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Exhibit 10.10
Richard L. Mercier
EMPLOYMENT AND CONSULTING AGREEMENT
AGREEMENT by and between Connecticut Water Company, a Connecticut corporation
with its principal office and place of business in Clinton, Connecticut (the
"Company"), Connecticut Water Service, Inc., a Connecticut corporation and
holder of all of the outstanding capital stock of Company (the "Parent") and
Richard L. Mercier, a resident of Plainfield, CT (the "Employee"), dated April
15, 1999.
WHEREAS, the Company and the Parent have determined that it is in the best
interests of the Company and the Parent to employ the Employee as President of
Gallup Water Service, Incorporated and the Employee desires to serve in that
capacity.
WHEREAS, the Company and the Parent have determined that it is in the best
interests of the Company and the Parent to engage Richard L. Mercier as a
Consultant after the employment period and Mercier desires to serve in that
capacity.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. a) Employment Period. The Company shall employ the Employee, and the
Employee shall serve the Company, on the trams and conditions set forth
in this Agreement, for the period commencing on or before [date of
closing] and ending on the fourth anniversary of such commencement date
(the "Employment Period").
b) Consulting Period. After the Employment Period the Parent shall
engage the Employee as a Consultant and not as an Employee. Said
Consulting period shall continue until Richard L. Mercier obtains the
age of 70. The employee must complete the employment period described
in Section (1)(a) to be engaged as a Consultant.
2.) Position and Duties.
a) During the Employment Period, the Employee shall have the title of
President of Gallup Water Service, Incorporated and shall report
directly to the CEO of the Company. The Employee's authority, duties
and responsibilities shall be those which are described in "Schedule A"
attached hereto.
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b) During the Consulting Period, Richard L. Mercier shall have the
title of Consultant and shall report directly to the CEO of the Parent.
The Consultant's authority, duties and responsibilities shall be those
which are described in "Schedule B" attached hereto.
c) During the Consulting Period, Richard L. Mercier shall be
responsible for the payment of his own social security taxes, federal
and state income taxes, pension payments if any, and any similar items.
Richard L. Mercier shall not be entitled to workers compensation
benefits and shall not be entitled to unemployment compensation
benefits.
If the nature of the responsibilities required during the employment or
consulting period change from those duties outlined in Attachments A and B, the
Company shall make an immediate payment of the amounts due to Richard L. Mercier
under the terms of this agreement.
3.) Compensation.
a.) Base Salary. During the Employment Period, the Employee shall
receive an annual base salary ("Annual Base Salary") equal to $72,825,
to be earned and paid at a biweekly rate of $2,800.96. During any
period after the end of the Employment Period when the Employee is
employed by the Company, the Annual Base Salary shall be as agreed upon
by the Employee and the Company.
During the Consulting Period, Richard L. Mercier shall receive annual
fees equal to $18,000.00 to be paid on a quarterly basis of $4,500.00
per quarter.
b.) Other Benefits. During the Employment Period and any subsequent
period when the Employee is employed by the Company or any of its other
Affiliated Companies: (i) the Employee shall be entitled to participate
in all qualified deferred compensation, savings and retirement plans,
practices, policies and programs of the Company in accordance with the
plans, practices, programs and policies of The Connecticut Water
Company ("CWC") set forth, from time to time, in such plans or any CWC
employee manual; and (ii) the Employee and/or the Employee's family, as
the case may be, shall be eligible for participation in, and shall
receive all benefits under, all welfare benefit plans, practices,
policies and programs provided by the Company (including, without
limitation, medical, prescription, dental, disability, salary
continuance, employee life insurance, group
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life insurance, and accidental death and travel accident insurance
plans and programs) in accordance with the plans, practices, programs
and policies of CWC set forth, from time to time, in such plans or any
CWC employee manual. Richard L. Mercier will also have use of a company
vehicle during his employment and may purchase that vehicle, at its
then book value, at the time he ceases to be an employee. If the
Employee terminates employment with the Company or any of its other
Affiliated Companies at or after having attained age 70, the Employee
shall also be entitled to receive from the Company an annual
supplemental executive retirement benefit having a value equal to the
excess, if any, of (i) or (ii), where:
(i) it an annual benefit of $18,000.00 payable to the Employee
as a life annuity as of the date of the Employee's retirement,
and
(ii) is the annual benefit, if any, payable to the Employee
under The Connecticut Water Company's qualified deferred
benefit retirement plan and any non-qualified retirement plan
covering the Employee, as a life annuity as of the date of the
Employee's retirement, calculated in accordance with the terms
of such plans.
