EXHIBIT 10.35
CONFIDENTIALITY, NON-COMPETE AND
SEVERANCE AGREEMENT
THIS AGREEMENT is made on May 21, 1999 between Martin S.
Stone (the "Key Employee") and Trigen Energy Corporation (the "Company").
WHEREAS, the Company has retained the Key Employee to serve
as its Vice President Finance and Chief Financial Officer, upon mutually agreed
terms; and
WHEREAS, the Company and the Key Employee agree that
certain benefits should accrue to the Key Employee and
reasonable restrictions be imposed on the Key Employee in
connection with Key Employee's employment by the Company.
WHEREAS, in consideration of the severance provisions and
other covenants agreed to by the Company in this Agreement, the
Key Employee is willing to surrender his rights to severance
payments on termination of his employment described on page 2 of
the letter dated July 27, 1998, a true and correct copy of which
is attached hereto as Exhibit A, under the heading "Severance
Provision" and to comply with the provisions of this Agreement.
NOW THEREFORE, in consideration of the mutual promises of
the parties herein, the Key Employee and the Company agree to
the following provisions in connection with the employment of
the Key Employee by the Company:
1. Severance Benefts. Except as provided in Section 2
and 3 below, the Key Employee will be eligible for the
applicable severance benefits set forth in this Agreement if the
Key Employee is permanently terminated by the Company for any
reason other than for cause. If the Key Employee is terminated
for cause, the Key Employee agrees that he will be entitled to
payment of his accrued and unused vacation only. For the
purposes of this Agreement "for cause" shall mean any
termination of employment based upon:
(a) any material breach of Sections 7 or 8 of this Agreement;
or
(b) any conviction of any felony or misdemeanor involving moral
turpitude or conviction of any other crime which the Board
of Directors reasonably deems to involve fraud; or
(c) any act or omission which the Board of Directors reasonably
deems to constitute gross negligence or misconduct inimical
to the best interests of the Company in the performance of
the Key Employee's obligations, duties and responsibilities
as an officer and employee of the Company.
Discharge for cause will be effective immediately upon the Key
Employee's receipt of
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written notice of termination of employment or such later date
as may be specified in that notice; provided that, the notice
shall contain the specific reasons and the specific event or
events upon which the discharge is predicated.
2. In the event of the death of the Key Employee during
the term of his employment by the Company, such employment shall
be deemed to terminate on the date of the Key Employee's death
and no severance benefits set forth in this Agreement shall
accrue and be owing by the Company to the estate or heirs or
representatives of said Key Employee, other than payment for
accrued but unused vacation time.
3. Upon a voluntary termination of employment by the Key
Employee, no severance benefits as set forth in this Agreement
shall be due to the Key Employee, other than payment for accrued
but unused vacation time. The employment of the Key Employee
shall be deemed to terminate upon the written or oral
resignation by the Key Employee.
4. Except for a termination "for cause", or pursuant to
Sections 2 or 3, above, the Company shall give the Key Employee
not less than ninety (90) days written notice of any
termination of his employment by the Company. Thereafter, in
the case of any termination of his employment, other than a
termination by the Company "for cause" or pursuant to Sections 2
or 3, in addition, the Company shall pay to the Key Employee a
lump surn severance benefit equal to twelve (12) months of his
then current annual base salary and any full and/or prorated
bonus payments due and owed to the Key Employee. If prior to
the termination of the Key Employee, the Compensation Committee
of the Board of Directors of the Company provides for a
"retirement" program for its employees then the Key Employee
will be bound by that program and will be offered the same
benefits defined by that program for other similarly situated
Vice Presidents subject to the eligibility criteria of the
program.
In the event that Key Employee's employment is terminated
within a one (1) year period immediately following a Change in
Control (as defined below), for any reason other than "for
cause", death or pursuant to a voluntary termination, then in
addition to the foregoing ninety day notice and twelve month
payment the Company shall pay to the Key Employee an additional
year of the Key Employee's then current annual base salary, or
such greater severance benefit as may be then generally
applicable to Corporate Vice Presidents.
