EXHIBIT 10(u)(13)
RELIANT ENERGY, INCORPORATED
RETIREMENT PLAN
(As Amended and Restated Effective January 1, 1999)
Third Amendment
Reliant Energy, Incorporated, having reserved the right under
Section 15.1 of the Reliant Energy, Incorporated Retirement Plan, as amended and
restated effective January 1, 1999 (the "Plan"), to amend the Plan, does hereby
amend the Plan, as follows:
1. Effective as of March 1, 2001, the following new
definition of "Distribution" is hereby added as Section 1.19 of the Plan, and
all subsequent definitions shall be redesignated and all affected references are
hereby amended accordingly:
"1.19 Distribution: The distribution by the Company to the
holders of its common stock of all of the shares of the common stock of
Reliant Resources, Inc. it then owns."
2. Effective as of March 1, 2001, the following new
definition of "Distribution Date" is hereby added as Section 1.20 of the Plan
(prior to the redesignation in Paragraph 1 herein), and all subsequent
definitions shall be redesignated and all affected references are hereby amended
accordingly:
"1.20 Distribution Date: The earlier of (i) the date of the
Distribution or (ii) the date the Board of Directors of the Company
affirmatively elects not to proceed with the Distribution."
3. Effective as of March 1, 2001, the following new
definition of "GPU Protected Employee" is hereby added as Section 1.25 of the
Plan (prior to the redesignations in Paragraphs 1 and 2 herein), and all
subsequent definitions shall be redesignated and all affected references are
hereby amended accordingly:
"1.25 GPU Protected Employee: An Employee who is entitled
to certain retiree welfare benefits under Schedule 6.10(h) of the
applicable Purchase and Sale Agreement, dated as of October 29, 1998,
as amended by amendments 1 through 9, between (i) Pennsylvania Electric
Company, as Seller, and Sithe Energies, Inc., as Buyer, (ii) Jersey
Central Power & Light Company and Metropolitan Edison Company, as
Sellers, and GPU, Inc. and Sithe Energies, Inc., as Buyer, (iii) Jersey
Central Power & Light Company, as Seller, and Sithe
Energies, Inc., as Buyer or (iv) Metropolitan Edison Company, as
Seller, and Sithe Energies, Inc., as Buyer."
4. Effective as of March 1, 2001, the following new
definition of "Resources Group" is hereby added as Section 1.51 of the Plan
(prior to the redesignations in Paragraphs 1, 2 and 3 herein), and all
subsequent definitions shall be redesignated and all affected references are
hereby amended accordingly:
"1.51 Resources Group: Reliant Resources, Inc., a Delaware
corporation, or a successor to Reliant Resources, Inc. in the ownership
of substantially all of its assets, and its subsidiaries that have
adopted this Plan, and Reliant Energy Tegco, Inc., or its successor."
5. Effective as of March 1, 2001, the following new
definition of "Resources Group Employee" is hereby added as Section 1.52 of the
Plan (prior to the redesignations in Paragraphs 1, 2, 3 and 4 herein), and all
subsequent definitions shall be redesignated and all affected references are
hereby amended accordingly:
"1.52 Resources Group Employee: An Employee of an Employer
that is included within the Resources Group."
6. Effective as of March 1, 2001, the following new
definition of "Resources IPO" is hereby added as Section 1.50 of the Plan (prior
to the redesignations in Paragraphs 1, 2, 3, 4 and 5 herein), and all subsequent
definitions shall be redesignated and all affected references are hereby amended
accordingly:
"1.50 Resources IPO: The initial public offering of shares
of common stock of Reliant Resources, Inc., a Delaware corporation,
pursuant to a registration statement on Form S-1 filed pursuant to the
Securities Act of 1933, as amended."
7. Effective as of March 1, 2001, the following new
definition of "Transfer Period" is hereby added as Section 1.58 of the Plan
(prior to the redesignations in Paragraphs 1, 2, 3, 4, 5 and 6 herein), and all
subsequent definitions shall be redesignated and all affected references are
hereby amended accordingly:
"1.58 Transfer Period: The period commencing after March 1,
2001 and ending on the Distribution Date."
