EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is being executed as of October 5,
1998 (the "Effective Date"), between Green Mountain Energy Resources L.L.C.
("Green Mountain" or the "Employer") and M. Xxxxx Xxxxx (the "Employee")
(collectively, the "Parties").
WHEREAS, the Employer desires to employ the Employee on the terms and
conditions described herein, and the Employee wishes to be so employed;
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
terms and conditions set forth in this Agreement, the Parties hereby agree,
effective as of the Effective Date, as follows:
1. Employment. Employer hereby employs Employee, and Employee hereby
accepts employment subject to the terms and conditions set forth below.
1.1 Term. The employment of the Employee shall commence on the
Effective Date and shall continue until December 31, 2003 (the "Term").
Notwithstanding the foregoing, this Agreement shall be subject to termination at
any time prior to the expiration of the Term as provided in Sections 4 and 5
hereof.
1.2 Capacity. Employee is and shall be employed in the capacity of
President, Chief Executive Officer, and Chief Financial Officer of Green
Mountain and in such capacity, shall have the rights and responsibilities
attendant to that of the Chief Executive Officer of a publicly traded company.
Employer shall consult with Employee, and Employee will participate in any
decisions, with respect to changing Green Mountain's policies, personnel,
culture, compensation structure, reporting systems or configuration and
alignment of operating divisions; without limiting the generality of the
foregoing, all material decisions affecting Green Mountain, other than those not
in the ordinary course of business, shall be made by Employee. Employee's
duties in such capacity shall be to control, direct and supervise the day-to-day
operations of Green Mountain. Employee's exercise of the foregoing duties shall
be subject at all times to the oversight and direction of Green Mountain's
Management Committee or Board of Directors.
1.3 Place of Performance. In connection with his employment by the
Employer, Employee's principal place of business will be in Dallas, Texas.
Duties of Employee to be performed in connection with his employment for Green
Mountain that cannot be performed in Dallas, Texas will be performed at the
Company's offices in South Burlington, Vermont, and at such other locations as
may be reasonably required by the Company, consistent with the duties of
Employee as set forth in Section 1.2 above.
2. [Reserved]
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3. Compensation.
3.1 Salary, Bonus and Withholding.
3.1.1 Salary and Bonus. During the Term, as compensation for
services rendered by Employee, Green Mountain shall pay Employee a base salary
("Green Mountain Salary") in monthly installments equal to one twelfth (1/12) of
the then Annualized Amount (herein defined). Employee may be paid an annual
incentive bonus (the "Incentive Bonus") at the absolute discretion of the
Management Committee or Board of Directors of Employer.
3.1.2 Definition of Annualized Amount. As used herein, the term
"Annualized Amount" shall mean $155,000. The Annualized Amount may be subject
to reduction pursuant to an expenditure control review; provided, however, that
Employee must receive written notice of any proposed reduction in the Annualized
Amount prior to the effective date of such reduction.
3.1.3 Withholding for Taxes. Compensation (as herein defined)
shall be subject to any and all applicable payroll and withholding deductions
required by the law of any jurisdiction, state or federal, with taxing authority
with respect to such Compensation.
3.1.4 Definition of Compensation. The Green Mountain Salary, the
Incentive Bonus (if any), the Benefits, and the other perquisites set forth in
this Agreement are herein collectively referred to as the "Compensation."
3.2 Expenses. Green Mountain shall provide Employee an annual expense
allowance of up to $50,000 for transportation and housing within Vermont (the
"Vermont Allowance"). Green Mountain shall reimburse Employee, in accordance
with Green Mountain's standard expense reimbursement policy applicable to senior
executives of Green Mountain, for reasonable and necessary expenses incurred by
Employee while traveling pursuant to Green Mountain's directions (including,
without limitation, air fare, aircraft charter and hotel expenses incurred in
connection with travel between the locations specified in Section 1.3) upon
presentation of documentation reasonably acceptable to Green Mountain. In
connection with such reimbursement, Green Mountain may, but shall not be
obligated to, provide Employee with a credit card or cards to be used for paying
such expenses. Such card or cards shall be the property of Green Mountain and
upon termination of the employment shall be returned to Green Mountain by
Employee. Employee shall be responsible for and shall reimburse Green Mountain
for any and all payments made by Green Mountain for Employee's personal, non-
reimbursable expenses charged on any such card or cards.
3.3 Other Benefits. During the Term, Employer shall provide the
following additional benefits to Employee:
(a) Health Insurance. Medical, dental and hospitalization
insurance for Employee and his family with the same scope and coverage as is
provided by Employer to its senior executives.
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(b) Term Life Insurance. Term life insurance upon the life of
Employee in an amount consistent with insurance made available to the senior
executives of Employer, including, if applicable, split-dollar insurance
policies.