For the purposes of this Agreement, a "Change in Control"
shall be deemed to have taken place if after the date of
execution of this Agreement (i) any person, including a "group"
as described in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended, (other than Suez Lyonnaise Des Eaux and its
affiliates) becomes the owner or beneficial owner of the
Company's common stock, having 40% or more of the combined
voting power of the then outstanding common stock of the Company
that may be cast for the election of directors of the Company
(other than as a result of an issuance of securities initiated
by the Company), or (ii) the persons who were directors of the
Company before the date of execution of this Agreement
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shall cease to constitute a majority of the Board of Directors
of the Company, or any successor to the Company, as the direct
or indirect result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the
foregoing transactions.
5. Notwithstanding any of the foregoing, the Key Employee will
be required to sign a release agreement, in the form and
substance as usual and customary for other Company employees,
waiving all claims against the Company in order to receive any
of the post termination benefits or other payments described in
this Agreement. The Key Employee agrees that if he refuses to
sign such a payments owed release, the Company may reduce in
whole or in part the post termination benefits and/or other
payments owed to the Key Employee.
6. Except for a termination "for cause", or pursuant
to Sections 2 or 3, above, the following employee benefits, or such
greater employee benefits as may be then generally offered to Corporate
Vice Presidents following termination, will be provided during the twelve
(12) month period immediately following the date of termination:
(a) Individual executive level outplacement service, internally
or externally as required; and
(b) The Company will, at its option, either pay the Key
Employee's health care continuation coverage ("COBRA")
premiums, or require the Key Employee to pay such premiums
but pay to the Key Employee an additional amount or
severance pay equal to said premiums, if the Key Employee
elects such coverage.
7. Non-Competition. During the period of the Key
Employee's employment by the Company and for one year after any
termination thereof (the "Non-Competition Period"), the Key
Employee will not without prior written permission engage,
directly or indirectly, including without limitation as a
director, officer, employee, member, advisor, agent, or in any
other capacity, or become an owner in whole or part, of any
person, partnership, corporation or other entity engaged in
district heating or cooling, cogeneration relating to district
heating and cooling, providing building management services with
respect to heating, ventilating or air conditioning, or other
principal business activities of the Company or any of its
subsidiaries in territories in which, at the time of termination
of the Key Employee's employment, the Company or its
subsidiaries have or are developing operations (the
"Territories"). Ownership by the Key Employee of less than 5%
of the outstanding securities or voting interest of any such
competing corporation shall not constitute a breach of this
Agreement.
8. Secret or Confidential Information. At no time
will the Key Employee disclose to anyone, other than the Company or
persons designated by the Company, or use for the Key
Employee's own benefit, any trade secrets or other confidential
information, or any inventions, discoveries, improvements, tools,
machines, compounds, formulae, methods or products, whether or
not patented or patentable, which are directly or indirectly
useful in or relating to any aspect of the business of the Company
or any of its affiliates as conducted from time to
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time, as to which the Key Employee at any time during the term
of his employment shall become informed, which shall not be
generally known to the public or recognized as standard
practice. This Section shall not be violated by disclosure
required, in the reasonable judgment of the Key Employee by
governmental authorities, provided that (i) to the extent
permitted by law, notice of the requirement for such disclosure
is given to the Board of Directors prior to making any
disclosure, and (ii) the Key Employee requests confidential
treatment in connection with such disclosure. This Section
shall not be violated by any disclosure of such information by
the Key Employee required in the proper course of his duties as
Chief Financial Officer in good faith, including without
limitation during discussions with analysts, stockholders,
investors and underwriters conducted in accordance with
applicable laws and regulations.