Such supplemental executive retirement benefit shall cease as of the
date of the Employee's death and shall be an unfunded obligation of the
Company.
For the purpose of determining the eligibility of the Employee to
participate in such retiree medical and dental and retiree life
insurance benefit plans as the Company may maintain for the benefit of
employees of the Company, the Employee shall receive credit for six (6)
years of service, provided he has completed the Employment period as
defined in Section (1)(a), and shall participate in any such plans in
accordance with the terms and conditions thereof.
c.) Expenses. During the Employment and Consulting Periods and any
subsequent period when the Employee/Consultant is employed by the
Company, the Employee/Consultant shall be entitled to receive prompt
reimbursement for all reasonable authorized travel and other authorized
expenses incurred by the Employee/Consultant in carrying out the
Employee's/Consultant's duties under this Agreement in accordance with
the policies and procedures established by the Company.
d.) Fringe Benefits. During the Employment Period and any subsequent
period when the Employee is employed by the Company, the Employee shall
be entitled to Fringe benefits including sick time and holidays in
accordance with the plans, practices, programs and policies of CWC set
forth, from time to time, in such plans or any CWC employee manual.
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e.) Vacation. During the Employment Period and any subsequent period
when the Employee is employed by the Company, the Employee shall be
entitled to two weeks' paid vacation annually in accordance with the
plans, policies, programs and practices of CWC as set forth, from time
to time, in such plans or any CWC employee manual.
4.) Termination of Employment.
a.) Death or Disability. The Employee's employment shall terminate
automatically upon the Employee's death. The Company shall be entitled
to terminate the Employee because of the Employee's Disability during
the Employment Period. "Disability" means that the Employee has been
unable, with or without accommodation, for a period of 180 consecutive
business days, to perform the Employees' duties under this Agreement,
as a result of physical or mental illness or injury. A termination of
the Employee's employment by the Company for Disability shall be
communicated to the Employee by written notice, and shall be effective
on the 30th day after receipt of such notice by the Employee (the
"Disability Effective Date"), unless the Employee returns to full-time
performance of the Employee's duties before the Disability Effective
Date. In the event that the Company terminates the Employee due to
Disability, the Employee shall be considered to have completed the
Employment Period as defined in Section (1)(a) and shall receive
disability benefits as provided in paragraph 6 hereof. The Employee
shall have no disability benefits other than those set forth in
paragraph 6 hereof.
b.) By the Company. The Company may terminate the Employee's employment
for Cause. "Cause" means: the Employee's commission of a felony under
the laws of the United States or any state thereof (in connection with
his employment) as determined by a Court of Competent Jurisdiction.
c.) A termination of the Employee's employment by the Employee shall be
effected by giving the Company written notice of the termination.
d.) Date of Termination. The "Date of Termination" means the date of
the Employee's death, the date on which the termination of the
Employee's employment by the Company for Cause is effective, or the
date that is 60 days after the date on which the Employee gives the
Company notice of a termination of employment, as the case may be.
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5. Termination of Consulting.
a) The Consulting services of Richard L. Mercier shall be initiated
upon completion of the employment period described in Section (1)(a)
and shall terminate only upon his death or upon his attaining the age
of 70 and not upon his disability. Richard L. Mercier's retirement
benefits in existence since age 55 shall continue until Richard L.
Mercier's death.