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8. Effective as of March 1, 2001, Section 5.1 of the
Plan is hereby amended to add the following new sentence to the end thereof:
"The foregoing to the contrary notwithstanding, a Member (i) who is a
Resources Group Employee as of March 1, 2001, or who becomes a
Resources Group Employee during the Transfer Period, and (ii) whose
employment is not covered by a collective bargaining agreement, shall
be fully vested in his Pension, regardless of whether he has completed
five (5) years of Vesting Service, as of the applicable date described
in clause (i) above; provided, however, that if such Member becomes a
Resources Group Employee during the Transfer Period, such Member was
continuously employed by an Employer at all times from March 1, 2001
through the date immediately preceding such transfer date."
9. Effective as of March 1, 2001, Section 7.6 of the
Plan is hereby amended to add the following new subsection (d) thereto:
"(d) Eligibility for Certain Resources Group Employees: If
a Member who is eligible for the benefit under this Section 7.6 becomes
a Resources Group Employee as of March 1, 2001 or during the Transfer
Period, but is not eligible for the Transition Benefit in Section 7.8
of the Plan, is subsequently reemployed by an Employer prior to
December 31, 2002, then such Member shall again be eligible for the
benefit under this Section 7.6 as of his reemployment date as an
Employee if he satisfies the following requirements:
(1) the Member was eligible for the benefit under this
Section 7.6 immediately prior to becoming a Resources
Group Employee and, after becoming such an employee,
was continuously a Resources Group Employee at all
times prior to his reemployment date; and
(2) if the Member received a lump-sum distribution of his
Accrued Pension, the Member repays such distribution
to the Trust Fund in accordance with Section 4.2 of
the Plan.
The foregoing notwithstanding, such Member's employment as a Resources
Group Employee during the period commencing on and after the later of
March 1, 2001 or the date he became a Resources Group Employee and
ending immediately prior to his reemployment date by an Employer shall
not be considered or treated as Service for Accrued Benefit purposes
for the Grandfathered Benefit under this Section."
10. Effective as of March 1, 2001, Article VII of the
Plan is hereby amended to add the following new Section 7.8:
"7.8 Transition Benefit: A Transition Benefit shall be
calculated under this Section 7.8 with respect to each Member who meets
the eligibility
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requirements set forth in this Section. Except as otherwise provided in
this Section, the Transition Benefit shall be equal to the sum of the
amount, if any, determined under subsection (a) of this Section,
hereinafter referred to as the "Base Transition Benefit Amount," and
the amount, if any, determined under subsection (b) of this Section,
hereinafter referred to as the "Additional Transition Benefit Amount,"
subject to a Member satisfying the separate eligibility requirements
for each such amount as described herein. Any Transition Benefit shall
be credited to an eligible Member's Cash Balance Account, shall be
vested as provided in subsection (d) of this Section, and shall be
distributable as provided in subsection (e) of this Section.
(a) Base Transition Benefit Amount: A Member who meets
the eligibility requirements in clause (1) below shall be entitled to a
Base Transition Benefit Amount as calculated in clause (2) below.
(1) Eligibility for Base Transition Benefit
Amount: A Member shall be eligible for a Base Transition
Benefit Amount, with each such eligible Member hereinafter
referred to as a "BTB Eligible Member," if such Member meets
each and all of the following requirements:
(i) as of December 31, 2000, the Member
was (a) an Employee who was an active Member or was a
Member on Authorized Absence, (b) age 42 or older
with five (5) or more years of Vesting Service and
(c) eligible for the Grandfathered Benefit under
Section 7.6(a) of the Plan; and
(ii) as of March 1, 2001, the Member
was, or during the Transfer Period becomes, a
Resources Group Employee; provided, however, that if
the Member becomes a Resources Group Employee during
the Transfer Period, such Member was continuously
employed by an Employer at all times from March 1,
2001, through the date immediately preceding the date
he becomes a Resources Group Employee; and
(iii) as of the Distribution Date, the
Member is not an Employee whose employment is covered
by a collective bargaining agreement.
