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EXHIBIT 10(y)
RELIANT ENERGY, INCORPORATED
AND SUBSIDIARIES
COMMON STOCK PARTICIPATION PLAN FOR
DESIGNATED NEW EMPLOYEES AND
NON-OFFICER EMPLOYEES
INTRODUCTION
ARTICLE I
PURPOSE
The purpose of this Reliant Energy, Incorporated and
Subsidiaries Common Stock Participation Plan for Designated New Employees and
Non-Officer Employees (the "Plan") is to strengthen the alignment of financial
interests of selected employees of Reliant Energy, Incorporated (the "Company")
and its Subsidiaries with those of the Company's shareholders through the
increased ownership of shares of the Company's Common Stock by such employees.
The Plan (i) enhances the Company's ability to maintain a competitive position
in attracting and retaining qualified personnel, (ii) provides a means of
rewarding the outstanding performance of such employees, and (iii) enhances the
interest of such employees in the Company's continued success and progress by
enabling them to obtain a proprietary interest in the Company. Pursuant to the
Plan, the Company may provide for the delivery of shares of Common Stock to (i)
persons not previously employed by the Company or its Subsidiaries as an
inducement to their entering into employment with the Company or its
Subsidiaries and (2) employees who are not officers of the Company who it is
determined should be rewarded for exceptional performance.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms shall have the
meanings below stated, subject to the provisions of Section 8.1.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means Executive's (a) gross negligence in the
performance of Executive's duties, (b) intentional and continued failure to
perform Executive's duties, (c) intentional engagement in conduct which is
materially injurious to the Company or its Subsidiaries (monetarily or
otherwise) or (d) conviction of a felony or a misdemeanor involving moral
turpitude. For this purpose, an act or failure to act on the part of Executive
will be deemed "intentional" only if done or omitted to be done by Executive not
in good faith and without reasonable belief that his/her action or omission was
in the best interest of the Company, and no act or failure to act on the part of
Executive will be deemed "intentional" if it was due primarily to an error in
judgment or negligence.
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A "CHANGE IN CONTROL" or "CIC" shall be deemed to have
occurred upon the occurrence of any of the following events:
(a) 30% OWNERSHIP CHANGE: Any Person makes an acquisition of
Outstanding Voting Stock and is, immediately thereafter, the beneficial
owner of 30% or more of the then Outstanding Voting Stock, unless such
acquisition is made directly from the Company in a transaction approved
by a majority of the Incumbent Directors; or any group is formed that
is the beneficial owner of 30% or more of the Outstanding Voting Stock;
or
(b) BOARD MAJORITY CHANGE: Individuals who are Incumbent
Directors cease for any reason to constitute a majority of the members
of the Board; or
(c) MAJOR MERGERS AND ACQUISITIONS: Consummation of a Business
Combination unless, immediately following such Business Combination,
(i) all or substantially all of the individuals and entities that were
the beneficial owners of the Outstanding Voting Stock immediately prior
to such Business Combination beneficially own, directly or indirectly,
more than 70% of the then outstanding shares of voting stock of the
parent corporation resulting from such Business Combination in
substantially the same relative proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding
Voting Stock, (ii) if the Business Combination involves the issuance or
payment by the Company of consideration to another entity or its
shareholders, the total fair market value of such consideration plus
the principal amount of the consolidated long-term debt of the entity
or business being acquired (in each case, determined as of the date of
consummation of such Business Combination by a majority of the
Incumbent Directors) does not exceed 50% of the sum of the fair market
value of the Outstanding Voting Stock plus the principal amount of the
Company's consolidated long-term debt (in each case, determined
immediately prior to such consummation by a majority of the Incumbent
Directors), (iii) no Person (other than any corporation resulting from
such Business Combination) beneficially owns, directly or indirectly,
30% or more of the then outstanding shares of voting stock of the
parent corporation resulting from such Business Combination and (iv) a
majority of the members of the board of directors of the parent
corporation resulting from such Business Combination were Incumbent
Directors of the Company immediately prior to consummation of such
Business Combination; or
(d) MAJOR ASSET DISPOSITIONS: Consummation of a Major Asset
Disposition unless, immediately following such Major Asset Disposition,
(i) individuals and entities that were beneficial owners of the
Outstanding Voting Stock immediately prior to such Major Asset
Disposition beneficially own, directly or indirectly, more than 70% of
the then outstanding shares of voting stock of the Company (if it
continues to exist) and of the entity that acquires the largest portion
of such assets (or the entity, if any, that owns a majority of the
outstanding voting stock of such acquiring entity) and (ii) a majority
of the members of the board of directors of the Company (if it
continues to exist) and of the entity that acquires the
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largest portion of such assets (or the entity, if any, that owns a
majority of the outstanding voting stock of such acquiring entity) were
Incumbent Directors of the Company immediately prior to consummation of
such Major Asset Disposition.
