Document:

Exhibit 10.2

(DIRECTOR)

 

GEVITY HR, INC.

RESTRICTED STOCK AWARD

 

This RESTRICTED STOCK AWARD (the “Award”) is made and entered into as of the ____ day of __________________, 200__ by and between Gevity HR, Inc. (the “Company”), a Florida corporation, and _____________________________ (the “Recipient”).

 

Upon and subject to the Additional Terms and Conditions attached hereto and incorporated herein by reference as part of this Award, the Company hereby awards as of the Grant Date to the Recipient the Restricted Shares described below pursuant to the Gevity HR, Inc. 2005 Equity Incentive Plan (the “Plan”) in consideration of the Recipient’s services to the Company (the “Restricted Stock Award”). 

 

 

	
A.

	
Grant Date: ________________, 200__.

 

	
B.

	
Restricted Shares: ______________ shares of the Company’s common stock (“Common Stock”), $.01 par value per share.

 

	
C.

	
Vesting Schedule: The Restricted Shares shall vest according to the Vesting Schedule attached hereto as Schedule 1 hereto (the “Vesting Schedule”). The Restricted Shares which have become vested pursuant to the Vesting Schedule are herein referred to as the “Vested Shares.” Any and all unvested Restricted Shares determined as of the date the Recipient ceases for any reason to be a member of the Board of Directors of the Company or any Subsidiary will be forfeited and returned to the Company. 

 

 

IN WITNESS WHEREOF, the Company and Recipient have signed this Award as of the Grant Date set forth above.

 

	
Gevity HR, Inc.

 

	
By:_________________________________

 

	
Title:________________________________

	
____________________________________
Recipient

 

 

 

ADDITIONAL TERMS AND CONDITIONS OF

GEVITY HR, INC.

RESTRICTED STOCK AWARD

 

	
1.

	
Issuance of Restricted Shares. 

 

(a)            The Company shall issue the Restricted Shares as of the Grant Date by the issuance of share certificate(s) evidencing Restricted Shares to the Secretary of the Company or such other agent of the Company as may be designated by the Committee (the “Share Custodian”). Evidence of the Restricted Shares in the form of share certificate(s) shall be held by the Company or Share Custodian, as applicable, until the Restricted Shares become Vested Shares in accordance with the Vesting Schedule. 

 

(b)            When the Restricted Shares become Vested Shares, the Company or the Share Custodian, as the case may be, shall deliver the Vested Shares by physical delivery of the share certificate(s) to a broker designated by the Company (the “Designated Broker”) for the benefit of an account established in the name of the Recipient. If the number of Vested Shares includes a fraction of a share, neither the Company nor the Share Custodian shall be required to deliver the fractional share to the Recipient, and the Company shall pay the Recipient the amount determined by the Company to be the estimated fair market value therefor. At any time after receipt by the Designated Broker, the Recipient may require that the Designated Broker deliver the Vested Shares to the Recipient
pursuant to such arrangements or agreements as may exist between the Designated Broker and the Recipient.

 

(c)            In the event that the Recipient forfeits any of the Restricted Shares, the Company shall cancel the issuance on its stock records and the Share Custodian shall promptly deliver the share certificate(s) representing the forfeited shares to the Company.

 

(d)            Recipient hereby irrevocably appoints the Share Custodian, and any successor thereto, as the true and lawful attorney-in-fact of Recipient with full power and authority to execute any stock transfer power or other instrument necessary to transfer any Restricted Shares to the Company in accordance with this Award, in the name, place, and stead of the Recipient. The term of such appointment shall commence on the Grant Date of this Award and shall continue until the last of the Restricted Shares are delivered to the Recipient as Vested Shares or are returned to the Company as forfeited Restricted Shares. 

 

(e)            Until the Restricted Shares become Vested Shares, the Recipient shall be entitled to all rights applicable to holders of shares of Common Stock including, without limitation, the right to vote such shares and to receive dividends or other distributions thereon as provided by Section 2, except as expressly provided in this Award. 

 

(f)             In the event the number of shares of Common Stock is increased or reduced as a result of a subdivision or combination of shares of Common Stock or the 

 

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payment of a stock dividend or any other increase or decrease in the number of shares of Common Stock or other transaction such as a merger, reorganization or other change in the capital structure of the Company, the Recipient agrees that any certificate representing shares of Common Stock or other securities of the Company issued as a result of any of the foregoing shall be delivered to the Share Custodian and shall be subject to all of the provisions of this Award as if initially granted hereunder.

 

2.                 Dividends. The Recipient shall be entitled to dividends or other distributions paid or made on all Restricted Shares as and when declared and paid or made. 

 

	
3.

	
Restrictions on Transfer of Restricted Shares.