(c) Disability Insurance. Disability insurance in an amount
consistent with insurance made available to the senior executives of Employer.
(d) Other Benefit Programs. Employee shall be entitled to
participate in all other employee benefit programs of Employer which the
Management Committee or Board of Directors of Employer may, in its sole
discretion, regularly make available to all of its senior executives (such as a
stock bonus plan, a retirement plan and other fringe benefits).
(e) Offices. Employer shall provide reasonable office facilities
in Dallas, Texas with secretarial and support services, for the use of Employee.
Employee shall also be entitled to an office with secretarial and support
services at the principal offices of Green Mountain in Vermont.
(f) Vacation. Employee shall be entitled to a minimum of four
(4) weeks of paid vacation during each calendar year.
(g) Equity Interest. Employee will have an opportunity to
purchase 300,000 Common Units of the Employer (i.e., an equity interest in the
Employer equal to 5% of the existing equity interests) pursuant to the
Employer's Employee Equity Loan Program. Such interest will be subject to
dilution resulting from the sale of additional equity interests in Employer.
(h) Options. Employer will grant to Employee options to purchase
300,000 Common Units of the Employer (i.e., an equity interest in the Employer
equal to 5% of the existing equity interests, (20% of such options to vest
immediately and the remaining options to vest 20% per year on each anniversary
of the Effective Date). Contemporaneously with the consummation of any
additional equity financing by the Employer (other than in connection with the
Employer's Employee Unit Purchase Plan and other than any equity financing
consummated after the successful completion of an initial public offering of the
Employer's equity securities), Employer will grant to Employee additional
options to purchase equity interests in the Employer equal to 5% of the
additional equity interests issued, such additional options to be at an exercise
price equal to the issue price of the equity interests issued.
(i) Definition of Benefit. The expense allowance and
reimbursement of expenses provided for in Section 3.2, the benefits provided for
in this Section 3.3 and any other benefits hereafter granted to Employee by the
Employer are herein referred to as the "Benefits."
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4. Termination of Employment.
4.1 Termination by the Employer.
4.1.1 Termination for Cause. Employer may terminate the
Employee's employment with Employer "for Cause" by written notice to the
Employee specifying the reasons for termination, with the consequences set forth
in Section 4.3.1 below. "For Cause," as used in this Agreement, shall mean (a)
conviction of a felony involving an act of dishonesty or moral turpitude, (b)
material breach by Employee of a provision of this Agreement, or (c) gross
negligence or willful malfeasance by Employee in the management of Green
Mountain.
4.1.2 Other Termination. In addition, the Employer shall have
the right in its sole discretion to terminate the Employee's employment with
Employer for any reason whatsoever, or for no reason, with the consequences set
forth in Section 4.3.2 below.
4.2 Termination by the Employee. The Employee shall have the right to
terminate his employment with Employer, with the consequences set forth in
Section 4.3.2 below, by giving written notice to Employer.
4.3 Severance Benefits.
4.3.1 Termination by the Employee or by the Employer for Cause.
If Employer terminates the Employee's employment with Employer for Cause
pursuant to Section 4.1.1 hereof, or if the Employee terminates the Employee's
employment with the Employer pursuant to Section 4.2 hereof, the Employee shall
have no right to any further compensation, except for (a) any accrued but unpaid
portions of the Annualized Amount, and (b) such health benefits as the Employer
is required by law to continue to provide for a period of thirty (30) days
following termination.
4.3.2 Termination by the Employer other than For Cause. If the
Employer terminates the Employee's employment with the Employer prior to the
expiration of the Term for any reason other than pursuant to Section 4.1.1
hereof, the Employee shall be entitled to receive (a) any Compensation or
Benefit provided under this Agreement that has accrued up to the termination
date, and (b) the Green Mountain Salary and the Benefits specified in clauses
3.3(a), (b), and (c) until the earlier to occur of (i) the expiration of one
year following the termination and (ii) the commencement of substantially full-
time employment by Employee. Employee agrees to give Employer prompt written
notice of any subsequent employment following termination of the Employee's
employment pursuant to this Section 4.3.2. In addition, if the Employer
terminates the Employee's employment with the Employer prior to the expiration
of the Term for any reason other than pursuant to Section 4.1.1 hereof, and if
no Xxxx family member is serving as the chairman of the management committee,
board of directors, or other governing body of the Employer, all options granted
pursuant to Section 3.3(h) shall immediately vest and be exercisable.
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4.3.3 Sole Benefits. The benefits and payments provided for in
this Section 4.3 will be the Employee's only severance benefits.
5. Termination of this Agreement upon Employee's Death or Permanent
Disability. This Agreement shall be deemed terminated in the event of death or
permanent and total disability of Employee during the Term.