For purposes of the foregoing,
(1) the term "Person" means an individual, entity or group;
(2) the term "group" is used as it is defined for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange
Act");
(3) the term "beneficial owner" is used as it is defined for
purposes of Rule 13d-3 under the Exchange Act;
(4) the term "Outstanding Voting Stock" means outstanding
voting securities of the Company entitled to vote generally in the
election of directors; and any specified percentage or portion of the
Outstanding Voting Stock (or of other voting stock) shall be determined
based on the combined voting power of such securities;
(5) the term "Incumbent Director" means a director of the
Company (x) who was a director of the Company on September 1, 1997 or
(y) who becomes a director subsequent to such date and whose election,
or nomination for election by the Company's shareholders, was approved
by a vote of a majority of the Incumbent Directors at the time of such
election or nomination, except that any such director shall not be
deemed an Incumbent Director if his or her initial assumption of office
occurs as a result of an actual or threatened election contest or other
actual or threatened solicitation of proxies by or on behalf of a
Person other than the Board;
(6) the term "election contest" is used as it is defined for
purposes of Rule 14a-11 under the Exchange Act;
(7) the term "Business Combination" means (x) a merger or
consolidation involving the Company or its stock or (y) an acquisition
by the Company, directly or through one or more subsidiaries, of
another entity or its stock or assets;
(8) the term "parent corporation resulting from a Business
Combination" means the Company if its stock is not acquired or
converted in the Business Combination and otherwise means the entity
which as a result of such Business Combination owns the Company or all
or substantially all the Company's assets either directly or through
one or more subsidiaries; and
(9) the term "Major Asset Disposition" means the sale or other
disposition in one transaction or a series of related transactions of
70% or more of the assets of the Company and its Subsidiaries on a
consolidated basis; and any specified
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percentage or portion of the assets of the Company shall be based on
fair market value, as determined by a majority of the Incumbent
Directors.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"COMMITTEE" means the Special Stock Award Committee or the
Compensation Committee of the Board of Directors of the Company, it being
understood that either such Committee shall have authority to grant Stock Awards
and take other action contemplated by this Plan.
"COMMON STOCK" means, subject to the provisions of Section
10.3, the presently authorized common stock, without par value, of the Company.
"COMPANY" means Reliant Energy, Incorporated, a Texas
corporation.
"DISABILITY" means a physical or mental impairment of
sufficient severity such that an Employee is both eligible for and in receipt of
benefits under the long-term disability provisions of the Company's benefit
plans.
"EMPLOYEE" means an employee of the Company or a Subsidiary.
"EMPLOYER" means the Company or Subsidiary that employs the
Employee.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" means the average of high and low sales
price of a share of Common Stock on the New York Stock Exchange--Composite
Transactions reporting system, as reported in The Wall Street Journal on the
date as of which such value is being determined or, if no sales occurred on such
day, then on the next preceding day on which there were such sales.
"PARTICIPANT" means a person selected to participate in this
Plan pursuant to the terms hereof.
"PLAN" means the Reliant Energy, Incorporated and Subsidiaries
Common Stock Participation Plan for Designated New Employees and Non-Officer
Employees, as set forth herein and as from time to time amended.
"RESTRICTED PERIOD" means the period of employment established
by the Committee which the Participant must complete for the restrictions to
lapse pursuant to Section 6.2.
"STOCK AWARD" means an award of shares of Common Stock or
units denominated in shares of Common Stock, of options to purchase shares of
Common Stock, or of the right to a payment measured by the appreciation in the
value of shares of Common Stock or the value of units denominated in shares of
Common Stock, granted by the Company to a Participant pursuant to Section 5.1.
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"SUBSIDIARY" means a subsidiary corporation of the Company as
defined in Section 424(f) of the Code.