6. Obligations of the Company upon Termination.
a.) Cause; Other than Death. If the Employee's employment is terminated
by the Company other than for cause or death during the Employment
Period, or if the employee becomes disabled during the Employment
Period, the Company shall pay the amounts described in subparagraph (i)
below to the Employee in a lump sum in cash within 30 days after the
Date of Termination OR AT THE EMPLOYEE'S OPTION IN A MANNER DESCRIBED
IN PARAGRAPH 3(a), REDUCED BY ANY PAYMENT TO EMPLOYEE DUE TO DISABILITY
COVERAGE PROVIDED IN 3 (b), THROUGH THE REMAINDER OF THE INITIAL
EMPLOYMENT PERIOD. The payments provided pursuant to this subparagraph
(a) of Paragraph 5 are intended as either or both severance pay or
liquidated damages for a termination of the Employee's employment by
the Company other than for Cause or death and shall be the sole and
exclusive remedy therefor.
1) The amounts to be paid in a lump sum as described above are:
A. The Employee's accrued but unpaid cash compensation (the
"Accrued Obligations"), which shall equal the sum of (1) any
portion of the Employee's Annual Base Salary through the Date
of Termination that has not yet been paid; (2) any
compensation previously deferred by the Employee (together
with any accrued interest or earnings thereon) that has not
yet been paid; and (3) any accrued but unpaid vacation pay.
B. Severance pay ill an amount equal to the Employee's annual
Base Salary for the period, if any, from the Date of
Termination to the end of the initial four year Employment
Period set forth in Section 1 hereof.
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C. The aggregate Company matching contributions and Company
profit sharing contributions, if any, that would have been
made by the Company under the Savings Plan of the Company or
any successor program of the Company in effect on the date on
which termination shall have occurred, if the Employee had
continued to be employed, and to participate on a fully vested
basis in the Savings Plan or such successor program to the
same extent as the Employee participated for the last month
during which the Employee was permitted to participate, for
the period, if any, from the Date of Termination to the end of
the initial four year Employment Period set forth in Section 1
hereof at an annual rate of compensation equal to the
Employee's Annual Base Salary. The discounted present value of
such contributions shall be payable to the Employee in a lump
sum, as calculated by the independent actuary for the
Employees' Pension Plan using the assumptions specified in the
Employees' Pension Plan.
(2) For the period, if any, from the Date of Termination to the
end of the initial four year Employment Period set forth in
Section 1 hereof, the Employee shall continue to be entitled
to participate in such employee welfare benefit plans, within
the meaning of Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended, maintained by the Company in
which the Employee shall be a participant on the Date of
Termination, subject to the terms and conditions of such
employee welfare benefit plans as may be in effect from time
to time during such period under this Agreement, with benefits
based upon compensation equal to the Employee's Annual Base
Salary. The extent that such benefits shall not be payable or
provided under any such employee welfare benefit plan, the
Company shall pay or provide such benefits on an individual
basis. The medical, dental, health and other employee welfare
benefits provided for hereunder shall be secondary to any
comparable benefits provided by another employer.
b.) By Reason of Death. If the Employee's employment or the
Consultant's services are terminated by reason of death at any
time, this Agreement shall terminate without further
obligations to Mr. Mercier's legal representatives under this
Agreement, other than for payment of the Accrued Obligations
and life insurance as provided in Section (3)(b) as may be
applicable.
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7.) Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Employee's future participation in any plan, program, policy
or practice provided by the Company or any of the other Affiliated
Companies for which the Employee may qualify, nor shall anything in
this Agreement limit or otherwise affect such rights as the Employee
may have under any contract or agreement with the Company or any of the
other Affiliated Companies. Vested benefits and other amounts that the
Employee is otherwise entitled to receive under any plan, policy,
practice or program of, or any contract or agreement with, the Company
or any of the other Affiliated Companies on or after the Date of
Termination shall be payable in accordance with such plan, policy,
practice, program, contract or agreement, as the case may be, except as
otherwise explicitly modified by this Agreement.
