[NRG Generating (U.S.) Inc. letterhead]
March 28, 1997
Xx. Xxxxxx X. Xxxxxxx, Xx.
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Dear Xxx:
Subject: Employment Offer/Agreement
I am pleased to provide an offer of employment to you for the position
of President & CEO of NRG Generating (U.S.) Inc. ("NRGG"). The
elements of the employment offer for your consideration are summarized
below:
1. Employment will commence upon a mutually agreed start date of no
later than May 1, 1997 (the "Start Date").
2. Base salary will be $210,000 per year ("Base Salary").
3. A signing bonus of $40,000 will be paid within seven (7) business
days of the Start Date.
4. The "1997 Short-Term Incentive Plan Specifications" is attached as
Exhibit "A". While the goals outlined in that plan will help guide
expectations during 1997, the Company is agreeing that your 1997
incentive will be calculated at the maximum level of 60 percent of
Base Salary assuming you arc employed from the Start Date through
December 31, 1997.
5. You will be granted an option for 105,000 shares ("Base Option")
of NRGG stock pursuant to a new stock option plan. The new option
plan will be identical to the existing 1996 Stock Option Plan of
NRGG except that the definition of Change of Control will include
either an acquisition by NRG Energy, Inc. of more than 51% of the
capital stock of NRGG or a merger of NRGG into NRG Energy, Inc.
The Date of Grant will be the Start Date. Pursuant to the plan,
the option price will be equal to the average of the 20-trading
days closing price prior to the Start Date. Your option grant
agreements (Base and Performance) will be drafted to provide that
these options are Incentive Stock Options (ISO) to the greatest
extent allowed by law and the Internal Revenue Service's
regulations. One-third of the Base Option grant will vest and be
exercisable on each of the first three anniversaries of the Date
of Grant. The Base Option grant will have a term of ten years.
Xx. Xxxxxx X. Xxxxxxx, Xx.
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March 28, 1997
It is understood that this Base Option grant is subject to
ratification of the new stock option plan and of these options by
the Shareholders of NRGG, and that the option contract itself will
not be entered into, delivered or binding until after such
ratification.
6. Within the new stock option plan as described above (item #5) you
will also be granted a performance based stock option for 100,000
shares ("Performance Option") of NRGG stock on the Start Date The
option price will be equal to the average of the 20-trading days
closing price prior to the Start Date. It is understood that this
Performance Option grant is subject to ratification of the new
stock option plan and these options by the Shareholders of NRGG
and that the option contract itself will not be entered into,
delivered or binding until after such ratification. These shares
would vest as follows:
a) 50,000 shares (the "First Block") when the NRGG common stock
price is greater than or equal to $25 per share for 20
consecutive days. The right to achieve the vesting of the
First Block will be valid through December 31, 1999. If the
First Block becomes vested, it will be exercisable until the
tenth anniversary of the Grant Date.
b) 50,000 shares (the "Second Block") when the NRGG common stock
price is greater than or equal to $35 per share for 20
consecutive days. The right to achieve the vesting of the
Second Block will be valid through December 31, 2001. If the
Second Block becomes vested, it will be exercisable until the
tenth anniversary of the Grant Date.
7. NRGG will provide employee health and welfare benefits under
NRGG's existing plans as included as exhibits "B" and "C":
a) Major medical benefits pursuant to NRGG's Blue Cross plan;
b) Dental coverage per NRGG's plan;
c) Other comprehensive coverage and life insurance per NRGG's
plan.
The cost to the employee of NRGG's health and we1fare plans (a, b
& c) for 1997 is $5.00 per month.
8. You will be provided with the benefits of the NRGG relocation
program (a plan purchased by NRGG from NRG/NSP as outlined
earlier). See exhibit "D".
9. You will be provided a leased automobile pursuant to the NRGG
Officer level program (same program as NRG/NSP officer program)
administered by GECC. Since you would like to transfer your
existing vehicle to the program, arrangement will be made for GECC
Xx. Xxxxxx X. Xxxxxxx, Xx.
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March 28, 1997
to purchase your vehicle at current market value from you (any
associated loan payoffs will be your responsibility). Normally,
any purchase price above the program maximum (currently $27,000)
must be paid by the employee. On this occasion only, NRGG will
reimburse the program for any amount over the program purchase
price maximum of $27,000.
10. Underground parking at 0000 Xxxxxxxx Xxxx will be paid by NRGG.
11. Business club dues at a club of your choice (subject to prior
approval by the Chairman) will be paid by NRGG.