(2) Calculation of Base Transition Benefit
Amount: Each BTB Eligible Member's Base Transition Benefit
Amount, if any, shall be equal to the Discounted Excess
Amount, which shall be calculated as follows:
Step 1: Determination of Excess Amount: The
"Excess Amount" shall be equal to:
(a) In the case of a BTB Eligible Member who was
born after December 31, 1943, his "Normal
Excess Amount," as determined in clause (i)
below; or
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(b) In the case of a BTB Eligible Member who was
born prior to January 1, 1944, the greater
of the Member's Normal Excess Amount or
"Alternate Excess Amount," as determined in
clause (ii) below.
(i) Normal Excess Amount: The Normal
Excess Amount shall be equal to the excess, if any,
of the Member's Final Average Pay Lump Sum Benefit,
as determined in clause (A) below, over his Cash
Balance Lump Sum Benefit, as determined in clause (B)
below, as follows:
(A) Final Average Pay Lump Sum
Benefit: A BTB Eligible Member's Final
Average Pay Lump Sum Benefit shall be equal
to the greater of the amounts determined in
paragraphs (I) or (II):
(I) The Actuarial Equivalent
present value, determined
as of December 31, 2008,
of the projected Accrued
Benefit calculated under
the terms of the Prior
Plan, the Minnegasco Plan
or the NorAm Plan, as
applicable, assuming the
eligible Member's Service
continued through December
31, 2008, using Transition
Benefit Compensation (as
defined in subsection (c)
of this Section). For
purposes of this paragraph
(I) "Actuarial Equivalent"
shall be computed using
the return on the 30-Year
Treasury Securities for
November 2000 (5.78%) and
the blended 1983 Group
Annuity Mortality Table
published in Rev. Rule.
95-6 ("GAM 1983").
(II) The Actuarial Equivalent
present value, determined
as of December 31, 2008,
of the projected benefit
(including the early
retirement subsidy) as an
immediate annuity
calculated under the terms
of the Prior Plan, the
Minnegasco Plan or the
NorAm Plan, as applicable,
assuming the eligible
Member's Service continued
through December 31, 2008,
using Transition Benefit
Compensation. For purposes
of this paragraph (II)
"Actuarial Equivalent"
shall be computed using an
interest rate of 8.5% and
GAM 1983.
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(B) Cash Balance Lump Sum
Benefit: The Cash Balance Lump Sum Benefit
shall be equal to a BTB Eligible Member's
Cash Balance Account as of December 31,
1999, projected forward to December 31,
2008. The Member's Service shall be assumed
to continue during such projection period,
with such Member's Cash Balance Account
deemed to receive (a) Basic Contribution
Credits and, if applicable, Additional
Contribution Credits, in accordance with
Sections 7.3 and 7.4, respectively, based on
Transition Benefit Compensation (as defined
in subsection (c) of this Section), and (b)
Interest Credits in accordance with Section
7.5. The Interest Rate applied for such
period shall be equal to the return on the
30-Year Treasury Securities for November
2000 (5.78%).
(ii) Alternate Excess Amount: The
Alternate Excess Amount shall be equal to the excess,
if any, of the BTB Eligible Member's Alternate Final
Average Pay Lump Sum Benefit, as determined in clause
(A) below, over his Alternate Cash Balance Lump Sum
Benefit, as determined in clause (B) below, as
follows:
(A) Alternate Final Average
Pay Lump Sum Benefit: A BTB Eligible
Member's Alternate Final Average Pay Lump
Sum Benefit shall be equal to the Actuarial
Equivalent present value, determined as of
the last day of the month during which such
Member will attain age 65, of the projected
Accrued Benefit calculated under the terms
of the Prior Plan, the Minnegasco Plan or
the NorAm Plan, if applicable, assuming the
eligible Member's Service continued through
the last day of the month during which such
Member will attain age 65 (or, as of March
1, 2001, if a Member attained age 65 prior
to December 31, 2000), using Transition
Benefit Compensation. For purposes of this
clause (A), "Actuarial Equivalent" shall be
computed using the return on the 30-Year
Treasury Securities for November 2000
(5.78%) and GAM 1983.