8.) Full Settlement. In no event shall the Employee be obligated to seek
other employment or take any other action by way of mitigation of the
amounts payable to the Employee under any of the provisions of this
Agreement, but if the Employee secures other employment, any employee
welfare benefits the Company is required to provide to the Employee
following termination of the Employee's employment shall be secondary
to those provided by another employer (if any).
9.) Confidential Information. The Employee understands that in the course
of the Employee's employment by the Company, the Employee will receive
or have access to confidential information concerning the business or
proposes of the Company and any of the other Affiliated Companies and
which the Company or any of the other Affiliated Companies desire to
protect. Such confidential information shall be deemed to include, but
not be limited to, the Company's customer lists and information, and
employee lists, including, if known, personnel information and data.
The Employee agrees that the Employee will not, at any time during the
period of his employment, or at any time during the period ending two
(2) years after the date of termination, reveal to anyone outside the
Company or any of the other Affiliated Companies or use for the
Employee's own benefit any such information without specific written
authorization by the Company or the Parent.
10.) Covenants by the Employee Not to Compete with the Company or the Parent
a) Upon file Date of Termination of the Employee's employment with the
Company for any reason, the Employee covenants and agrees that the
Employee will not at any time during the period of two years from and
after such Date of Termination directly or indirectly in any manner or
under any circumstances or conditions whatsoever be or become
interested, as an individual, partner, principal, agent, clerk,
employee, stockholder, officer, director, trustee or in any other
capacity whatsoever, except as a nominal owner of stock of a public
corporation, in any other business which, at the date of the Employee's
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termination, is a Competitor (as defined herein), with directly or
indirectly, with the Company or any of the other Affiliated Companies,
or engage or participate in, directly or indirectly (whether as an
officer, director, employee, partner, consultant, holder of any equity
or debt investment, lender or in any other manner or capacity), or lend
the Employee's name (or any part or variant thereof) to, any business
which, at the date of the Employee's termination, is a Competitor,
either directly or indirectly, with the Company or any of the other
Affiliated Companies, or as a result of the Employee's engagement or
participation would become, a Competitor, either directly or
indirectly, with any aspect of the business of the Company or any of
the other Affiliated Companies, as it exists at the time of the
Employee's termination, or solicit any officer, director, employee or
agent of the Company or any of the other Affiliated Companies or any
subsidiary or affiliate of the Company or any of the other Affiliated
Companies to become an officer, director, employee or agent of the
Employee, the Employee's respective affiliates or anyone else.
Ownership, in the aggregate, of less than (1%) of the outstanding
shares of capital stock of any corporation with one or more classes of
its capital stock lists on a national securities exchange or publicly
traded in the over-the-counter market shall not constitute a violation
of the foregoing provision. For the purposes of this Agreement, a
Competitor is any business which is similar to the business of the
Company or any of the other Affiliated Companies or in any way in
competition with the business of the Company or any of the other
Affiliated Companies within any of the then-existing service areas of
the Company or any of the other Affiliated Companies.
b) The Employee hereby acknowledges that the Employee's services are
unique and extraordinary, and are not readily replaceable, and hereby
expressly agrees that the Company and the Parent, in enforcing the
covenants contained in Paragraphs 8 and 9 herein, in addition to any
the remedies provided for herein or otherwise available at law, shall
be entitled in any court of equity having jurisdiction to an injunction
restraining the Employee in the event of a breach, actual or
threatened, of the agreements and covenants contained in this Section
9.
c) The parties hereto believe that the restrictive covenants of this
Section 9 are reasonable. However, if at any time is shall be
determined by any court of competent jurisdiction that this Section 9
or any portion of it as written, are unenforceable because the
restrictions are unreasonable, the parties hereto agree that such
portions as shall have been determined to be unreasonably restrictive
shall thereupon be amended as to make such restrictions reasonable in
the determination of such court, and the said covenants, as so
modified, shall be enforceable between the parties to the same extent
as if such amendments had been made prior to the date of any alleged
breach of said covenants.
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11.) Insurance. The Company shall have the right at its own cost and expense
to apply for and to secure in its own name, or otherwise, life, health
or accident insurance or any or all of them covering the Employee, and
the Employee agrees to submit to the usual and customary medical
examination and otherwise to cooperate with the Company in connection
with the procurement of any such insurance, and any claims thereunder.