5.1 Effect. In such event, Employer shall be obligated to (i) pay to
Employee, Employee's guardian, or Employee's estate, as applicable, all Salary
earned by Employee through the date of death or the date that Employee is
considered permanently and totally disabled, and (ii) grant to Employee all
Benefits accrued as of the date of death or the date that Employee is considered
to be permanently and totally disabled. Also in such event, the Employer will
allow the Employee's spouse and dependent children to continue to participate in
the Employer's medical plan on the same basis as such continued participation is
provided to spouses and dependent children of other executive employees. In the
event such continued participation is not possible for any reason, the Employer
will purchase health insurance coverage for the Employee's spouse and dependent
children that provides, to the extent practicable, reasonably comparable
benefits for a period of 1 year. In no event will the Employer be obligated to
provide any medical plan or other health insurance coverage in the event
Employee's spouse and dependent children become eligible for medical benefits
offered by another employer. Upon the payments of the aforesaid sums by the
Employer, all obligations of Employer to Employee hereunder shall be totally and
completely satisfied, and Employer shall have no further obligations of any type
to Employee pursuant to this Agreement.
5.2 Definition. Employee shall be considered "permanently and totally
disabled" for purposes of this Section 5 in the event he is unable to perform
with reasonable continuity his material duties hereunder by reason of any
medically determinable physical or mental impairment which has lasted for a
continued period of not less than nine (9) months.
6. Confidentiality. Employer agrees to provide access to, and the
Employee acknowledges that his employment under this Agreement may bring the
Employee into close contact with, many of the Employer's (which for purposes of
this Section 6 and Section 7 shall mean the Employer, its subsidiaries and
affiliated companies of each) confidential affairs, including information about
costs, profits, business opportunities, key personnel, operational methods,
plans for future development, and other business affairs, and other information
not readily available to the public. The Employee further acknowledges that the
services agreed to under this Agreement are of a special and unique character
and that the Employer competes in nearly all of its business activities with
other organizations for which the Employee's services and expertise would be
valuable. In recognition thereof, the Employee agrees and covenants:
(a) to keep confidential all information of the Employer which is not
publicly known or generally known to persons engaged in businesses similar or
related to those of Employer and not to disclose such matters to anyone outside
the Employer either while the Employee is employed with the Employer or
thereafter, except (i) with the Employer's express prior written authorization,
or (ii) pursuant to subpoena, court order or similar judicial process
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about which the Employee has given the Employer notice as soon as practicable
upon the Employee's receipt thereof;
(b) to deliver promptly to the Employer, upon termination of the
Employee's employment with the Employer (whether upon expiration of the Term or
prior thereto), or at any other time that the Employer may so request, all
memoranda, notes, records, reports, and other documents or other repositories of
information (all copies thereof) containing any information concerning
confidential information, whether prepared by the Employee, the Employer or
anyone else;
(c) not to make, publicly or privately, any disparaging remarks of any
nature whatsoever about the Employer or any of its employees, customers or
prospect (and the Employer agrees not to make, publicly or privately, any
disparaging remarks of any nature whatsoever about the Employee);
(d) to coordinate with the Employer concerning comments, made publicly or
privately (other than to his immediate family), on his employment, except to the
extent reasonably required to obtain new employment, provided that all such
statements shall in any event be consistent with clause 6(c) hereof; and
(e) to keep confidential the terms of this Employment Agreement and to
disclose this Agreement's terms only to (i) a financial institution considering
a loan to Employee, (ii) tax or other governmental authorities, or (iii)
counsel, advisors or related parties of Employee who have been advised of the
confidentiality provisions of this Agreement.
For purposes of this Section 6 (other than clause (b) of the preceeding
sentence), all references to Employer shall include the Employer, any member of
the Xxxx family or any affiliate of either.
7. Non-Interference. During the Employee's tenure of employment with the
Employer and for one year thereafter, the Employee agrees to refrain from
interfering with the employment relationship between the Employer and its other
employees by soliciting, directly or indirectly, any such individual to
participate in, or be employed by, any business venture other than the Employer.
During the Employee's tenure of employment with the Employer and for a period of
one year thereafter, the Employee agrees to refrain from soliciting (for himself
or for any entity in which the Employee has an interest or by which the Employee
is employed) any business in any area or activity in which Employee or such
entity competes with Employer from any person who is a current client or
customer of the Employer at the termination date of the Employee's employment
with the Employer.
8. Return of Property on Termination. In order to prevent the intentional
or unintentional disclosure of Employer's trade secrets by Employee, the Parties
agree that on termination of the Employee's employment, all of Employer's
property shall be promptly returned to Employer by Employee. Without limiting
the generality of the term "Employer's property," Employer and Employee
stipulate that for the purposes of this Agreement, that term includes, but is
not limited to: all credit cards, sales manuals, leasing manuals, brochures,
charts,
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graphs, price lists, customer account lists, prospective mailing lists, and any
other written or printed materials, recordings, photographs, films or slides
relating to the Employer's business, or any copies or reproductions of the
foregoing, and all equipment, hardware, and other property, given by the
Employer to the Employee or owned by Employer and in the possession or under the
direct or indirect control of Employee.
