EXHIBIT 10.8
EMPLOYMENT AGREEMENT
Thomas M.
Boehlert
This EMPLOYMENT
AGREEMENT (the “Agreement”) is dated as of
January 12, 2005 (the “Effective Date”) by and
between Texas Genco LLC (the “Company”), Texas Genco
Operating Services LLC, a wholly owned subsidiary of the Company
(the “Service Company”) and Thomas M. Boehlert (the
“Executive”).
WHEREAS, pursuant
to a Transaction Agreement dated as of July 21, 2004, the
Company has agreed to, among other things, acquire Texas Genco
Holdings, Inc. (“TGH”), in a multi-step
transaction; and
WHEREAS, as of the
Effective Date, the Company desires to employ Executive and to
enter into an agreement embodying the terms of such employment and
Executive desires to accept such employment and enter into such an
agreement.
NOW, THEREFORE, in
consideration of the premises and mutual covenants herein and for
other good and valuable consideration, the parties agree as
follows:
1.
Term of Employment . Subject to the provisions of
Section 8 of this Agreement, Executive shall be employed by
the Company for a period commencing on a date selected by the
Executive which shall be no later than March 31, 2005 and
ending on December 31, 2009 (the “Employment
Term”); provided , however, that commencing with
December 31, 2009 and on each December 31 thereafter
(each an “Extension Date”), the Employment Term shall
be automatically extended for an additional one year period, unless
the Company or Executive provides the other party hereto at least
60 days prior written notice before the next Extension Date that
the Employment Term shall not be so extended (“Notice of
Nonrenewal”).
2.
Position .
a.
During the Employment Term, Executive shall serve as Executive Vice
President, Chief Financial Officer of the Company and of the
Company’s significant subsidiaries. In such position,
Executive shall, subject to any limitations or other directions
determined from time to time by the Board of Managers of the
Company (the “Board”) or the Chief Executive Officer of
the Company (the “Chief Executive Officer”), have such
duties and authority as are consistent with the position of chief
financial officer of a company (and subsidiaries) of similar size
and nature. Executive shall report directly to the Board and
Chief Executive Officer.
b.
During the Employment Term, Executive will devote Executive’s
full business time to the performance of Executive’s duties
hereunder and will not engage in any other business, profession or
occupation for compensation or otherwise which would conflict
or
interfere with the rendition of such services
either directly or indirectly, without the prior written consent of
the Board; provided that nothing herein shall preclude
Executive, subject to the prior approval of the Board, from
accepting appointment to or continuing to serve on any board of
directors or trustees of any business corporation or any charitable
organization; provided , further , in each case, and
in the aggregate, that such activities do not conflict or interfere
with the performance of Executive’s duties hereunder or
conflict with Section 9.
3.
Base Salary . During the Employment Term, the Company
shall pay Executive a base salary at the annual rate of $450,000,
payable in regular installments in accordance with the
Company’s usual payment practices. Commencing in 2006,
and annually thereafter, the Board (or its Compensation Committee,
as appropriate) shall review Executive’s base salary in light
of the performance of Executive and the Company, and may, in its
sole discretion, increase (but not decrease) such base salary by an
amount it determines to be appropriate. Executive’s
annual base salary, as in effect from time to time, is hereinafter
referred to as the “Base Salary.”
4.
Bonus Payments .
a.
Annual Bonus . During the Employment Term, Executive
shall be eligible to earn an annual bonus award in respect of each
fiscal year of the Company (or, for each of the first and last
years of the Employment Term, a pro rata bonus award based on the
ratio that the number of days of such fiscal year during the
Employment Term bears to 365) (each an “Annual Bonus”),
in a target amount equal to 65% of Executive’s Base Salary
(the “Target Bonus”), with a maximum bonus opportunity
of 130% (increasing in a linear progression above 65% and up to
130% of Executive’s Base Salary), with no bonus payable
unless the Company achieves the threshold level of performance
established by the Board (for which the threshold bonus will be 21%
of Executive’s Base Salary), payable pursuant to the terms of
the applicable incentive compensation plan to be established by the
Board as soon as practicable after the Effective Date (the
“Incentive Plan”). Each Annual Bonus shall be
payable promptly following a determination by the Board (or a
designated committee thereof) that the applicable performance
criteria have been satisfied, but in no event later than 30 days
after the audited consolidated financial statements for the Company
are prepared for each such fiscal year.
b.
Signing Bonus . Executive shall be entitled to a
one-time payment of $450,000 (the “Signing Bonus”),
which shall be paid to Executive in cash in a single lump sum as
soon as practicable after Executive takes up residence in the
United States and he actually commences employment with the
Company, provided , however , if Executive receives
any bonus in respect of 2004 from his previous employer, then the
Signing Bonus shall be reduced by such amount (or, if Executive was
already paid the Signing Bonus, such amount shall be repaid by
Executive to the Company within 10 business days).