 

(a)            General Restrictions. Except as provided by this Award, the Recipient shall not have the right to make or permit to exist any transfer or hypothecation, whether outright or as security, with or without consideration, voluntary or involuntary, of all or any part of any right, title or interest in or to any Restricted Shares. Any such disposition not made in accordance with this Award shall be deemed null and void. The Company will not recognize, or have the duty to recognize, any disposition not made in accordance with the Plan and this Award, and any Restricted Shares so transferred will continue to be bound by the Plan and this Award. The Recipient (and any subsequent holder of Restricted Shares) may not sell, pledge or otherwise directly or
indirectly transfer (whether with or without consideration and whether voluntarily or involuntarily or by operation of law) any interest in or any beneficial interest in any Restricted Shares except pursuant to the provisions of this Award. Any sale, pledge or other transfer (or any attempt to effect the same) of any Restricted Shares in violation of any provision of the Plan or this Award shall be void, and the Company shall not record such transfer, assignment, pledge or other disposition on its books or treat any purported transferee or pledgee of such Restricted Shares as the owner or pledgee of such Restricted Shares for any purpose.

 

(b)            Certain Permitted Transfers. The restrictions contained in this Section 3 will not apply with respect to transfers of the Restricted Shares pursuant to applicable laws of descent and distribution; provided that the restrictions contained in this Section 3 will continue to be applicable to the Restricted Shares after any such transfer; and provided further that the transferee(s) of such Restricted Shares must agree in writing to be bound by the provisions of the Plan and this Award.

 

	
4.

	
Additional Restrictions on Transfer.

 

(a)               In addition to any legends required under applicable securities laws, the certificates representing the Restricted Shares shall be endorsed with the following legend and the Recipient shall not make any transfer of the Restricted Shares without first complying with the restrictions on transfer described in such legend:

 

 

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TRANSFER IS RESTRICTED

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND FORFEITURE PROVISIONS WHICH ALSO APPLY TO THE TRANSFEREE AS SET FORTH IN A RESTRICTED STOCK AWARD, DATED ___________, A COPY OF WHICH IS AVAILABLE FROM THE COMPANY.

 

(b)               Opinion of Counsel. No holder of Restricted Shares may sell, transfer, assign, pledge or otherwise dispose of (whether with or without consideration and whether voluntarily or involuntarily or by operation of law) any interest in or any beneficial interest in any Restricted Shares, except (i) pursuant to an effective registration statement under the Securities Act of 1933 (the “Securities Act”) or (ii) in a transaction that fully complies with Rule 144 under the Securities Act, without first delivering to the Company an opinion of counsel (reasonably acceptable in form and substance to the Company) that neither registration nor qualification under the Securities Act and applicable state securities laws is required
in connection with such transfer.

 

	
5.

	
Change in Capitalization.

 

(a)               The number and kind of Restricted Shares shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a subdivision or combination of shares or the payment of a stock dividend in shares of Common Stock to holders of outstanding shares of Common Stock or any other increase or decrease in the number of shares of Common Stock outstanding effected without receipt of consideration by the Company. No fractional shares shall be issued in making such adjustment. All adjustments made by the Committee under this Section shall be final, binding, and conclusive.

 

(b)               In the event of a merger, consolidation, extraordinary dividend (including a spin-off), reorganization, recapitalization, sale of substantially all of the Company’s assets, other change in the capital structure of the Company, tender offer for shares of Common Stock or a Change in Control, an appropriate adjustment may be made with respect to the Restricted Shares such that other securities, cash or other property may be substituted for the Common Stock held by Share Custodian.

 

(c)               The existence of the Plan and the Restricted Stock Award shall not affect the right or power of the Company to make or authorize any adjustment, reclassification, reorganization or other change in its capital or business structure, any merger or consolidation of the Company, any issue of debt or equity securities having preferences or priorities as to the Common Stock or the rights thereof, the dissolution or liquidation of the Company, any sale or transfer of all or part of its business or assets, or any other corporate act or proceeding.

 

6.                 Governing Laws. This Award shall be construed, administered and enforced according to the laws of the State of Florida; provided, however, no Restricted Shares shall be 

 

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issued except, in the reasonable judgment of the Committee, in compliance with exemptions under applicable state securities laws of the state in which the Recipient resides, and/or any other applicable securities laws.

 

7.                 Successors. This Award shall be binding upon and inure to the benefit of the heirs, legal representatives, successors, and permitted assigns of the parties.

 

8.                 Notice. Except as otherwise specified herein, all notices and other communications under this Award shall be in writing and shall be deemed to have been given if personally delivered or if sent by registered or certified United States mail, return receipt requested, postage prepaid, addressed to the proposed recipient at the last known address of the recipient. Any party may designate any other address to which notices shall be sent by giving notice of the address to the other parties in the same manner as provided herein. Notices sent to the Company shall be addressed to the attention of the Secretary of the Company.

 

9.                 Severability. In the event that any one or more of the provisions or portion thereof contained in this Award shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Award, and this Award shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.