(B) Alternate Cash Balance
Lump Sum Benefit: The Alternate Cash Balance
Lump Sum Benefit shall be equal to a BTB
Eligible Member's Cash Balance Account as of
December 31, 1999, projected forward to the
last day of the month during which such
Member will attain age 65. The Member's
Service shall be assumed to continue during
such projection period, with the Member's
Cash Balance Account deemed to receive (a)
Basic Contribution Credits and, if
applicable, Additional Contribution Credits,
in accordance with Sections 7.3 and 7.4,
respectively, based
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on Transition Benefit Compensation, and (b)
Interest Credits in accordance with Section
7.5. The Interest Rate applied for such
period shall be equal to the return on the
30-Year Treasury Securities for November
2000 (5.78%).
Step 2: Determination of Discounted Excess Amount:
The Discounted Excess Amount shall be equal to:
(a) In the case of a BTB Eligible Member who was
born after December 31, 1943, the present
value of the Member's Excess Amount
(determined in Step 1 above) discounted for
the period March 1, 2001, or such later date
during the Transfer Period that the Member
becomes a Resources Group Employee, through
December 31, 2008; or
(b) In the case of a BTB Eligible Member who was
born prior to January 1, 1944, the greater
of (1) the present value of the Member's
Excess Amount discounted for the period
March 1, 2001, or such later date during the
Transfer Period that the Member becomes a
Resources Group Employee, through December
31, 2008, or (2) the present value of the
Member's Alternate Excess Amount (as
determined under Step 1 above) discounted
for the period March 1, 2001, or such later
date during the Transfer Period that the
Member becomes a Resources Group Employee,
through the beginning on last day of the
month during which the Member attains age
65.
For purposes of this Step 2, the present value calculations
shall be based on the return on the 30-Year Treasury
Securities for November 2000 (5.78%).
(b) Additional Transition Benefit Amount: A Member who
meets the eligibility requirements in clause (1) below shall be
entitled to an Additional Transition Benefit Amount as calculated in
clause (2) below.
(1) Eligibility for Additional Transition
Benefit Amount: A Member shall be eligible for the Additional
Transition Benefit Amount, with each such eligible Member
hereinafter referred to as an "ATB Eligible Member," if such
eligible Member meets each and all of the following
requirements:
(i) as of December 31, 2000, the Member
was (a) an Employee who was an active Member or was a
Member on Authorized Absence and (b) age 42 or older
with five (5) or more years of Vesting Service; and
7
(ii) as of March 1, 2001, the Member
was, or during the Transfer Period becomes, a
Resources Group Employee; provided, however, that if
the Member becomes a Resources Group Employee during
the Transfer Period, such Member must be continuously
employed by an Employer at all times from March 1,
2001, through the date immediately preceding the date
he becomes a Resources Group Employee; and
(iii) as of the Distribution Date the
Member is not an Employee whose employment is covered
by a collective bargaining agreement; and
(iv) as of the date immediately
preceding the later of (1) the date the Member became
a Resources Group Employee or (2) the date of the
Resources IPO, such Member had not attained age 55
with five (5) or more years of Vesting Service earned
after age 50 and is not a GPU Protected Employee.