ARTICLE III
RESERVATION OF SHARES
The aggregate number of shares of Common Stock which may be
issued under this Plan shall not exceed One Million (1,000,000) shares, subject
to adjustment as hereinafter provided. All or any part of such One Million
shares may be issued pursuant to Stock Awards. The shares of Common Stock which
may be granted pursuant to Stock Awards will consist of either authorized but
unissued shares of Common Stock or shares of Common Stock which have been issued
and which shall have been heretofore or hereafter reacquired by the Company as
treasury shares. The total number of shares authorized under this Plan shall be
subject to increase or decrease in order to give effect to the adjustment
provision of Section 10.3 and to give effect to any amendment adopted as
provided in Section 9.1. The foregoing limitation on the number of shares of
Common Stock issuable under the Plan is a limitation on the aggregate number of
shares of Common Stock issued, net of any shares of Common Stock subject to a
Stock Award implemented by delivery of certificates that are returned to the
Company as provided in Article V, but subject to such other rules and procedures
concerning the counting of shares against the Plan maximum as the Committee may
deem appropriate.
ARTICLE IV
PARTICIPATION IN THE PLAN
4.1 ELIGIBILITY TO RECEIVE STOCK AWARDS. Stock Awards under this Plan
may be granted only to persons selected by the Committee who are not officers of
the Company and who are Employees of the Company or a Subsidiary on the date the
Stock Award is granted. Stock Awards under this Plan may be granted to any
Employee who has become entitled to an award pursuant to another incentive plan
of the Company or a Subsidiary provided that the award is consistent with the
purposes of this Plan.
4.2 PARTICIPATION NOT GUARANTEE OF EMPLOYMENT. Nothing in this Plan or
in the instrument evidencing the grant of a Stock Award shall in any manner be
construed to limit in any way the right of the Company or a Subsidiary to
terminate a Participant's employment at any time, without regard to the effect
of such termination on any rights such Participant would otherwise have under
this Plan, or give any right to such Participant to remain employed by the
Company or a Subsidiary in any particular position or at any particular rate of
compensation.
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ARTICLE V
STOCK AWARDS
5.1 GRANT OF STOCK AWARDS.
(a) SELECTION OF PARTICIPANTS. Subject to the terms of this Plan, the
Committee shall select the persons to whom Stock Awards shall be awarded.
Subject to the eligibility requirements of Section 4.1, awards pursuant to other
incentive plans of the Company or any Subsidiaries denominated in shares of
Common Stock, in the discretion of the Committee, may be granted to Employees
pursuant to the terms of the Plan.
(b) AWARD OF SHARES. The Committee shall determine the number of shares
of Common Stock covered by each Stock Award awarded to a Participant, as well as
all other terms and conditions of each Stock Award. Shares issued pursuant to
the terms of other incentive plans of the Company or a Subsidiary may be issued
subject to terms established with reference to such other plans. Shares of
Common Stock may be awarded subject to a Restricted Period, without any
restriction whatsoever or subject to such other vesting and forfeiture
conditions, which may be performance based, as may be established by the
Committee. If Stock Awards are issued subject to a Restricted Period, then on or
about the close of, and, if appropriate and in accordance with Section 6.3 or
6.4, during the term of, each Restricted Period, the Committee shall determine
whether restrictions set forth in Article VI hereof shall lapse with respect to
a portion or all of the shares awarded under a Stock Award.
The Committee may implement the grant of a Stock Award subject
to a Restricted Period by (i) credit to a bookkeeping account maintained by the
Company evidencing the accrual to a Participant of unsecured and unfunded rights
to receive, subject to the terms of the Stock Award, shares of Common Stock or
(ii) delivery of certificates for shares of Common Stock to the Participant, who
must execute appropriate stock powers in blank and return the certificates and
stock powers to the Company to be held in escrow for future delivery in
accordance with the terms of the Stock Award. The grant of a Stock Award subject
to other vesting and forfeiture conditions shall be implemented in a manner
determined by the Committee.
(c) FORM OF INSTRUMENT. Each Stock Award shall be made pursuant to an
instrument prescribed in form by the Committee. Such instrument shall specify
the number of shares covered thereby and the restrictions, if any, which, if not
achieved, may cause all or part of the shares to be forfeited.