5.
Equity Participation . Promptly following the
initiation of the Company’s management equity program (the
“Equity Program”), Executive will be provided a
confidential information memorandum (the “PPM”)
regarding the Equity Program. The Company will offer
Executive the opportunity to invest $750,000 in Units of the
Company on the terms in the PPM and Equity Documents (defined
below), at a price of $5 per Unit. Subject to receipt and
satisfactory review of such PPM, Executive intends to subscribe for
$750,000 in Units of the
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Company. Executive will be offered the
opportunity to make such investment in the Company promptly
following the availability of the PPM (and in any event no later
than March 31, 2005). Executive’s equity
participation in the Company shall be documented pursuant to the
Texas Genco LLC 2004 Unit Plan (the “Unit Plan”),
Management Unitholder’s Agreement (substantially in the form
attached hereto), Unit Option Agreements (substantially in the
forms attached hereto), which shall be executed by the Company and
delivered to Executive within 10 business days following the
Effective Date (the “Award Agreements”), and Amended
and Restated Limited Liability Company Agreement of the Company,
dated as of December 15, 2004 (the “LLC
Agreement”), as amended from time to time, each as executed
by Executive, the Company, and its members, as applicable, in such
forms as are agreed to by the parties (collectively, the
“Equity Documents”). The Company and Executive
each acknowledges that the terms and conditions of the
aforementioned Equity Documents govern Executive’s
acquisition, holding, sale or other disposition of
Executive’s equity in the Company, and all of
Executive’s and the Company’s rights with respect
thereto. In the event that for any reason Executive does not
commence employment with the Company on or prior to March 31,
2005, to the extent Executive has purchased or subscribed for any
Units or been granted any Options, commencing on March 31,
2005, Executive’s Equity Documents shall terminate in respect
of any right of the Executive in respect of such Units or Options
and any right to subscribe for additional Units or Options, and the
Company shall have the right and obligation to repurchase any such
Units for a purchase price equal to the purchase price paid by
Executive for such Units, and the right to cancel and extinguish
any such Options without payment.
6.
Employee Benefits .
a.
During the Employment Term, Executive shall be entitled to
(1) participation in the Company’s employee 401(k),
health and welfare benefit plans and all fringe benefits and
executive perquisites as in effect from time to time, (2) 20
paid vacation days per year and (3) sick leave, paid holidays
and other paid time off in accordance with the Company’s
policies as in effect from time to time (collectively
“Employee Benefits”), on a basis no less favorable than
those benefits generally made available to other senior executives
of the Company or to the Company’s employees
generally.
b.
For a period of six months following the date Executive commences
his employment with the Company, Executive shall work both in the
Company’s office located in Houston, Texas and his home
office in Toronto, Ontario; provided, however, that Executive
understands that he may be required to work in the Company’s
Houston office at such times as the Board determines. Until
June 30, 2005, the Company shall reimburse Executive for
temporary living expenses to cover accommodation, transportation
between Toronto and the Company’s Houston office and
miscellaneous living expenses (but not meal expenses). The
Company shall reimburse Executive for all reasonable, standard and
customary costs and expenses incurred by Executive that are
associated with (i) the physical move of Executive’s
family and belongings to Houston, Texas (e.g., packing, storing,
transportation, and unpacking of household items) and temporary
living expenses for up to ten days for the Executive’s family
in Houston, (ii) the sale of Executive’s current home
and Executive’s purchase of a primary residence in Houston,
Texas (e.g., brokers’ commissions, taxes, legal fees,
inspection, appraisal and survey charges, title search and
insurance charges, closing costs, points and transfer taxes),
(iii) up to four trips for Executive’s family to
Houston, Texas for house
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hunting (e.g., air fare, hotel, car rental,
meals); and (iv) an amount which, after payment of any
Federal, state or local taxes imposed thereon, shall equal the
amount of any Federal, state or local taxes imposed on the
Executive with respect to any of the payments described in clauses
(i), (ii) or (iii) of this sentence. For purposes
of (ii) under this subsection (b), the
Company’s reimbursement in connection with the sale of
Executive’s current home shall include the payment of the
deficiency, if any, in the difference between the original equity
contribution to the purchase of his residence,determined in U.S.
dollars as of such purchase date, and the amount of the sales price
of Executive’s residence (reduced by the amount of any
indebtedness incurred in connection with the purchase thereof),
determined in U.S. dollars as of such date of sale. The
Company shall reimburse such costs and expenses promptly following
Executive’s submission of written documentation reasonably
satisfactory to the Company evidencing that Executive has incurred
such costs and expenses.
7.