12.) Notices. All notices under this Agreement shall be in writing and shall
be deemed effective when delivered in person to the Employee or to the
Secretary of the Company and the Parent, or if mailed, postage prepaid,
registered or certified mail, addressed, in the case of the Employee,
to the Employee's last known address as carried on the personnel
records of the Company, and, in the case of the Company and the Parent,
to the corporate headquarters, attention of the Secretary, or to such
other address as the party to be notified may specify by notice to the
other party.
13.) Successors and Assigns.
a.) Assignment by Employee. This Agreement is personal to the Employee
and shall not be assignable by the Employee.
b.) Assignment by the Company. This Agreement shall inure to the
benefit of and by binding upon the Company and the other Affiliated
Companies and their respective successors and assigns. As used in this
Agreement, the "Company" and the other Affiliated Companies shall mean
both the Company and the other Affiliated Companies, respectively, and
any such successor that assumes and agrees to perform this Agreement,
by operation of law or otherwise.
14.) Release. Prior to receiving severance payments or benefits provided for
in Paragraph 6(a) of this Agreement, at the request of the Company or
the Parent, the Employee shall execute and deliver for the benefit of
the Company and the Parent, and any of the Affiliated Companies, a
general release in the form set forth in Attachment C, and such release
shall, become effective in accordance with its terms. The failure or
refusal of the Employee to sign such a release or the revocation of
such a release shall cause the termination of any and all obligations
of the Company and the Parent to make payment or provide benefits
hereunder and the forfeiture of the right of the Employee to receive
any such payments and benefits. The Employee acknowledges that the
Company and the Parent have advised the Employee to consult with an
attorney prior to signing this Agreement and that the Employee has had
an opportunity to do so.
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15.) Arbitration. Any dispute which may arise between the parties hereto
shall, be submitted to binding arbitration in the State of Connecticut
in accordance with the Rules of the American Arbitration Association.
16.) Severability. If any of the terms or conditions of this Agreement shall
be declared void or unenforceable by any court or administrative body
of competent jurisdiction, such term or condition shall be deemed
severable from the remainder of this Agreement, and the other terms and
conditions of this Agreement shall continue to be valid and
enforceable.
17.) Amendment. This Agreement may be modified or amended only by an
instrument in writing executed by the parties hereto.
18.) Construction. This Agreement is intended to include all prior
agreements and understandings between the parties as have been
set-forth in various letters including without limitation a certain
letter from Connecticut Water Service, Inc. to Richard L. Mercier dated
February 10, 1999. This Agreement shall be governed and construed under
the laws of the State of Connecticut. Words of the masculine gender
mean and include correlative words of the feminine gender. Paragraph
headings are for convenience only and shall not be considered a part of
the terms and provisions of the Agreement.
IN WITNESS WHEREOF, the Company and the Parent have caused this Agreement to be
executed by a duly authorized officer, and the Employee and the Consultant have
hereunto set the Employee and the Consultant's hand, this 13th day of April,
1999.
CONNECTICUT WATER SERVICE, INC.
/s/ David C. Benoit
- -------------------------------------------
David C. Benoit
Vice President of Finance and Treasurer
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CONNECTICUT WATER COMPANY
/s/ David C. Benoit
- -------------------------------------------
David C. Benoit
Vice President of Finance and Treasurer
/s/ Richard L. Mercier
- -------------------------------------------
Richard L. Mercier
Employee
/s/ Richard L. Mercier
- -------------------------------------------
Richard L. Mercier
Consultant
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SCHEDULE A
POSITION DESCRIPTION
PRESIDENT - GALLUP WATER SERVICE, INCORPORATED
1. Serves as a primary spokesman for the company in developing its public
image and represents the company in its relationships with major
customers, suppliers, the financial community, industry groups,
government bodies, as well as directing participation in appropriate
outside meetings. Develops and maintains appropriate working
relationships with government officials.