12. You will be entitled to vacation eligibility of 4 weeks per year.
13. Your work location will be 0000 Xxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxxx, XX.
14. NRGG shall consider you to be an employee at will and accordingly
may terminate your employment with NRGG at any time, for any
reason, with or without cause. Notwithstanding the previous
sentence, NRGG will provide you with the following severance
payment arrangement during the three-year period commencing on the
Start Date and ending on the third anniversary of the Start Date
(the "Severance Payment Period"). During the Severance Payment
Period, if your employment with NRGG terminates, then NRGG will
make severance payments to you if, and only if, a) you are
terminated without Cause, or b) NRGG has materially breached a
material obligation of NRGG under this agreement and you have
therefore elected to terminate your employment with NRGG within 30
days of such breach, or c) there has been a Change of Control or
Corporate Transactions (as such terms are defined in NRGG's 1996
Stock Option plan, as modified pursuant to the second sentence of
item number 5 above) and you have therefore elected to terminate
your employment with NRGG within 30 days of such Change of Control
or Corporate Transaction. The amount of any such severance
payment will be that portion of your Base Salary remaining from
the termination date to the third anniversary of the Start Date.
For purposes of this item 14, "Cause" shall mean either of:
(i) the commission of a felony or gross negligence in the conduct
of your duties at NRGG: or
(ii) your engaging in conduct that is either outside of the
ordinary scope of your duties at NRGG or a material breach of
your obligations under this letter agreement and that has a
material adverse effect on the business or financial
condition of NRGG.
If NRGG determines that it has the right to terminate your employment
with NRGG for Cause add elects to exercise that right, then NRGG will
give you notice thereof. Such notice shall
Xx. Xxxxxx X. Xxxxxxx, Xx.
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March 28, 1997
describe in reasonable detail the conduct or circumstances that
constitute Cause. If such notice is delivered under item ii, then you
will have a period of 30 days from the date of such notice within which
to cure the conduct or circumstances constituting Cause and to cause to
be repaired the adverse effect on the business or financial condition
of NRGG. Termination of your employment with NRGG shall become
effective on the date of the notice if the notice is given under item i
or on the 30th day following the date of such notice if the notice is
given under item ii and the above referenced cure and repair has not
been completed to the reasonable satisfaction of NRGG within such 30
day period.
15. In order to protect the Company's interest in the development and
maintenance of business opportunities, you and we agree as
follows:
a) You will at all times faithfully, industriously and to the
best of your ability, experience, and talents, perform and
discharge the duties of your position and that otherwise may
be required of and from you by the Board of Directors of NRGG
so as to promote the profit, benefit and business of NRGG and
so as to represent NRGG in the most professional manner
possible. In the performance of your duties hereunder, you
covenant that you will diligently and in a business-like
manner, and to the best of your abilities, and consistent
with your overall duties to the stockholders of NRGG: (a)
keep, observe and perform all lawful rules, regulations and
duties that may be adopted or prescribed by the Board of
Directors of NRGG; and (b) perform such other functions as
are appropriate to further the best interests of NRGG.
b) You shall devote your full business time, attention,
knowledge, effort and skills solely to the business and
interests of NRGG. You shall not devote significant business
time to activities that would inhibit or otherwise interfere
with the proper performance of your duties and shall not be
directly or indirectly concerned or interested in any other
occupation or business; provided, however, that you shall be
entitled to maintain investments and interests in
corporations or business ventures provided that such
investments or interests do not interfere with your ability
to devote your full business time to NRGG and to perform your
duties hereunder; provided, further however, that any
investment that you have, make or acquire in a Competitor
must be limited to a passive investment in less than 5% of
the publicly traded securities of such Competitor. You
acknowledge and agree that all business opportunities
presented to you in the scope of your employment relating to
the business of NRGG shall belong to NRGG. NRGG shall be
entitled to all benefits, profits or other issues arising
from or incident to all work, services and advice of you
relating to the business of NRGG. For purposes of this item
number 15, "Competitor" shall refer to any person or entity
engaged, wholly or partly, in the business of developing,
financing, owning, operating or maintaining cogeneration or
other electric power generation facilities or projects in the
United
Xx. Xxxxxx X. Xxxxxxx, Xx.
