjunction with others at any time alike employed by the Company.
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 below.
(a) Confidential Information. Executive shall not disclose or
reveal to any unauthorized person any trade secret or other
confidential information relating to the Company, its subsidiaries or
its 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. For
purposes of this Section 9(a), the "Compliance Period" shall commence
on the Effective Date and continue thereafter.
(b) Competitive Conduct. Executive shall not otherwise act or
conduct himself 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 engage, directly or
indirectly, alone, in association with or as a shareholder, principal,
agent, partner, member, officer, director, employee or consultant of
any person, firm or entity, in any business within the United States or
Canada in competition with any part of the business being conducted by
the Company or its subsidiaries; provided, however, that Executive's
ownership of less than 2 percent of the outstanding stock of a publicly
traded corporation (other than a corporation engaged primarily in the
business of developing or operating hydroelectric projects) shall not
by itself be deemed to constitute such competition. Executive shall not
(i) divert
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to any entity which is engaged in any business conducted by the Company
or any of its subsidiaries, any customer of such entities or any
project which such entities are pursuing, developing or attempting to
develop as of Executive's date of termination or (ii) solicit any
officer, employee (other than secretarial staff) or consultant of the
Company or any of its subsidiaries to leave the employ of such
entities. Executive recognizes that the possible restrictions on his
activities which may occur as a result of his performance of his
obligations under this Section 9(b) are required for the reasonable
protection of the Company and its investments.
(c) Compliance Period. For purposes of Section 9(b) of this
Agreement, the "Compliance Period" shall commence on the Effective
Date. 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 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 terminates in accordance with
Section 7(c) hereof or if Executive voluntarily terminates employment
(other than pursuant to Section 7(a)(ii)) 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 second
anniversary of the termination of Executive's employment. In all cases
other than those described in the two preceding sentences, the
Compliance Period shall end on the expiration of the term of this
Agreement.
(d) 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) or 9(b)
above, his 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) or 9(b) 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.
(e) 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. Accordingly, in
addition to any other remedies that the Company may have at law or in
equity, Company shall have the right to have all
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obligations, agreements and other provisions of Sections 8 and 9
specifically performed by Executive, and the Company shall have the
right to obtain preliminary injunctive relief to secure specific
performance and to prevent a breach of Section 8 or 9.
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 (including without limitation the
Prior Agreement), 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 (other than benefits set
forth in the Prior Agreement or in Executive's guaranteed minimum bonus
arrangement which Executive acknowledges has been terminated).
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.
(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 any such legal
expenses reasonably incurred.
(c) Mitigation. Executive shall not be obligated to seek other
employment or take any other action to mitigate any severance benefits
hereunder.
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 successors 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
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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 Morgan Stanley & Co. or
Swiss Bank Corporation or their successors shall be a holder of at least 3% of
the equity of the Company, Morgan Stanley & Co. or Swiss Bank Corporation (or
their successors), as the case may be.
15. Severability. In the event any provision of this Agreement
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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
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. Notices. Any notice to be given hereunder shall be in
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writing and shall be deemed given when delivered personally, sent by courier or
telecopy or registered or certified mail, postage prepaid, return receipt
requested, addressed to the party concerned at the address indicated below or to
such other address as such party may subsequently give notice of hereunder in
writing:
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To Executive at:
169 Mill Brook Road
Stamford, CT 06902
To the Company at:
680 Washington Boulevard
Stamford, CT 06901
Attention: Controller
18. Governing Law. The parties hereto intend that
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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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Title: CHAIRMAN-CEO
/s/ Michael I. Storch
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Michael I. Storch
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