(2) Calculation of Additional Transition Benefit
Amount: Except as otherwise provided below, each ATB Eligible
Member's Additional Transition Benefit Amount shall be equal
to the balance as of his "Final Credit Date," which shall be
the later of (i) March 1, 2001 or (ii) the date during the
Transfer Period on which the Member becomes a Resources Group
Employee, of a notional account ("ATB Account"), deemed
established for each ATB Eligible Member as of December 31,
1998, with the balance of the ATB Account determined as
follows:
(A) Beginning Balance: Each ATB Account
Member whose Vesting Service as of December 31, 1998
(if applicable, as adjusted in paragraph (E) below)
is greater than zero shall have a deemed beginning
ATB Account balance as of January 1, 1999 equal to
the greater of the amount determined under "x" or
"y", where:
"x" is equal to the sum of ($750 x (1.075(n)-1)/.075)
+ (p x $750 x 1.075(n))
where, "n" is equal to the number of completed
years of Vesting Service for a Member, and "p" is
equal to the partial year of Vesting Service for
a Member, as of December 31, 1998; and
"y" is equal to the amount corresponding to the
Member's age as of December 31, 1998, as follows:
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Member's Age
As Of 12/31/98 Amount
- -------------- -------
40 $ 8,000
41 $11,000
42 $14,000
43 $17,000
44 $20,000
45 $25,000
46 $30,000
47 $35,000
48 $40,000
49 $45,000
50 or more $50,000
(B) Basic Contribution Credits: Each
ATB Eligible Member shall be deemed to receive the
following credit or credits to his ATB Account:
(I) For 1999 and 2000: For 1999 and
2000, a $750 credit as of December
31, 1999 and a $750 credit as of
December 31, 2000, with such credit
or credits prorated for the number
of months and days during such
year(s) that the Member is not
employed by an Employer and for such
number of months and days that the
Member does not receive Vesting
Service (if applicable, as adjusted
in paragraph (E) below); and
(II) After 2000: After December 31, 2000,
a $750 credit as of his Final Credit
Date and a $750 credit as of each
December 31st, if any, occurring
after January 1, 2001 but prior to
his Final Credit Date, provided that
the credit on his Final Credit Date
shall be prorated for the number of
months and days from January 1st of
the year including his Final Credit
Date through his Final Credit Date.
(C) Additional Contribution Credits: In
addition to the credits in paragraph (B) above, each
ATB Eligible Member shall be eligible to receive the
following additional credits to his ATB Account:
(I) For 1999 and 2000: For 1999 and
2000, as of December 31, 1999 and
December 31, 2000, based on a
Member's completed years of Vesting
Service (if applicable, as adjusted
in paragraph (E) below)
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as of December 31, 1998, a credit
equal to the following amount:
Member's Completed
Years of Vesting Credit
Service As Of 12/31/98 Amount
- ---------------------- ------
Less than 10 $ 0
10-14 $150
15-19 $300
20-24 $450
25 or More $600
(II) After 2000: After December 31,
2000, a credit, in the amount
determined in subparagraph (I)
above based on a Member's completed
years of Vesting Service (if
applicable, as adjusted in
paragraph (E) below), on his Final
Credit Date and a credit as of each
December 31st, if any, occurring
after January 1, 2001 but prior to
his Final Credit Date, provided
that the credit on his Final Credit
Date shall be prorated for the
number of months and days from
January 1st of the year including
his Final Credit Date through his
Final Credit Date.
(D) Interest Credits: As of December
31, 1999 and each December 31st occurring prior to an
ATB Eligible Member's Final Credit Date and as of his
Final Credit Date, such Member's ATB Account shall be
credited with an interest credit equal to the
"Applicable Interest Rate" (as defined below) times
the balance of his ATB Account as of each such
December 31st and Final Credit Date, as applicable,
prior to allocation of the Basic Contribution Credit
and Additional Contribution Credit, if any, in
paragraphs (B) and (C) above, respectively, for such
Member for such Plan Year, provided that such
interest credits shall be prorated for the number of
months and days from January 1st of the year
including his Final Credit Date through his Final
Credit Date. For purposes of this paragraph (D), the
"Applicable Interest Rate" shall be equal to the
average annual interest rate on 30-year Treasury
securities as reported daily during the month of
November preceding the first day of the applicable
Plan Year.