5.2 RIGHTS WITH RESPECT TO SHARES.
(a) AWARD BY BOOKKEEPING ENTRY. No Participant who is granted a Stock
Award implemented by credit to a Company bookkeeping account shall have any
rights as a stockholder by virtue of such grant until shares are actually issued
or delivered to the Participant. The Committee may establish and express in the
written instrument evidencing the Stock Award terms and conditions under which
the Participant granted such Stock Award shall be entitled to receive an
amount equivalent to any dividend payable with respect to the number of shares
which, as of the
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record date for which dividends are payable, have been credited but not
delivered to the Participant. At the Committee's discretion, any such dividend
equivalents (i) may be paid at such time or times during the period when the
shares are as yet undelivered pursuant to the terms of the Stock Award, (ii) may
be paid at the time the shares to which the dividend equivalents apply are
delivered, or (iii) may be reflected by the credit of additional full or
fractional shares to three decimal places in an amount equal to the amount of
such dividend equivalents divided by the Fair Market Value of a full share on
the date of payment of the dividend on which the dividend equivalent is based,
all as shall be expressed in the written instrument evidencing the Stock Award.
Any arrangements for the payment or credit of dividend equivalents shall be
terminated if, and to the extent that, under the terms and conditions so
established, the right to receive shares pursuant to the terms of the Stock
Award shall terminate or lapse.
(b) AWARD BY STOCK CERTIFICATE. Each Participant to whom a Stock Award
consisting of shares represented by a stock certificate has been made shall have
absolute ownership of such shares including the right to vote the same and to
receive dividends thereon, subject, however, to the terms, conditions and
restrictions, if any, described in this Plan and in the instrument evidencing
the grant of the Stock Award.
Notwithstanding the foregoing, shares of Common Stock
transferred pursuant to a Stock Award subject to a Restricted Period shall be
held in escrow pursuant to an agreement satisfactory to the Committee until such
time as the Committee shall have determined whether the restrictions set forth
in Article VI shall have lapsed. Each such escrow agreement shall provide,
without limitation, that the shares of Common Stock subject to such agreement
are subject to the restrictions set forth in Article VI.
ARTICLE VI
STOCK AWARDS SUBJECT TO A RESTRICTED PERIOD
6.1 RESTRICTIONS. Each Stock Award granted under this Plan subject to a
Restricted Period shall contain the following terms, conditions and restrictions
and such additional terms, conditions and restrictions as may be determined by
the Committee.
Until the restrictions set forth in this Section 6.1 shall
lapse pursuant to this Article VI, shares of Common Stock awarded to a
Participant pursuant to each Stock Award:
(a) shall not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of; and
(b) shall be returned to the Company, and all rights of the
Participant to such shares shall terminate without any payment of
consideration by the Company, if the Participant's continuous
employment with the Company or any of its Subsidiaries shall terminate
for any reason, except as provided in Section 6.2, 6.3 or 6.4.
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6.2 LAPSE OF RESTRICTIONS DUE TO TERMINATION OF RESTRICTED PERIOD. At
the time of the Stock Award, there may be established for a Participant a
"Restricted Period" which shall be such length of time as established by the
Committee in its discretion. Shares of Common Stock awarded to Participants may
not be sold, assigned, transferred, pledged, otherwise encumbered or disposed
of, except as hereinafter provided, during the Restricted Period. Except for
such restrictions on transfer, the Participant, as owner of such shares, shall
have all the rights of the holder of Common Stock, including but not limited to,
the right to vote the same and to receive all dividends paid on such shares.
6.3 LAPSE OF RESTRICTIONS DUE TO CERTAIN TERMINATIONS OF EMPLOYMENT.
Unless otherwise provided by the Committee with respect to a particular Stock
Award, if a Participant who has been in the continuous employment of any
Employer since the date on which a Stock Award was granted to such Participant
shall, while in such employment and prior to the close of the Restricted Period
with respect to which such Stock Award was granted, terminate employment by
reason of death, Disability or retirement on or after attainment of age
fifty-five (55), the restrictions set forth in Section 6.1 shall lapse with
respect to all of the shares subject to the Award.
6.4 TREATMENT UPON CHANGE IN CONTROL. Unless otherwise provided by the
Committee with respect to a particular Stock Award, notwithstanding any
provision of Section 6.1 or any other provision of this Plan, forthwith upon the
occurrence of any Change in Control of the Company, the Company shall pay cash
to each Participant to whom a Stock Award has been made (and with respect to
which the restrictions have not previously lapsed) in an amount equal to the
number of shares of Common Stock granted under this Plan pursuant to outstanding
Stock Awards times the Fair Market Value on the date of the Change in Control.