2. Works with external agencies to address opportunities for expanding
service territories, as well as to expand the economic development of
the operating regions.
3. Recommends programs aimed at achieving growth, diversification, and
profitability.
4. Works with CEO to ensure that future planning is carried out.
5. At specified intervals, reviews with the CEO operating and capital
budgets, performance toward objectives and changes.
6. Develops, grows and manages a profitable business. Preserves the
strength of the company to best preserve its independence and the
interests of the stockholders and customers.
7. Ensures that corporate policies are uniformly understood and properly
interpreted and administered by subordinates.
8. Works with the CEO to develop the basic objectives, policies and
operating plans of the business, both tactical and strategic. Ensures
that regulatory history and trends are recognized for their impact.
9. Maintains a strong management team, assuring the availability of
qualified people to support and strengthen the resources of the
business in meeting its objectives.
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SCHEDULE B
POSITION DESCRIPTION
CONSULTANT
A. Develops and maintains appropriate working relationships with
government officials.
B. Works with external agencies to address opportunities for expanding
service territories, as well as expand the economic development of the
operating regions.
C. Recommends programs aimed at achieving growth, diversification, and
profitability.
D. Works with the CEO to develop the basic objectives, policies, and
operating plans of the business, both tactical and strategic. Ensures
that regulatory history and trends are recognized for their impact.
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ATTACHMENT C
RELEASE
We advise you to consult an attorney before you sign this Release. You have
until the date which is seven (7) days after the Release is signed and returned
to the [ ] Water Company ("the Company") to change your mind and revoke your
Release. Your Release shall not become effective or enforceable until after that
date.
In consideration for the severance benefits and payments provided under your
Employment Agreement dated ___________ with the Company and Connecticut Water
Service, Inc. ("the Parent"), and more specifically enumerated in Exhibit 1
hereto, by your signature below you agree to accept such benefits and not to
make any claims of any kind against the Company, its past and present and future
Parent corporations, subsidiaries, divisions, subdivisions, affiliates and
related companies or their successors and assigns, including without limitation
the Parent, or any and all past, present and future Directors, officers,
fiduciaries or employees of any of the foregoing (all parties referred to in the
foregoing are hereinafter referred to as the "Releasees") before any agency,
court or other forum, and you agree to release the Releasees from all claims,
known or unknown, arising in any way from any actions taken by the Releasees up
to the date of this Release, including, without limiting the foregoing, any
claim for wrongful discharge or breach of contract or any claims arising under
the Age Discrimination in Employment Act of 1967, Title VII of the Civil Rights
Act of 1964, the Americans with Disabilities Act of 1990, the Employee
Retirement Income Security Act of 1974, Connecticut's Fair Employment Practices
Act or any other federal, state or local statute or regulation and any claim for
attorneys' fees, expenses or costs of litigation.
THE PRECEDING PARAGRAPH MEANS THAT BY SIGNING THIS RELEASE YOU WILL HAVE WAIVED
ANY RIGHT YOU MAY HAVE TO BRING A LAWSUIT OR MAKE ANY LEGAL CLAIM AGAINST THE
RELEASEES BASED ON ANY ACTIONS TAKEN BY THE RELEASEES UP TO THE DATE OF THIS
RELEASE.
By signing this Release, you further agree as follows:
1.) You have read this Release carefully and fully understand its terms;
2.) You have had at least twenty-one (21) days to consider the terms of the
Release;
3.) You have seven (7) days from the date you sign this Release to revoke
it by written notification to the Company. After this seven (7) day
period, THIS Release is final and binding and may not be revoked;
4.) You have been advised to seek legal counsel and have had an opportunity
to do so;
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5.) You would not otherwise be entitled to the severance benefits provided
under your Employment Agreement with the Company and the Parent had you
not agreed to waive any right you have to bring a lawsuit or legal
claim against the Releasees; and
6.) Your agreement to the terms set forth above is voluntary.
Name: _____________________________
Signature: _____________________________
Date: _____________________________
Received by: _____________________________
Date: _____________________________