(E) ATB Calculation Adjustments: Solely
for purposes of the calculation of the amount of the
ATB Account under this clause (2), and
notwithstanding any provision of this clause (2) or
the Plan to the contrary, the following shall apply:
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(I) A Member who immediately prior to
May 12, 2000, was an employee of
Sithe Mid-Atlantic Power Services,
Inc., Sithe Pennsylvania Holdings,
LLC, Sithe Maryland Holdings, LLC,
Sithe New Jersey Holdings, LLC or
Sithe Northeast Management Company
and who became an Employee on May
12, 2000, pursuant to that certain
purchase agreement dated as of
February 19, 2000, among Reliant
Energy Power Generation, Inc. as
Buyer, Reliant Energy,
Incorporated, as Guarantor, and
Sithe Energies, Inc. and Sithe
Northeast Generating Company, Inc.
as Sellers ("REMA Member") and who
meets the eligibility requirements
of clause (1) of this subsection
(b) shall be deemed to have been a
Member as of December 31, 1998.
(II) If an ATB Eligible Member who is
not employed by an Employer on
December 31, 1998 is subsequently
reemployed with an Employer after
December 31, 1998, then (a) his ATB
Account shall be deemed established
as of such Member's subsequent
reemployment date ("Reemployment
Date"); (b) the beginning balance
of his ATB Account shall be
determined solely under "x" in
paragraph (A) of this clause (2)
above; (c) his ATB Account shall
not receive any Additional
Contribution Credits under
paragraph (C) of this clause (2)
above; (d) for any years prior to
his Reemployment Date, he shall not
receive any Basic Contributions or
Interest Credits under paragraphs
(B) or (D) above, and (e) for the
year during which his Reemployment
Date occurs, the Basic Contribution
Credits and Interest Credits to
such Member's ATB Account, under
paragraphs (B) and (D) of this
clause (2) above, shall be prorated
for the number of months and days
from his Reemployment Date through
December 31 of such year or the
Final Credit Date, as applicable.
(III) Except with respect to an ATB
Eligible Member who is a Minnegasco
Member, NorAm Member or REMA
Member, an ATB Eligible Member's
Vesting Service for purposes of
paragraphs (A), (B), and (C) above
shall be based solely upon his
Service earned on and after the
date his Employer becomes an
Affiliate.
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(IV) Notwithstanding any provision of
this subsection (b) to the
contrary, if an ATB Eligible
Member's employment with an
Employer terminates after December
31, 1998, but prior to his Final
Credit Date, his ATB Account shall
receive Basic and Additional
Contribution Credits pursuant to
paragraphs (B) and (C) only through
such Member's termination date,
with such credits prorated for the
number of months and days from
January 1st of the year of
termination through his termination
date. If such Member is
subsequently reemployed by an
Employer prior to his Final Credit
Date, his ATB Account shall receive
Basic Contribution Credits pursuant
to paragraph (B) only (and shall
not receive any Additional
Contribution Credits) from and
after his reemployed date through
his Final Credit Date, with such
credit prorated for the number of
months and days from January 1st of
the year of reemployment through
his reemployment date.
(c) Transition Benefit Compensation: For purposes of this
Section, the term "Transition Benefit Compensation" shall mean the
following:
(1) Plan Years Prior to 2000: For Plan Years
commencing prior to January 1, 2000, Transition Benefit
Compensation shall mean Compensation as defined in the
applicable of the Prior Plan, the Minnegasco Plan or the NorAm
Plan for purposes of the Final Average Pay Lump Sum Benefit,
Alternate Final Average Pay Lump Sum Benefit, Cash Balance
Lump Sum Benefit, and Alternate Cash Balance Lump Sum Benefit
under subsection (a)(2) of this Section.
(2) Plan Year 2000: For the 2000 Plan Year
commencing on January 1, 2000, Transition Benefit Compensation
shall mean projected compensation based on the following:
(A) for purposes of the Cash Balance
Lump Sum Benefit and Alternate Cash Balance Lump Sum
Benefit, the sum of (i) the amount of a BTB Eligible
Member's base pay earned for the month of November
2000 annualized ("Deemed 2000 Base Pay"); plus (ii)
the amount of such Member's short term incentive
target bonus for 2000 under the Reliant Energy,
Incorporated Annual Incentive Compensation Plan, with
such amount deemed paid in December 2000 ("Deemed
Target Bonus"); and
(B) for purposes of the Final Average
Pay Lump Sum Benefit and Alternate Final Average Pay
Lump Sum Benefit, the
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sum of (i) the Member's Deemed 2000 Base Pay; plus
(ii) for Members who participated in the Minnegasco
or NorAm Plan, the amount of such Member's Deemed
Target Bonus.