 

10.              Entire Agreement. Subject to the terms and conditions of the Plan, this Award expresses the entire understanding and agreement of the parties with respect to the subject matter. This Award may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.

 

11.              Headings and Capitalized Terms. Paragraph headings used herein are for convenience of reference only and shall not be considered in construing this Award. Capitalized terms used, but not defined, in this Award shall be given the meaning ascribed to them in the Plan

 

12.              Specific Performance. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Award, the party or parties who are thereby aggrieved shall have the right to specific performance and injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.

 

13.              No Right to Continuation of Relationship. Neither the establishment of the Plan nor the Restricted Stock Award made pursuant to this Award shall be construed as giving the Recipient the right to any continued service as a director or other service provider of the Company or any affiliate of the Company.

 

 

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SCHEDULE 1

 

GEVITY HR, INC.

RESTRICTED STOCK AWARD

 

Vesting Schedule

 

	
I.

	
The Restricted Shares shall become vested in accordance with the following Vesting Schedule:

 

	
 

	
Percentage of Restricted Shares

	
Years of Vesting Service

	
which are Vested Shares

	
 

				

 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
  

	
 

	
 

	
 

						

 

 

	
II.

	
The Recipient shall receive one Year of Vesting Service for each full consecutive one-year period during the period beginning ____________, 200___ and ending on the date the Recipient ceases to be a member of the Board of Directors of the Company or any Subsidiary, regardless of the reason. Except as provided in Section III below, any portion of the Restricted Shares which are not vested as of the date the Recipient ceases be a member of the Board of Directors of the Company or any Subsidiary shall be forfeited.

 

	
III.

	
Notwithstanding the provisions of Sections I or II above, in the event of the occurrence of any Change in Control following the Grant Date but prior to the date the Recipient ceases to be a member of the Board of Directors of the Company or any Subsidiary, any previously unvested Restricted Shares shall become immediately vested. 

 

 

 

 

 

 

 

 

Schedule 1-Page 1 of 1EXHIBIT 10.10

 

EMPLOYMENT AGREEMENT

 

John B. (Thad) Hill, III

 

This EMPLOYMENT
AGREEMENT (the “Agreement”) is dated as of May 9, 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
Thaddeus Hill (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 May 18, 2005 and ending on May 17, 2010 (the “Employment Term”);
provided, however, that commencing with May 17, 2010 and on each Mary 17
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 the Executive Vice President, Business Development and
Strategic Planning 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 executive vice
president of business development and strategic planning 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 $325,000, 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 $100,000 (the “Signing
Bonus”), which shall be paid to Executive in cash in a single lump sum as soon
as practicable after Executive commences his employment with the Company.

 

5.                                       Equity Participation.  Executive will be provided a confidential
information memorandum (the “PPM”) regarding the Company’s equity program.  Executive’s equity participation in
the Company shall be subject to his review of the PPM, and shall be documented
pursuant to the Texas Genco LLC 2004 Unit Plan (the “Unit Plan”), Management
Unitholder’s Agreement, Unit Option Agreements, 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.

 

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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.                                      Until the earlier of October 30,
2005 or until the Executive relocates in Houston, Executive shall work both in
the Company’s office located in Houston, Texas and his home office located in
Dallas, Texas; provided, however, that Executive understands that he may be
required to work in the Company’s Houston office at such times as the CEO
determines.  Until October 30, 2005, the
Company shall reimburse Executive for temporary living expenses to cover
accommodation, transportation between Dallas, Texas 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), (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), and
(iii) up to four trips for Executive’s family to Houston, Texas for house
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.  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.

 

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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 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

 

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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:

 

(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, (B) any sustained diminution, other than in an inconsequential
or immaterial aspect, in Executive’s authority, title, duties or
responsibilities from those described in Section 2 hereof, (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

 

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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 60th 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.

 

(iii)  If Executive’s employment is
terminated by the Company without Cause (other than by reason of death or
Disability) or if Executive resigns for Good Reason, 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) if Executive commences receiving coverage under
comparable welfare benefit plans from any subsequent employer (“Comparable
Coverage”) prior to the occurrence of (x) or (y) of the preceding clause, through
the date such Comparable Coverage commences.

 

6

 

Following
Executive’s termination of employment by the Company without Cause (other than
by reason of Executive’s death or Disability) or by Executive’s resignation for
Good Reason, except as set forth in this Section 8(c)(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.