9. Injunctive Relief, Survival. The parties hereto
acknowledge that the covenants contained herein are reasonable
and necessary for the protection and commercial success of the
Company, and that the Company will be damaged irrevocably if
such covenants are not specifically enforced. Accordingly, the
parties agree that the Company shall be entitled, in addition to
any other rights and remedies available at law or in equity, to
injunctive relief for the purpose of restraining the Key
Employee from directly or indirectly doing or continuing to do
any acts in violation of the covenants contained herein. The
parties hereto agree that any judicial authority construing this
Agreement shall be empowered to sever any portion of the
Territories, any prohibited activity, or any portion of the Non-
Competition Period from the coverage of this Agreement and to
apply the provisions of this Agreement to the remaining portion
of the Territories, prohibited activities and Non-Competition
Period not so severed by such judicial authority.
10. Notices. All communications under this Agreement
shall be in writing and shall be deemed given when sent by
overnight delivery service or delivered by mail and, if
delivered by mail, shall be mailed by registered or certified
first class mail, postage prepaid, and addressed as follows (or
to such other address as may be specified in writing by one
party to the other):
if to the Key Employee:
Martin S. Stone
11 Holmes Avenue
Hartsdale, NY 10530
if to the Company:
Trigen Energy Corporation
1 Water Street
White Plains, New York 10601
Attention: Richard E. Kessel
Executive Vice President & Chief
Operating Officer
Facsimile No.: (914) 286-6600
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11. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New
York applicable to contracts executed in and to be performed in
that State, regardless of laws that might otherwise govern under
applicable principles of conflicts of laws thereof
12. Letter Agreement Dated July 27, 1998. The Company and the
Key Employee
Agree to amend the terms of the letter dated July 27, 1998 to
delete the second sentence of the first paragraph on page 1 of
the letter and to delete the paragraph under the heading
"Severance Provision" which begins at the bottom of page 2 and continues on
to page 3 of the letter dated July 27, 1998. Without limiting
the obligations agreed to by the Company and the Key Employee
under this Agreement, the Key Employee and the Company agree
that effective upon the execution of this Agreement, the Company
will employ the Key Employee for a term which may be terminated
at any time at will by either the Company or the Key Employee.
All of the other terms of the letter dated July 27, 1998 shall
remain in full force and effect, including the first and the
third sentences of the first paragraph on page 1 of the letter
and the benefits described in the paragraphs set forth on pages
1 and 2 of the letter beginning with the paragraph under the
heading "Annual Incentive Management (AIM) Program" and ending
with the paragraph under the heading "Vacation."
IN WITNESS WHEREOF, the Key Employee has executed this
Agreement and the
Company has caused this Agreement to be executed by its duly
authorized officer as of the day and year first above written.
TRIGEN ENERGY CORPORATION
/s/ Richard E. Kessel
By: ------------------------------
Richard E. Kessel
Executive Vice President &
Chief Operating Officer
/s/ Martin S. Stone
----------------------------------
Martin S. Stone
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EXHIBIT A
Trigen Energy Corporation
One Water Street,
White Plains, New York 10601
(914) 286-6600
Fax (914) 948-9157/9190
July 27, 1998
Mr. Martin Stone
11 Holmes Avenue
Hartsdale, NY 10530
Dear Martin:
I am pleased to confirm our employment offer to you for the
position of Vice President and Chief Financial Officer for
Trigen Energy Corporation at an annualized salary of $200,000.
Your first day of employment will be Tuesday, July 28th, and the
terms of your employment under this agreement shall be for
twelve months commencing on July 28, 1998. In addition to your
base salary, you will be eligible to participate in the Trigen
Executive Compensation Program.
The Trigen Executive Compensation Program includes the
following:
- Annual Incentive Management (AIM) Program - You will be
eligible for a target incentive of 30% of your annualized
salary (prorated for 1998). The actual awards granted under
this plan are a function of the company's financial results
and the attainment of individual objectives, and are
distributed after year-end.