ARTICLE VII
TAX PAYMENTS
A Participant who has received shares of Common Stock pursuant
to a Stock Award may also, at the discretion of the Committee, receive from the
Company a cash payment in an amount determined by the Committee, if any, not to
exceed that amount sufficient to pay such Participant's tax liability with
respect to (i) such shares and (ii) such cash payment.
ARTICLE VIII
ADMINISTRATION OF THE PLAN
8.1 THE COMMITTEE. This Plan shall be administered solely by the
Committee. The Committee shall have full and final authority to interpret this
Plan and the instruments evidencing Stock Awards granted hereunder, to
prescribe, amend and rescind rules and regulations, if any, relating to this
Plan and to make all determinations necessary or advisable for the
administration of this Plan. The Committee's determination in all matters
referred to herein shall be conclusive and binding for all purposes and upon all
persons including, but without limitation, the Company, all Subsidiaries, the
shareholders of the Company, the Committee and each of the members thereof, as
well as Participants and Employees and their respective successors in interest.
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8.2 LIABILITY OF COMMITTEE. No member of the Committee shall be liable
for anything done or omitted to be done by such member or by any other member of
the Committee or by any person to whom authority is delegated as provided in the
last sentence of Section 8.1 in connection with this Plan, except for the
willful misconduct of such member or as expressly required by law. The Committee
shall have power to engage outside consultants, auditors or other professionals
to assist in the fulfillment of the Committee's duties under this Plan at the
Company's expense.
8.3 DETERMINATION OF THE COMMITTEE. In making its determinations
concerning the individuals who will become Participants, as well as the number
of shares to be awarded to each Participant, the Committee shall take into
account such factors as the Committee may deem relevant. The Committee shall
also determine the form of Stock Awards to be issued under this Plan and the
terms and conditions to be included therein, provided such terms and conditions
are not inconsistent with the terms of this Plan. The Committee may, in its sole
discretion, waive any provisions of any Stock Award, provided such waiver is not
inconsistent with the terms of this Plan as then in effect.
ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN
9.1 AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION. The Board may
amend, modify, suspend or terminate the Plan at any time except that no
amendment or alteration that would impair the rights of any Participant under
any outstanding Stock Award shall be made without such Participant's consent.
9.2 TERMINATION. The Board may at any time terminate this Plan as of
any date specified in a resolution adopted by the Board. No Stock Awards may be
granted after this Plan has terminated. After this Plan has terminated, the
function of the Committee with respect to this Plan will be limited to
determinations, interpretations and other matters provided herein with respect
to Stock Awards previously granted.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 RESTRICTIONS UPON GRANT OF STOCK AWARDS. The listing upon the New
York Stock Exchange or the registration or qualification under any federal or
state law of any shares of Common Stock to be granted pursuant to this Plan
(whether to permit the grant of Stock Awards or the resale or other disposition
of any such shares of Common Stock by or on behalf of the Participants receiving
such shares) may be necessary or desirable and, in any event, if the Committee
in its sole discretion so determines, delivery of the certificates for such
shares of Common Stock shall not be made until such listing, registration or
qualification shall have been completed. In such connection, the Company agrees
that it will use its best efforts to effect any such listing, registration or
qualification, provided, however, that the Company shall not be required to use
its best efforts to effect such registration under the Securities Act of 1933,
as amended, other than on Form S-8, as
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presently in effect, or other such forms as may be in effect from time to time
calling for information comparable to that presently required to be furnished
under Form S-8.
10.2 RESTRICTIONS UPON RESALE OF UNREGISTERED STOCK. If the shares of
Common Stock that have been transferred to a Participant pursuant to the terms
of this Plan are not registered under the Securities Act of 1933, as amended,
pursuant to an effective registration statement, such Participant, if the
Committee deems it advisable, may be required to represent and agree in writing
(i) that any shares of Common Stock acquired by such Participant pursuant to
this Plan will not be sold except pursuant to Rule 144 under the Securities Act
of 1933 (the "1933 Act"), pursuant to an effective registration statement under
the 1933 Act, or pursuant to an exemption from registration under said Act and
(ii) that such Participant is acquiring such shares of Common Stock for such
Participant's own account and not with a view to the distribution thereof.
10.3 ADJUSTMENTS.
(a) The existence of outstanding Stock Awards shall not affect in any
manner the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the capital stock of the Company or its business or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock (whether or not such issue is prior to, on a parity with
or junior to the Common Stock) or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding of any kind, whether or not of a character
similar to that of the acts or proceedings enumerated above.