 

d.                                      Expiration
of Employment Term. 
In the event
either party delivers a Notice of Nonrenewal, unless Executive’s employment is
earlier terminated pursuant to paragraphs (a), (b) or (c) of this Section 8,
Executive’s termination of employment hereunder (whether or not Executive
continues as an employee of the Company thereafter) shall be deemed to occur on
the close of business on the next scheduled Extension Date and Executive shall
be entitled to receive the Accrued Rights (including, without limitation, his
full Annual Bonus for his final year of employment).  Following such termination of Executive’s
employment hereunder as a result of either party’s election not to extend the
Employment Term, except as set forth in this Section 8(d) and in Sections 13
and 14, Executive shall have no further rights to any compensation or any other
benefits under this Agreement, and the Executive shall have no further obligations
under Section 9, provided, however, that Executive’s rights with respect to his
equity participation shall be governed solely by the Equity Documents, and
solely in respect of the Executive’s rights under the Equity Documents: (i) if
the Company delivers a Notice of Nonrenewal, and Executive subsequently
terminates his employment with the Company, Executive’s employment shall be
deemed terminated by Executive for Good Reason; and (ii) if the Executive
delivers a Notice of Nonrenewal, and Executive subsequently terminates his
employment with the Company, Executive’s employment shall be deemed terminated
by Executive without Good Reason.  For
the avoidance of doubt, any changes set forth in this Section 8(d) relating to
the termination of Executive’s employment by Executive after either party
delivers a Notice of Nonrenewal shall apply only for purposes of the Equity
Documents, and shall have no further effect on this Agreement.  Notwithstanding the foregoing, if the Company
elects, in its sole discretion, that Section 9 shall apply for a period of up
to one year following Executive’s termination of employment under this Section
8(d), Executive shall be paid one hundred sixty-five percent (165%) of the Base
Salary at the rate in effect immediately prior to the termination of Executive’s
employment for such period.  In order to
make the election described in the preceding sentence, the Company must deliver
written notice to Executive, at least 60 days prior to the end of the Term,
which explains that the Company has made such election and sets forth the
period of time that Section 9 shall continue to apply (and that Executive shall
continue to be paid 165% of the Base Salary).

 

e.                                       Notice of Termination.  Any purported termination of employment by
the Company or by Executive (other than due to Executive’s death) shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 12(h) hereof. 
For purposes of this Agreement, a “Notice of Termination” shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of employment under
the provision so indicated.

 

f.                                         Board/Committee Resignation.  Upon termination of Executive’s employment
for any reason, Executive agrees to resign, as of the date of such termination
and to

 

7

 

the extent applicable, from the Board (and
any committees thereof), and any board of directors or managers (and any
committees thereof) of any of the Company’s affiliates.

 

g.                                      Payments
to Executive. 
Except where provided otherwise, all payments required to be made by the
Company to Executive under this Section 8 in connection with the termination of
Executive’s employment shall be payable within 15 days after the effective date
of such termination; provided, however, that nothing shall affect or impair
such rights as Executive shall have pursuant to the Equity Documents.

 

9.                                       Non-Competition.

 

a.                                       Executive acknowledges and
recognizes the highly competitive nature of the businesses of the Company and
its subsidiaries and accordingly agrees as follows:

 

(1)                                                                                  During
the Employment Term and, except as provided in Section 8(d), for a period of
one year following the date Executive ceases to be employed by the Company (the
“Restricted Period”), Executive will not, whether on Executive’s own behalf or
on behalf of or in conjunction with any person, firm, partnership, joint
venture, association, corporation or other business organization, entity or
enterprise whatsoever (“Person”), directly or indirectly:

 

(i)                                     engage
in any business that competes with the business of the Company or its
subsidiaries (including, without limitation, businesses which the Company or
its subsidiaries have specific plans to conduct in the future and as to which
Executive is aware of such planning) in any geographical area that is within
100 miles of any geographical area where the Company or its subsidiaries
materially operates, produces, sells, leases, rents, licenses or otherwise
provides material products or services (a “Competitive Business”);

 

(ii)                                  enter
the employ of, or render any services to, any Person (or any division or
controlled or controlling affiliate of any Person) who or which engages in a
Competitive Business;

 

(iii)                               acquire
a financial interest in, or otherwise become actively involved with, any
Competitive Business, directly or indirectly, as an individual, partner,
shareholder, officer, director, principal, agent, trustee or consultant; or

 

(iv)                              interfere
with, or attempt to interfere with, business relationships (whether formed
before, on or after the date of this Agreement) between the Company or any of
its subsidiaries and customers, clients, or suppliers of the Company or its
subsidiaries.

 

(2)                                                                                  Notwithstanding
anything to the contrary in this Agreement, Executive may, directly or
indirectly own, solely as an investment, securities of any Person engaged in
the business of the Company or its subsidiaries which are publicly traded on a
national or regional stock exchange or on the over-the-counter market if
Executive (i) is not a controlling person of, or a member of a group which
controls, such Person and (ii) does not, directly or indirectly, own 5% or
more of any class of securities of such Person.