- Long-term Equity Accumulation Program (LEAP) - Under LEAP
you will be given a grant of 5,500 Incentive Stock Options
(ISOs) and 9,750 Restricted Shares of Trigen stock. The ISO
grant is effective on your first day of employment with an
exercise price equaling the market's closing price on that
day. These options vest over pro rata over the first five
years of the grant and your have ten years from the date of
the grant to exercise them.
The Restricted Share grant will be effective on October 1, 1998.
The restrictions on the shares will lapse on the earlier of
Trigen attaining $2.08 earnings per share or December 31, 2005.
There is a stock ownership provision included in this plan.
Both the ISO grant and the Restricted Share grant require that
you be an employee on the date of exercise or lapse of
restrictions, unless otherwise noted in the plan agreements
documents. A full description of LEAP explaining the features
of this program is attached.
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- Benefits-Effective on the 1st of the month following your
employment date, our benefit package includes medical, dental,
prescription drug, vision, life insurance (up to two times
salary($300,000 Maximum)), accidental death and dismemberment
insurance, and short and long term disability. An Employee
Handbook detailing these benefits is enclosed.
- Automobile Program - Commencing with your first day of
employment, you will receive a supplemental stipend of $13,200,
payable bi-weekly, to compensate you for a car and automobile
insurance coverage.
- Omnibus Deferral Program - This plan, which has three
components, allows you to defer receipt of base salary and
incentive payments, defer receipt of Trigen stock following the
exercise of your stock options and restricted shares, and also
provides a deferred account for future receipt of ERISA excess
benefits.
- Employee Stock Purchase Plan-You may contribute up to 10% of
your total compensation to be used to purchase Trigen stock at a
15% discount from the lower of the market's closing price at the
start or end of the plan's cycle. The plan runs a six-month
period, and you will be eligible for the next cycle commencing
October 1st.
- 401(k) Plan - The plan provides you to invest up to 15% of
your compensation, subject to ERISA limits, on a before-tax basis
through payroll deductions. Trigen makes a matching contribution on
all your contributions based on a sliding scale formula of 100% of your
first $500 of contributions, 50% on your next $500, and 6% thereafter.
- Profit Sharing Plan - As part of the 40l(k) Plan, the
company may make a profit sharing contribution to your account.
These contributions will be determined at each year-end at the
company's sole discretion. The profit sharing contribution is
made in the form of Trigen stock.
- Vacation - Corporate officers are eligible for four weeks of
vacation.
- Severance Provision - If at any time during this term you
are terminated "without cause," you will receive all of the
compensation herein agreed to from the date of termination
through the balance of the above stated term. In this context
"cause" shall mean: (i) unauthorized use or disclosure to third
parties of confidential information of the company, including
financial information, marketing information, personnel
information, customer information, project development
information or information obtained from third parties
concerning which the company is bound by a written
confidentiality agreement (disclosure legally required to be
made to government authorities, disclosures of matters already
known to the general public, disclosure of information already
in your possession on a non-confidential basis are excluded from
this obligation.); (ii) conviction of any crime which the Board
of Directors reasonably deems to involve fraud or other
misdemeanor or felony involving moral turpitude, or (iii) any
act or omission which the Board of Directors reasonably deems to
constitute gross negligence or misconduct inimical to the best
interests of the company in the performance of your obligations,
duties and responsibilities hereunder.
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Both Rich and I are confident you will contribute quickly to
Trigen's culture and values of collegial and open communications
while encouraging creative ideas, commitment and passion for our
work. I look forward to working with you in meeting our
challenge in successfully attaining Trigen's mission.
This offer is contingent upon the approval of Trigen's
Compensation Committee concerning the provisions of this offer
and the Board's approval for becoming a corporate officer.
I trust this meets with your approval and please acknowledge
your acceptance of this offer by signing where indicated below
and returning a copy to me at your earliest convenience. The
second copy is for your records.
Sincerely,
/s/ Thomas R. Casten
Thomas R. Casten
President and Chief Executive Officer
TRC
Attachments
Accepted By: /s/ Martin S. Stone
7-27-98 ------------------------
Martin Stone
Date
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