(3) For Plan Years After 2000: For Plan Years
commencing after December 31, 2000, Transition Benefit
Compensation shall mean projected compensation based on the
following:
(A) for purposes of the Cash Balance
Lump Sum Benefit and Alternate Cash Balance Lump Sum
Benefit, the sum of (i) the amount of a BTB Eligible
Member's Deemed 2000 Base Pay, assuming that such
amount increased annually by 3.5% for the 2001 Plan
Year and for each Plan Year thereafter; plus (ii) the
amount of such Member's Deemed Target Bonus assuming
that the target bonus percentage for each such Member
remains constant for each such Plan Year and is
deemed paid in each December of the Plan Year for
which it relates; provided, however, that, with
respect to the Alternate Cash Balance Lump Sum
Benefit, for the Plan Year in which such Member
attains age 65, (x) the Deemed 2000 Base Pay amount
shall be equal to such Member's year-to-date Deemed
2000 Base Pay, as adjusted in this paragraph (A), and
(y) the Deemed Target Bonus amount shall be equal to
such Member's Deemed Target Bonus percentage
multiplied by the foregoing year-to-date Deemed 2000
Base Pay, with each such amount deemed earned by the
Member for such year through the last day of the
month in which such Member attains age 65; and
(B) for purposes of the Final Average
Pay Lump Sum Benefit and Alternate Final Average Pay
Lump Sum Benefit, the sum of (i) the Member's Deemed
2000 Base Pay, assuming that such amount increased
annually by 3.5% for the 2001 Plan Year and for each
Plan Year thereafter; plus (ii) for Members who
participated in the Minnegasco or NorAm Plan, such
Member's Deemed Target Bonus assuming that the target
bonus percentage for each such Member remains
constant for each such Plan Year and is deemed paid
in each December of the Plan Year for which it
relates; provided, however, that, with respect to the
Alternate Final Average Pay Lump Sum Benefit, for the
Plan Year in which such Member attains age 65, the
Deemed Target Bonus amount shall be equal to such
Member's Deemed Target Bonus percentage multiplied by
year-to-date Deemed 2000 Base Pay, as adjusted in
this paragraph (B), and deemed earned by the Member
for such year through the last day of the month in
which such Member attains age 65.
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The foregoing to the contrary notwithstanding, for any Plan Year in
which Transition Benefit Compensation exceeds the compensation
limitation under Code Section 401(a)(17), Transition Benefit
Compensation for such year shall be deemed equal to the applicable
compensation limitation under the Code. For purposes of Plan Years
commencing after December 31, 2000, the Code Section 401(a)(17)
limitation for 2001, $170,000, shall be applied in determining whether
Transition Benefit Compensation for any such year exceeds the Code
Section 401(a)(17) limitation for such year.
(d) Crediting and Vesting of Transition Benefit to Cash
Balance Account: The balance of a BTB Eligible Member's Cash Balance
Account as of the later of March 1, 2001, or the date he becomes a
Resources Group Employee during the Transfer Period (with such later
date hereinafter the "Adjustment Date") shall be adjusted, to the
extent necessary, as of such date to be equal to the greater of (1) the
balance of the Member's Cash Balance Account as of the Adjustment Date
or (2) the Actuarial Equivalent present value of the Member's
Grandfathered Benefit, as described in Section 7.6, calculated assuming
that the Member terminated Service on the Adjustment Date.
An eligible Member's Transition Benefit shall be equal to the
sum of his (1) if any, Base Transition Benefit Amount and (2) if any,
Additional Transition Benefit Amount, subject to the applicable
limitations under Article XXI of the Plan and otherwise under the Code,
ERISA and other applicable law and regulations. The Transition Benefit,
if applicable, as adjusted in the foregoing paragraph, shall be
credited to an eligible Member's Cash Balance Account as of or as soon
as practicable after the later of (1) March 1, 2001, or (2) the date
such Member becomes eligible for such benefit(s). Notwithstanding any
provision in this Plan to the contrary, a Member shall be fully vested
in the portion of his Cash Balance Account attributable to his
Transition Benefit at all times on and after the date such amount is
credited to such account.