 

8

 

(3)                                                                                  During
the Restricted Period, Executive will not, whether on Executive’s own behalf or
on behalf of or in conjunction with any Person, directly or indirectly:

 

(i)                                     solicit
or encourage any employee of the Company or its subsidiaries to leave the
employment of the Company or its subsidiaries; or

 

(ii)                                  hire
any such employee who was employed by the Company or its subsidiaries as of the
date of Executive’s termination of employment with the Company or who left the
employment of the Company or its subsidiaries coincident with, or within one
year prior to or after, the termination of Executive’s employment with the
Company.

 

(4)                                                                                  During
the Restricted Period, Executive will not, directly or indirectly, solicit or
encourage to cease to work with the Company or its subsidiaries any consultant
then under contract with the Company or its subsidiaries.

 

b.                                      It is expressly understood and
agreed that although Executive and the Company consider the restrictions
contained in this Section 9 to be reasonable, if a final judicial determination
is made by a court of competent jurisdiction that the time or territory or any
other restriction contained in this Agreement is an unenforceable restriction
against Executive, the provisions of this Agreement shall not be rendered void
but shall be deemed amended to apply as to such maximum time and territory and
to such maximum extent as such court may judicially determine or indicate to be
enforceable.  Alternatively, if any court
of competent jurisdiction finds that any restriction contained in this
Agreement is unenforceable, and such restriction cannot be amended so as to
make it enforceable, such finding shall not affect the enforceability of any of
the other restrictions contained herein.

 

10.                                 Confidentiality; Intellectual
Property.

 

a.                                       Confidentiality.

 

(i)   Executive will not at any time (whether during
or after Executive’s employment with the Company) (x) retain or use for the
benefit, purposes or account of Executive or any other Person outside the
Company; or (y) disclose, divulge, reveal, communicate, share, transfer or
provide access to any Person outside the Company (other than its professional
advisers who are bound by confidentiality obligations), any non-public,
proprietary or confidential information —including without limitation trade
secrets, know-how, research and development, software, databases, inventions,
processes, formulae, technology, designs and other intellectual property,
information concerning finances, investments, profits, pricing, costs,
products, services, vendors, customers, clients, partners, investors,
personnel, compensation, recruiting, training, advertising, sales, marketing,
promotions, government and regulatory activities and approvals — concerning the
past, current or future business, activities and operations of the Company, its
subsidiaries or affiliates and/or any third party that has disclosed or
provided any of same to the Company on a confidential basis (“Confidential
Information”) without the prior written authorization of the Board.

 

(ii)  “Confidential
Information” shall not include any information that is (a) generally known to
the industry or the public other than as a result of Executive’s breach of this
covenant or any breach of other confidentiality obligations by third parties;
(b) made legitimately

 

9

 

available to Executive by a third party without breach of any
confidentiality obligation; or (c) required by law to be disclosed; provided
that Executive shall give prompt written notice to the Company of such
requirement, disclose no more information than is so required, and cooperate
with any attempts by the Company to obtain a protective order or similar
treatment.

 

(iii)  Upon termination of Executive’s
employment with the Company for any reason, Executive shall (x) cease and not
thereafter commence use of any Confidential Information or intellectual
property (including without limitation, any patent, invention, copyright, trade
secret, trademark, trade name, logo, domain name or other source indicator)
owned or used by the Company, its subsidiaries or affiliates; (y) immediately
destroy, delete, or return to the Company, at the Company’s option, all
originals and copies in any form or medium (including memoranda, books, papers,
plans, computer files, letters and other data) in Executive’s possession or
control (including any of the foregoing stored or located in Executive’s
office, home, laptop or other computer, whether or not Company property) that
contain Confidential Information or otherwise relate to the business of the
Company, its affiliates and subsidiaries, except that Executive may retain only
those portions of any personal notes, notebooks and diaries that do not contain
any Confidential Information; and (z) notify and fully cooperate with the
Company regarding the delivery or destruction of any other Confidential
Information of which Executive is or becomes aware.

 

b.                                      Intellectual Property.

 

(i)   If
Executive creates, invents, designs, develops, contributes to or improves any
works of authorship, inventions, intellectual property, materials documents or
other work product (including without limitation, research, reports, software,
databases, systems, applications, presentations, textual works, content or
audiovisual materials) (“Works”) either alone or with third parties, at any
time during Executive’s employment by the Company and within the scope of such
employment and/or with the use of any Company resources (“Company Works”),
Executive shall promptly and fully disclose same to the Company and hereby
irrevocably assigns, transfers and conveys, to the maximum extent permitted by
applicable law, all rights and intellectual property rights therein (including
rights under patent, industrial property, copyright, trademark, trade secret,
unfair competition and related laws) to the Company to the extent ownership of
any such rights does not vest originally in the Company.

 

(ii)  Executive shall take all
requested actions and execute all requested documents (including any licenses
or assignments required by a government contract) at the Company’s expense (but
without further remuneration) to assist the Company in validating, maintaining,
protecting, enforcing, perfecting, recording, patenting or registering any of
the Company’s rights in the Company Works. 
If the Company is unable for any other reason to secure Executive’s
signature on any document for this purpose, then Executive hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents
as Executive’s agent and attorney in fact, to act for and in Executive’s behalf
and stead to execute any documents and to do all other lawfully permitted acts
in connection with the foregoing.