9. Notice. Any notice, request, reply, instruction, or other
communication provided or permitted in this Agreement must be given in writing
and may be served by depositing same in the United States mail in certified or
registered form, postage prepaid, addressed to the Party or Parties to be
notified with return receipt requested, or by delivering the notice in person to
such Party or Parties. Unless actual receipt is required by any provision of
this Agreement, notice deposited in the United States mail in the manner herein
prescribed shall be effective on dispatch. For purposes of notice, the address
of Employee, his spouse, any purported donee or transferee or any administrator,
executor or legal representative of Employee or his estate, as the case may be,
shall be as follows:
The address of Employee shall be:
M. Xxxxx Xxxxx
0000 Xxxxxxx
Xxxxxx, Xxxxx 00000
with a copy to:
J. Xxxxxxx Xxxxxx, Xx., P.C.
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
The address of Employer shall be:
Green Mountain Energy Resources L.L.C.
00 Xxxxx Xxxxxxxx Xxxxx
P.O. Box 2206
South Burlington, Vermont 05407-2206
Attention: General Counsel
with a copy to:
Green Mountain Energy Resources L.L.C.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx
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Employer shall have the right from time to time and at any time to change its
address and shall have the right to specify as its address any other address by
giving at least ten (10) days written notice to Employee. Employee shall have
the right from time to time and at any time to change his address and shall have
the right to specify as his address any other address by giving at least ten
(10) days written notice to Employer.
10. Controlling Law. The execution, validity, interpretation and
performance of this Agreement shall be determined and governed by the
substantive laws of the State of Texas.
11. Entire Agreement. This Agreement contains the entire agreement of the
Parties with respect to the employment of Employee. The Agreement may not be
changed orally or by action or inaction, but only by an agreement in writing
signed by the Party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
12. Severability. If any provision of the Agreement is rendered or
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by decree of a court of last resort, the Parties shall
promptly meet and negotiate substitute provisions for those rendered or declared
illegal or unenforceable, but all remaining provisions of this Agreement shall
remain in full force and effect.
13. Effect of Agreement, Assignment, Required Assumption. This Agreement
shall be binding upon Employee and his heirs, executors, administrators, legal
representatives, successors and assigns and the Employer and its successors and
assigns. Employee may not assign any rights hereunder without the prior written
consent of Employer. Employer may assign its rights and obligations hereunder
to any successor entity or transferee carrying on a substantial portion of the
business currently carried on by the Employer. Employer shall require any
person who is the successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to substantially all of the business or assets of
Employer to assume, by a written agreement in form and substance satisfactory to
the Employee, all of the obligations of Employer under this Agreement.
14. Indemnification. Employer shall indemnity, defend and hold Employee
harmless to the maximum extent permitted by law against judgments, fines,
amounts paid in settlement, and reasonable expenses, including attorneys' fees
incurred by Employee, in connection with the defense of, or as a result of any
action or proceeding (or any appeal from any action or proceeding) in which
Employee is made or is threatened to be made a party by reason of the fact that
Employee is or was an officer, employee or director of any corporation,
partnership or other organization which, directly or indirectly, controls or is
controlled by Employer, regardless of whether such action or proceeding is one
brought by or in the right of Employer. Employer further represents and
warrants: (i) that Employee shall be covered and insured up to the maximum
limits provided by all insurance which Employer maintains to indemnify its
directors and officers; and (ii) that Employer shall maintain such insurance, in
not less than its present limits, in effect throughout the term of this
Agreement.
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15. Relief. The Employee acknowledges that, because the Employer's legal
remedies may be inadequate in the event of a breach of, or other failure to
perform, by the Employee any of the agreements set forth in Sections 6, 7, and 8
hereof, the Employer may, in addition to obtaining any other remedy or relief
available to it (including without limitation damages at law), enforce the
provisions of such Sections by injunction and other equitable relief.
16. Attorneys' Fees. Employer shall pay in a timely and prompt manner any
and all legal fees and expenses incurred by the Employee in connection with
negotiation and preparation of this Agreement and from time to time as a result
of Employer's contesting the validity or enforceability of the Agreement.
17. Execution. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which shall constitute one
instrument.
EXECUTED effective as of the date first above written.
EMPLOYER:
GREEN MOUNTAIN ENERGY RESOURCES L.L.C.
By: /s/ Xxxx Xxxx
-------------------------------------
EMPLOYEE:
/s/ M. Xxxxx Xxxxx
-------------------------------------------
M. Xxxxx Xxxxx
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