(b) In the event of any subdivision or combination of outstanding
shares of Common Stock or declaration of a dividend on the Common Stock payable
in shares of Common Stock, the Committee may adjust proportionally the number of
shares of Common Stock reserved under this Plan and covered by outstanding Stock
Awards denominated in Common Stock or units of Common Stock and may also adjust,
if it deems appropriate, any price criteria or other determination in respect of
such Stock Awards. In the event of any consolidation or merger of the Company
with another corporation or entity or the adoption by the Company of a plan of
exchange affecting the Common Stock or any distribution to holders of Common
Stock of securities or property (other than normal cash dividends or dividends
payable in Common Stock) or any reclassification of this Common Stock, the
Committee may make such adjustments or other provisions as it may deem
equitable, including adjustments to avoid fractional shares, to give proper
effect to such event. In the event of a corporate merger, consolidation,
acquisition of property or stock, or liquidating distribution, the Committee
shall be authorized to issue or assume Stock Awards, regardless of whether in a
transaction to which Section 424(a) of the Code applies, by means of
substitution of new Stock Awards for previously issued Stock Awards or an
assumption of previously issued Stock Awards, or to make provision for the
acceleration of the exercisability of, or lapse of restrictions with respect to,
Stock Awards and the termination of unexercised rights with respect to Stock
Awards in connection with such transaction.
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10.4 RESTRICTIVE LEGENDS.
(a) Certificates for shares of Common Stock delivered pursuant to Stock
Awards shall bear an appropriate legend conforming to the requirements of
applicable law referring to the terms, conditions and restrictions described in
this Plan and in the instruments evidencing the grant of the Stock Awards. Any
attempt to dispose of any such shares of Common Stock in contravention of the
terms, conditions and restrictions described in this Plan or in the instruments
evidencing the grant of the Stock Award shall be ineffective. The Company may
also place appropriate "stop transfer" instructions in the stock transfer books
of the Company with respect to shares of Common Stock covered by a Stock Award.
(b) Any shares of Common Stock received by a Participant as a stock
dividend on, or as a result of stock splits, combinations, exchanges of shares,
reorganizations, mergers, consolidations or otherwise with respect to, shares of
Common Stock received pursuant to a Stock Award shall have the same status and
bear the same legend as the shares received pursuant to the Stock Award.
10.5 WITHHOLDING OF TAXES: The Committee shall deduct applicable taxes
(without regard to any alternative rule permitting the use of a flat percentage
rate in computing such applicable income tax withholding amounts) with respect
to any Stock Award, and withhold, at the time of delivery or other appropriate
time, an appropriate amount of cash or number of shares of Common Stock or a
combination thereof for payment of taxes required by law, such withholding to be
administered on a uniform basis (not involving any election by any Participant).
If shares of Common Stock are used to satisfy tax withholding, such shares shall
be valued based on the Fair Market Value when the tax withholding is required to
be made.
10.6 POOLING OF INTERESTS: In the event that the Company is party to a
transaction which is otherwise intended to qualify for "pooling of interests"
accounting treatment then (a) the provisions of the Plan shall, to the extent
practicable, be interpreted so as to permit such accounting treatment, and (b)
to the extent that the application of clause (a) of this sentence does not
preserve the availability of such accounting treatment, then, to the extent that
any of the provisions of the Plan or the terms or provisions of any outstanding
award or the manner or timing of the adoption of the Plan or the making of any
award thereunder disqualifies the transaction as a "pooling" transaction, the
Board may amend any provisions of the Plan, amend the provisions of any
outstanding award and/or declare any of the provisions of the Plan or the entire
Plan as well as any outstanding awards null and void if and to the extent
necessary (including declaring such provision or provisions to be null and void
as of the date hereof) so that such transaction may be accounted for as a
"pooling of interests." All determinations with respect to this paragraph shall
be made by the Board, based upon the advice of the accounting firm whose opinion
with respect to "pooling of interests" is required as a condition to the
consummation of such transaction.
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10.7 EFFECTIVE DATE OF PLAN: This Plan shall be effective as of March
4, 1998.
RELIANT ENERGY, INCORPORATED
By /s/ LEE W. HOGAN
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Name: Lee Hogan
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Title: Vice Chairman
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ATTEST:
/s/ RUFUS SCOTT
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Assistant Corporate Secretary
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