 

(iii)  Executive shall not improperly
use for the benefit of, bring to any premises of, divulge, disclose,
communicate, reveal, transfer or provide access to, or share with the Company
any confidential, proprietary or non-public information or intellectual
property relating to a former employer or other third party without the prior
written permission of such third party. 
Executive hereby indemnifies, holds harmless and agrees to defend the
Company

 

10

 

and its officers, directors, partners, employees, agents and
representatives from any breach of the foregoing covenant.  Executive shall comply with all relevant
policies and guidelines of the Company, including regarding the protection of
confidential information and intellectual property and potential conflicts of
interest.  Executive acknowledges that
the Company may amend any such policies and guidelines from time to time, and
that Executive remains at all times bound by their most current version.

 

(iv)  The provisions of Section 10
shall survive the termination of Executive’s employment for any reason.

 

11.                                 Specific Performance.  Executive acknowledges and agrees that the
Company’s remedies at law for a breach of any of the provisions of Section 9 or
Section 10 would be inadequate and the Company would suffer irreparable damages
as a result of such breach.  In
recognition of this fact, Executive agrees that, in the event of such a breach,
in addition to any remedies at law, the Company, without posting any bond,
shall be entitled to cease making any payments or providing any benefit
otherwise required by this Agreement and obtain equitable relief in the form of
specific performance, temporary restraining order, temporary or permanent
injunction or any other equitable remedy which may then be available; provided,
however, that if the Company does not institute and prevail in an action to
obtain such an equitable remedy, the Company shall re-pay and otherwise
reimburse Executive for the payments and benefits which the Company ceased
making or providing, and interest on such payments at the Company’s reference
lending rate with its principal bank lender. 
Notwithstanding anything contained in this Section 11, Executive’s
rights with respect to his equity participation shall be governed solely by the
Equity Documents.

 

12.                                 Miscellaneous.

 

a.                                       Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without regard to
conflicts of laws principles thereof.

 

b.                                      Entire Agreement/Amendments.  This Agreement contains the entire
understanding of the parties with respect to the employment of Executive by the
Company.  There are no restrictions,
agreements, promises, warranties, covenants or undertakings between the parties
with respect to the subject matter herein other than those expressly set forth
herein.  This Agreement may not be
altered, modified, or amended except by written instrument signed by the
parties hereto.  The Company may cause
the Service Company or another subsidiary to discharge the Company’s
obligations to Executive to make cash payments and provide benefits as set
forth in this Agreement (except with respect to any equity participation rights
pursuant to the Equity Documents), and any such discharge of the Company’s
obligations by the Service Company or another subsidiary shall not be deemed to
modify this Agreement.

 

c.                                       No Waiver.  The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver of such party’s rights or deprive such party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Agreement.

 

d.                                      Severability.  In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity,

 

11

 

legality and enforceability of the remaining
provisions of this Agreement shall not be affected thereby.

 

e.                                       Assignment.  This Agreement, and all of Executive’s rights
and duties hereunder, shall not be assignable or delegable by Executive or the
Company, except as set forth below.  Any
purported assignment or delegation by Executive in violation of the foregoing
shall be null and void ab initio
and of no force and effect.  This
Agreement may be assigned by the Company only to a Person which is a successor
in interest to substantially all of the business operations of the
Company.  Upon such assignment, the
rights and obligations of the Company hereunder shall become the rights and
obligations of such successor Person.

 

f.                                         Successors; Binding Agreement.  This Agreement shall inure to the benefit of
and be binding upon personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.

 

g.                                      Set Off; Mitigation.  The Company’s obligation to pay Executive the
amounts provided and to make the arrangements provided hereunder shall not be
subject to set-off, counterclaim or recoupment, except for any amounts loaned
or advanced to Executive by the Company or its affiliates or otherwise as
provided in Section 8(c)(iii) hereof. 
Notwithstanding the foregoing, Executive shall not be required to
mitigate the amount of any payment provided for pursuant to this Agreement by
seeking other employment or otherwise and the amount of any payment provided
for pursuant to this Agreement shall not be reduced by any compensation earned
as a result of Executive’s other employment or otherwise.

 

h.                                      Notice.  For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered by hand or overnight
courier or three days after it has been mailed by United States registered
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth below in this Agreement, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.