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March 28, 1997
States of America.
c) To the greatest extent possible, any and all Work Product
shall be deemed to be "work made for hire" (as defined in the
Copyright Act, 17 U.S.C.A. 101 et seq., as amended) and
owned exclusively by NRGG. You hereby unconditionally and
irrevocably transfer and assign to NRGG all right, title and
interest you may have or acquire, by operation of law or
otherwise; in or to any and all Work Product including,
without limitation, all patents, copyrights, trademarks,
service marks and other intellectual property rights. You
agree to execute and deliver to NRGG any transfers,
assignments, documents or other instruments which NRGG may
deem necessary or appropriate to vest complete title and
ownership of any and all Work Product, and all rights
therein, exclusively in NRGG. "Work Product" shall mean all
work product, property, data, documentation, "know how",
concepts, plans, inventions, improvements, techniques,
processes or information of any kind, prepared, conceived,
discovered, developed or created by you in connection with
the performance of your services hereunder.
d) You hereby covenant and agree that, if and when your
employment with NRGG terminates, then during the one-year
period following the date of such termination (the
"Termination Date"), you will not, either directly or
indirectly, alone or in conjunction with any other party,
divert or appropriate, or attempt to divert or appropriate,
any NRGG Project Opportunity. An "NRGG Project Opportunity"
means any and all of, but only, the following: (i) a project
or opportunity to develop a project on which NRGG was
actively working as of the Termination Date; (ii) a project
or opportunity to develop a project on which NRG Energy, Inc.
("NRGE") was actively working as of the Termination Date with
the intention of offering the same to NRGG at the appropriate
time under the Co-Investment Agreement between NRGG and NRGE;
and (iii) a project or project opportunity on which NRGE was
actively working as of the Termination Date, which is not
covered by item (ii) but as to which you have material
knowledge. NRGG will provide you with a list of projects
meeting the above criteria promptly following the Termination
Date. You will have 30 days after your receipt of such list
to notify NRGG of any projects or project opportunities
included on the list that you do not believe meet the above
criteria for NRGG Project Opportunity. NRGG will consider
your objections in good faith and then reissue the list of
NRGG Project Opportunities, omitting any projects or project
opportunities that NRGG agrees do not meet the above
criteria. The reissued list (or in the case of no objections
within the above 30 day disagreement period, the original
list) will be the final list of NRGG Project Opportunities.
e) You agree that damages at law for your violation of any of
the covenants in this Section 15 would not be an adequate or
proper remedy and that, should you
Xx. Xxxxxx X. Xxxxxxx, Xx.
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March 28, 1997
violate or threaten to violate any of the provisions of such
covenants, NRGG or its successors or assigns shall be
entitled to obtain a temporary or permanent injunction
against you in any court having jurisdiction prohibiting any
further violation of any such covenants, in addition to any
award or damages (compensatory, exemplary or otherwise) for
such violation.
f) NRGG has attempted to limit your rights under item 15d only
to the extent necessary to protect NRGG from unfair
competition. You, however, agree that, if the scope of
enforceability of any of these restrictive covenants is in
any way disputed at any time, a court or other trier of fact
may modify and enforce such covenant to the extent that it
believes to be reasonable under the circumstances existing at
the time.
16. This employment offer is contingent upon your successful
completion of"
a) NRGG's pre-employment physical.
b) Drug screening and security background investigation. (The
security questionnaire previously transmitted to you needs to
be conipteted and returned as soon as possible.)
c) Reference confirmations.
17. If the Shareholders of NRGG reject the stock option plan
contemplated in item numbers 5 and 6, then NRGG will issue to you
stock options out of the existing 1996 Stock Option Plan that
match as nearly as possible those contemplated in said items 5 and
6; provided, however, that you understand that the total shares
available for issuance under the 1996 Stock Option Plan is 176,000
shares and that the 1996 Stock Option Plan's definition of Change
of Control does not include an acquisition by NRG Energy, Inc. of
stock of NRGG or a merger of NRGG into NRG Energy, Inc.
Your acceptance of this offer shall be subject to the conditions
specified in item 16. The physical and drug screening will be
scheduled as soon as possible following your acceptance. When the
conditions have been satisfied, the provisions of this letter will
function as the terms and conditions of a binding agreement between you
and NRGG. NRGG will promptly notify you when the conditions specified
in item 16 have been fulfilled.
I am very pleased to be able to make this offer to you. I am very
excited about the future of NRGG and I know that you share this
excitement as well. Please call if you have any questions regarding
this employment offer.
Sincerely,
/s/ Xxxxxxx Xxxxx
Xx. Xxxxxx X. Xxxxxxx, Xx.
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March 28, 1997
Accepted:
/s/ Xxxxxx X. Xxxxxxx, Xx.
Date: 3/31/97