Business Expenses . During the Employment Term,
reasonable business expenses incurred by Executive in the
performance of Executive’s duties hereunder shall be
reimbursed by the Company in accordance with Company policies.
8.
Termination . The Employment Term and
Executive’s employment hereunder may be terminated by either
party at any time and for any reason; provided that Executive will
be required to give the Company at least 60 days advance written
notice of any resignation of Executive’s employment.
Notwithstanding any other provision of this Agreement, the
provisions of this Section 8 shall exclusively govern
Executive’s rights upon termination of employment with the
Company and its affiliates; provided, however, that
Executive’s rights with respect to his equity participation
shall be governed solely by the Equity Documents.
a.
By the Company For Cause or By Executive Resignation Without
Good Reason .
(i) The Employment Term and
Executive’s employment hereunder may be terminated by the
Company for Cause (as defined below) and shall terminate
automatically upon Executive’s resignation without Good
Reason (as defined in Section 8(c)); provided that
Executive shall be required to give the Company at least 60 days
advance written notice of a resignation without Good
Reason.
(ii) For purposes of this
Agreement, “Cause” shall mean
(A) Executive’s willful and continued failure
substantially to perform Executive’s duties hereunder (other
than as a result of total or partial incapacity actually suffered
by Executive as a result of any illness or other disability) for a
period of 15 days following written notice by the Company to
Executive of such failure (where such notice specifically
identifies the manner in which the Company believes Executive has
not substantially performed his duties), (B) Executive’s
conviction of, or plea of nolo contendere to, a crime
constituting (x) a felony under the laws of the United States or
any state thereof or (y) a misdemeanor involving moral turpitude,
(C) Executive’s willful malfeasance or willful
misconduct in connection with Executive’s duties hereunder or
any willful act or omission which is materially injurious to the
financial condition or business reputation of the Company or any of
its subsidiaries or affiliates, (D) Executive’s willful
and material breach of the provisions of Sections 9 or 10 of this
Agreement; provided, however, that Executive shall not be
terminated for Cause under any of clauses (A), (C) or
(D) above unless
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there shall have been delivered to Executive a
copy of a resolution duly adopted by the Board, at a meeting of
such Board (after reasonable notice to Executive and an opportunity
for Executive, together with his counsel, to be heard at such
meeting), finding that in the good faith opinion of the Board,
Executive had engaged in conduct of the type described in any of
clauses (A), (C) or (D) above and specifying the
particulars thereof.
(iii) If Executive’s
employment is terminated by the Company for Cause, or if Executive
resigns without Good Reason, Executive shall be entitled to
receive:
(A)
the Base Salary through the date of termination;
(B)
any Annual Bonus earned but unpaid as of the date of termination
for any previously completed fiscal year;
(C)
reimbursement for any unreimbursed business expenses properly
incurred by Executive in accordance with Company policy prior to
the date of Executive’s termination; and
(D)
such Employee Benefits, if any, as to which Executive may be
entitled under the employee benefit plans of the Company for
Executive and his family (the amounts described in clauses
(A) through (D) hereof being referred to as the
“Accrued Rights”).
Following such
termination of Executive’s employment by the Company for
Cause or resignation by Executive without Good Reason, except as
set forth in this Section 8(a)(iii) and Sections 13 and
14 of this Agreement, Executive shall have no further rights to any
compensation or any other benefits under this Agreement; provided,
however, that Executive’s rights with respect to his equity
participation shall be governed solely by the Equity
Documents.
b.
Disability or Death .
(i) The Employment Term and
Executive’s employment hereunder shall terminate upon
Executive’s death and may be terminated by the Company if
Executive becomes physically or mentally incapacitated and is
therefore unable for a period of six (6) consecutive months or
for an aggregate of nine (9) months in any twenty-four (24)
consecutive month period to perform Executive’s duties (such
incapacity is hereinafter referred to as
“Disability”). Any question as to the existence
of the Disability of Executive as to which Executive and the
Company cannot agree shall be determined in writing by a qualified
independent physician mutually acceptable to Executive and the
Company. If Executive and the Company cannot agree as to a
qualified independent physician, each shall appoint such a
physician and those two physicians shall select a third who shall
make such determination in writing. The determination of
Disability made in writing to the Company and Executive shall be
final and conclusive for all purposes of this
Agreement.