 

	
  If to the Company:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Texas Genco LLC

  	
   

  	
   

  
	
  c/o Texas Genco Operating Services LLC

  	
   

  	
   

  
	
  12301 Kurland Avenue

  	
   

  	
   

  
	
  Houston, Texas 77034

  	
   

  	
   

  
	
  Telecopy:

  	
   

  	
  (713) 945-3500

  
	
  Attention:

  	
   

  	
  Chief Legal Officer

  
	
   

  	
   

  	
   

  
	
  with a copy to

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Simpson Thacher & Bartlett LLP

  	
   

  	
   

  
	
  425 Lexington Avenue

  	
   

  	
   

  
	
  New York, New York 10017

  	
   

  	
   

  
	
  Telecopy:

  	
   

  	
  (212) 455-2502

  
	
  Attention:

  	
   

  	
  David J. Sorkin

  
	
   

  	
   

  	
  Brian M. Stadler

  
						

 

12

 

If to Executive:

 

To the most recent
address of Executive set forth in the personnel records of the Company.

 

i.                                          Executive Representation.  Executive hereby represents to the Company
that the execution and delivery of this Agreement by Executive and the
performance by Executive of Executive’s duties hereunder shall not constitute a
breach of, or otherwise contravene, the terms of any employment agreement or
other agreement or policy to which Executive is a party or otherwise bound.

 

j.                                          Cooperation.  Executive shall provide Executive’s
reasonable cooperation in connection with any action or proceeding (or any
appeal from any action or proceeding) which relates to events occurring during
Executive’s employment hereunder, but shall be done to the extent reasonably
possible in a manner as to reduce interference in Executive’s new position
after his employment hereunder ends.  The
Company shall reimburse Executive for any reasonable out of pocket expenses he
incurs in connection with such cooperation. 
This provision shall survive any termination of this Agreement.

 

k.                                       Withholding Taxes.  The Company may withhold from any amounts
payable under this Agreement such Federal, state and local taxes as may be required
to be withheld pursuant to any applicable law or regulation.

 

l.                                          Counterparts.  This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.

 

13.                                 Excise Taxes.

 

a.                                       If, after the Company becomes
taxable as a corporation for federal income tax purposes and the Company has
issued stock that is “readily tradeable on an established securities market” as
described in Section 280G of the Internal Revenue Code of 1986, as amended (the
“Code”), it shall be determined (as hereafter provided) that any payment,
benefit or distribution (or combination thereof) by the Company, any of its
affiliates, one or more trusts established by the Company for the benefit of
its employees, or any other person or entity, to or for the benefit of
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, including without limitation
any stock option, restricted stock award, stock appreciation right or similar
right, or the lapse or termination of any restriction on or the vesting or
exercisability of any of the foregoing (a “Payment”), would be subject to the
excise tax imposed by Section 4999 of the Code (or any successor provision
thereto) by reason of being “contingent on a change in ownership or effective
control or a change in the ownership of a substantial portion of the assets” of
the Company or an affiliate, within the meaning of Section 280G of the Code (or
any successor provision thereto) or to any similar tax imposed by state or
local law, or any interest or penalties with respect to such excise tax (such
tax or taxes, together with any such interest and penalties, are hereafter
collectively referred to as the “Excise Tax”), then the Company shall make an
additional payment (the “Gross-Up

 

13

 

Payment”) to
Executive such that, after payment of all Excise Taxes and any other taxes
payable in respect of such Gross-Up Payment, Executive shall retain the same
amount as if no Excise Tax had been imposed.

 

b.                                      Subject to the provisions of
Section 13(a) hereof, all determinations required to be made under this Section
13, including whether an Excise Tax is payable by Executive and the amount of
such Excise Tax, shall be made by the nationally recognized firm of certified
public accountants (the “Accounting Firm”) used by the Company prior to the
change in control (or, if such Accounting Firm declines to serve, the
Accounting Firm shall be a nationally recognized firm of certified public
accountants selected by Executive).  The
Accounting Firm shall be directed by the Company or Executive to submit its
preliminary determination and detailed supporting calculations to both the
Company and Executive within 15 calendar days after the receipt of notice from
Executive or the Company that there has been a Payment, or any other such time
or times as may be requested by the Company or Executive.  If the Accounting Firm determines that any
Excise Tax is payable by Executive, the Company shall make the Gross-Up
Payment.  If the Accounting Firm
determines that no Excise Tax is payable by Executive, it shall, at the same
time as it makes such determination, furnish Executive with an opinion that he
has substantial authority not to report any Excise Tax on his federal, state,
local income or other tax return. Any determination by the Accounting Firm
shall be binding upon the Company and Executive absent a contrary determination
by the Internal Revenue Service or a court of competent jurisdiction; provided,
however, that no such determination shall eliminate or reduce the
Company’s obligation to provide any Gross-Up Payment that shall be due as a
result of such contrary determination. 
As a result of the uncertainty in the application of Section 4999 of the
Code (or any successor provision thereto) and the possibility of similar
uncertainty regarding state or local tax law at the time of any determination
by the Accounting Firm hereunder, it is possible that the amount of the
Gross-Up Payment determined by the Accounting Firm to be due to (or on behalf
of) Executive was lower than the amount actually due (the “Underpayment”).  In the event that the Company exhausts its
remedies pursuant to Section 13(d) below, and Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred as promptly as possible and notify
the Company and Executive of such calculations, and any such Underpayment
(including the Gross-Up Payment to Executive) shall be promptly paid by the
Company to or for the benefit of Executive within five (5) business days after
receipt of such determination and calculations. All fees and expenses of the
Accounting Firm shall be paid by the Company in connection with the
calculations required by this section.