(e) Earliest Commencement of Transition Benefit from Cash
Balance Account: Notwithstanding Section 11.1 or any other provision in
this Plan to the contrary, a Member who has terminated his Service (or,
in the event of his death, his Beneficiary) may not elect to commence
the distribution of the portion of his Pension attributable to the
Transition Benefit prior to the earliest of (1) the Distribution Date,
(2) his Early Retirement Date, (3) his date of death or (4) such other
date determined by the Board of Directors of the Company. The foregoing
shall not prevent the application of Section 11.6 when otherwise
applicable with respect to a Member's Pension.
(f) Amendment to Transition Benefit: The Company reserves
the right to amend this Section 7.8 as necessary to comply with
requirements of the Code, ERISA, the Internal Revenue Service and/or
the U.S. Department of Labor."
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11. Effective as of March 1, 2001, Article VIII of the
Plan is hereby amended to add the following new Section 8.4:
"8.4 Transition Benefit: Anything to the contrary
notwithstanding, to the extent Section 8.1, 8.2 or 8.3 conflicts with
the provisions of Section 7.8 with respect to the commencement of the
portion of a Member's Pension, if any, that is attributable to the
Transition Benefit under such Section 7.8, then solely with respect to
the Transition Benefit, the provisions of Section 7.8 shall apply in
lieu of the applicable of Section 8.1, 8.2 or 8.3."
12. Effective as of January 1, 2001, Article VIII of the
Plan is hereby amended to add the following new Section 8.5:
"8.5 Involuntary Separation Benefit For Members Severed
Between January 1, 2001 and December 31, 2001: A Member (i) whose
Service is terminated involuntarily on or after January 1, 2001 and on
or before March 1, 2001 in the case of a Resources Group Employee, or
on or before December 31, 2001 with respect to all other Members, (ii)
who has attained age 45, but not age 55, and completed at least five
(5) years of Service on the date of such involuntary termination, and
(iii) who qualifies for a benefit under a Company-sponsored involuntary
severance benefit plan which provides for this benefit, and who
satisfies all requirements for such benefit under such severance plan,
may be entitled to receive an Early Retirement benefit, as described in
Section 8.2, (x) in the case of a NorAm Member or Minnegasco Member,
based on his Service accrued for benefit accrual purposes as of his
actual termination of Service but not payable until the NorAm Member or
Minnegasco Member has attained at least age 55 or (y) in the case of a
Prior Plan Member, based on his Service accrued for benefit accrual
purposes as of his actual termination of Service plus such Service
which would have accrued for purposes of eligibility for the Early
Retirement benefit but not for purposes of benefit accrual had the
Member remained actively employed with an Employer until attaining age
55 but not payable until the Prior Plan Member has attained at least
age 55. The Actuarial Equivalent present value of the benefit
(including the early retirement subsidy) shall be calculated under the
terms of the Prior Plan, the Minnegasco Plan or the NorAm Plan, as
applicable, based on Compensation (as defined in such applicable plan)
and Service until termination. For purposes of this Section 8.5,
"Actuarial Equivalent" shall be computed using the Unisex Mortality
Table UP-1984 without any age adjustments and an interest rate of 8.5%
per annum."
IN WITNESS WHEREOF, Reliant Energy, Incorporated has caused
these presents to be executed by its duly authorized duly authorized officer in
a number of copies, all of which shall constitute one and the same instrument,
which may be sufficiently evidenced by any executed copy hereof, this 20th day
of August, 2002, but effective as of the dates specified herein.
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RELIANT ENERGY, INCORPORATED
By /s/ DAVID M. MCCLANAHAN
--------------------------------------
David M. McClanahan
Vice Chairman, Reliant Energy,
Incorporated, and President & COO,
Regulated Group
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