(ii) Upon termination of
Executive’s employment hereunder for either Disability or
death, Executive or Executive’s estate (as the case may be)
shall be entitled to receive:
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(A)
the Accrued Rights; and
(B)
a lump sum payment of the pro rata portion (based upon the number
of days in the applicable fiscal year during which Executive was
employed with the Company through the date of such termination,
relative to the number of days in the applicable fiscal year) of
any Annual Bonus, if any, that Executive would have been entitled
to receive pursuant to the Incentive Plan in respect of the Fiscal
Year in which such termination occurs, payable when such Annual
Bonus would have otherwise been payable had Executive’s
employment not terminated,
Following
Executive’s termination of employment due to death or
Disability, except as set forth in this Section 8(b)(ii), and
Sections 13 and 14 of this Agreement, Executive shall have no
further rights to any compensation or any other benefits under this
Agreement; provided, however, that Executive’s rights with
respect to his equity participation shall be governed solely by the
Equity Documents.
c.
By the Company Without Cause or Resignation by Executive for
Good Reason .
(i) The Employment Term and
Executive’s employment hereunder may be terminated by the
Company without Cause or by Executive’s resignation for Good
Reason.
(ii) For purposes of this
Agreement, “Good Reason” shall mean (A) any
material breach by the Company of this Agreement, failure by the
Company to execute or deliver the Award Agreements within 10
business days of the Effective Date, or execute or deliver the
other Equity Documents as soon as practicable (and in no event
later than March 31, 2005), (B) any sustained diminution,
other than in an inconsequential or immaterial aspect, in
Executive’s authority, title, duties or responsibilities from
those that are consistent with the position of chief financial
officer of a company (and subsidiaries) of similar size and natue,
(C) the assignment to Executive of a material amount of
different or additional duties that are significantly inconsistent
with Executive’s position, (D) a merger or other
business combination or a material divestiture of all or
substantially all of its assets, whereby the Company is no longer
primarily in the energy related business, or (E) the
relocation of Executive, the Company’s principal executive
offices or all or substantially all of the Company’s
executive level employees without Executive’s consent, to any
location outside of the Houston, Texas metropolitan region.
Executive shall have the right to terminate his employment for
“Good Reason” by giving the Company notice in writing
of the reason for such termination and the Employment Term shall
terminate on the date of Executive’s termination of
employment; provided that either of the events described in
this Section 8(c)(ii) shall constitute Good Reason only
if the Company fails to cure such event within 30 days after
receipt from Executive of written notice of the event which
constitutes Good Reason; provided , further , that
“Good Reason” shall cease to exist for an event on the
60 th day following the later of its occurrence or
Executive’s knowledge thereof, unless Executive has given the
Company written notice thereof prior to such date.
Executive’s failure to resign in connection with any event,
or occurrence, which constitutes Good Reason shall not be deemed a
waiver of any other event or occurrence thereafter which
constitutes Good Reason.
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(iii) If Executive’s
employment is terminated by the Company without Cause (at any time
after the Effective Date and prior to, or during, the Employment
Term), other than by reason of death or Disability, or if Executive
resigns for Good Reason (during the Employment Term), Executive
shall be entitled to receive:
(A)
the Accrued Rights;
(B)
subject to Executive’s continued compliance with the
provisions of Sections 9 and 10, a payment equal to the sum of (x)
the Base Salary at the rate in effect immediately prior to the Date
of Termination (without regard to any decrease which constitutes a
breach of this Agreement as described in clause (A) of
Section 8(c)(ii) which is the basis for Executive’s
resignation for Good Reason) and (y) the Target Bonus for the year
in which such termination occurs, payable in equal monthly
installments over the twelve (12) month period commencing on the
date of such termination; provided , however , that
the aggregate amount described in this
subsection (B) shall be reduced by any amounts owed by
Executive to the Company and any amounts for any loans, or funds
advanced, to, Executive; provided , further , that
if, on or after a Change of Control (as defined in the LLC
Agreement), Executive’s employment is (or has previously
been) terminated by the Company without Cause (other than by death
or Disability) or if Executive resigns (or has previously resigned)
for Good Reason, a lump sum amount equal to the aggregate amount
remaining payable under this subsection (B) shall, as
soon as practicable, but in no event later than 15 days, after the
later of the effective date of such termination or such Change of
Control, be paid to Executive, subject to repayment unless
Executive continues to comply with the provisions of Sections 9 and
10; provided , that such repayment shall be paid in a lump
sum upon demand by the Company, and shall be in an amount equal to
the lump sum payment made pursuant to this
subsection (B) multiplied by a fraction, the numerator of
which is the number of months the Executive fails to comply with
the provisions of Sections 9 or 10 during the first 12 months
following the effective date of Executive’s termination of
employment, and the denominator of which is the number of monthly
installments comprising the lump sum payment which was paid to
Executive; and
(C)
subject to Executive’s continued compliance with the
provisions of Sections 9 and 10, continuation of welfare benefits
for Executive and his family (pursuant to the same benefit plans as
in effect for active executive employees of the Company)
(i) for a period through the later of (x) the second
anniversary of the date of such termination, or (y) the date on
which the Employment Term would have otherwise expired, or
(ii)&nb
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