 

c.                                       The federal, state and local
income or other tax returns filed by Executive (or any filing made by a
consolidated tax group which includes the Company) shall be prepared and filed
on a consistent basis with the determination of the Accounting Firm with
respect to the Excise Tax payable by Executive. 
Executive shall make proper payment of the amount of any Excise Tax, and
at the request of the Company, provide to the Company true and correct copies
(with any amendments) of his federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment.

 

d.                                      Executive shall notify the
Company in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of any

 

14

 

Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten (10) business days after
Executive is informed in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid. Executive shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which he gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies Executive in writing
prior to the expiration of such period that it desires to contest such claim,
Executive shall (w) give the Company any information which is in Executive’s
possession reasonably requested by the Company relating to such claim, (x) take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company, (y) cooperate with the Company in good
faith in order to effectively contest such claim, and (z) permit the Company to
participate in any proceedings relating to such claim; provided, however,
that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section 13,
the Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner,
and Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, further,
that if the Company directs Executive to pay such claim and sue for a refund,
the Company shall pay the amount of such payment to Executive, and Executive
shall use such amount received to pay such claim, and the Company shall
indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax
or income tax (including interest or penalties with respect thereto) imposed
with respect to such payment or with respect to any imputed income with respect
to such payment (including the applicable Gross-Up Payment); provided, further,
that if Executive is required to extend the statute of limitations to enable
the Company to contest such claim, Executive may limit this extension solely to
such contested amount. The Company’s control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

 

e.                                       If, after the receipt by
Executive of an amount paid or advanced by the Company pursuant to this Section
13, Executive becomes entitled to receive any refund with respect to a Gross-Up
Payment, Executive shall (subject to the Company’s complying with the
requirements of Section 13(d)) promptly pay to the Company the amount of such
refund received (together with any interest paid or credited thereon after
taxes applicable thereto) (or, to the extent such payment would be deemed
prohibited by applicable law, shall be treated as a prepayment by the Company
of any amounts owed to Executive). If, after the receipt by Executive of an
amount advanced by the Company pursuant to Section 13(d), a determination is
made that Executive shall not be entitled to any refund with respect to such
claim and the

 

15

 

Company does not notify Executive in writing
of its intent to contest such denial of refund prior to the expiration of
thirty (30) days after such determination, then such advance shall be forgiven
and shall not be required to be repaid and the amount of such payment made to
Executive thereunder shall offset, to the extent thereof, the amount of the
Gross-Up Payment required to be paid.

 

f.                                         The Company’s obligations under
this Section 13 shall survive any termination of Executive’s employment with
the Company, other than a termination by the Company for Cause.

 

14.                                 Indemnification.  During the Employment Term and thereafter,
the Company shall indemnify Executive to the fullest extent permitted by law
against any judgments, fines, amounts paid in settlement and reasonable
expenses (including attorneys’ fees) in connection with any claim, action or
proceeding (whether civil or criminal) against Executive as a result of
Executive serving as an officer or director of the Company or in any capacity
at the request of the Company, in or with regard to any other entity, employee
benefit plan or enterprise (other than arising out of Executive’s act of
willful misconduct, gross negligence, misappropriation of funds, fraud or
breach of this Agreement).  This
indemnification shall be in addition to, and not in lieu of, any other
indemnification Executive shall be entitled to pursuant to the LLC Agreement,
the Company’s Certificate of Incorporation or otherwise.  Following Executive’s termination of
employment, the Company shall continue to cover Executive under the Company’s
directors and officer’s insurance, if any, for the period during which
Executive may be subject to potential liability for any claim, action or
proceeding (whether civil or criminal) as a result of his service as an officer
or director of the Company or in any capacity at the request of the Company, in
or with regard to any other entity, employee benefit plan or enterprise on the
same terms such coverage was provided during the Employment Term, at the
highest level then maintained for any then current or former officer.

 

[Signatures on
next page.]

 

16

 

IN WITNESS
WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first above written.

 

 

	
   

  	
  Texas Genco LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ THAD MILLER

  	
   

  
	
   

  	
  Name: Thad Miller

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Texas Genco Operating Services LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ THAD MILLER

  	
   

  
	
   

  	
  Name: Thad Miller

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Executive:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ John B. (Thad) Hill

  	
   

  
	
   

  	
  John B. (Thad) Hill

  	
   

  

 

17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}]]