EXHIBIT 10(ll)
CENTERPOINT ENERGY, INC.
STOCK PLAN FOR OUTSIDE DIRECTORS
(AS AMENDED AND RESTATED EFFECTIVE MAY 7, 2003)
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ARTICLE I
PURPOSE
The purpose of this CenterPoint Energy, Inc. Stock Plan for
Outside Directors, as amended and restated effective May 7, 2003 (the "Plan") is
to provide for a method of compensation of Outside Directors of CenterPoint
Energy, Inc. and any successor thereto (the "Company") that will strengthen the
alignment of their financial interests with those of the Company's shareholders
through increased ownership of shares of the Company's Common Stock by such
Outside Directors. The Plan is intended to (i) enhance the Company's ability to
maintain a competitive position in attracting and retaining qualified Outside
Directors who contribute, and are expected to contribute, materially to the
success of the Company and its Subsidiaries; (ii) provide a means of
compensating such Outside Directors whereby the compensation received will have
a value dependent on the price of the Common Stock; and (iii) enhance the
interest of such Outside Directors in the Company's continued success and
progress by further aligning each Outside Director's interests with those of the
Company's shareholders. Stock Awards under this Plan shall be in addition to the
annual retainer fee and meeting fees earned by Outside Directors of the Company.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the terms set forth below shall have
the following meanings:
"ANNUAL AWARD DATE" means the first business day of the month
immediately following each Annual Meeting of Shareholders, commencing
with the June 2nd following the May 7, 2003 Annual Meeting of
Shareholders of the Company.
"BOARD" means the Board of Directors of the Company.
A "CHANGE OF CONTROL" 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
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(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 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");
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(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 May 7, 2003 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 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.
"COMMON STOCK" means, subject to the provisions of Section
7.3, the presently authorized common stock, $0.01 par value, of the
Company.
"COMPANY" means CenterPoint Energy, Inc., a Texas corporation,
and any successor thereto.
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"DIVIDEND EQUIVALENTS" means, with respect to shares of Common
Stock issued or delivered at the end of the Restriction Period
applicable to a Stock Award, an amount equal to all dividends and other
distributions (or the economic value thereof) that are payable to
shareholders of record during the Restriction Period on a like number
of shares of Common Stock.
"OUTSIDE DIRECTOR" means a person who is a member of the Board
on an Annual Award Date and who is not a current employee of the
Company or a Subsidiary.
"PLAN" means the CenterPoint Energy, Inc. Stock Plan for
Outside Directors, as set forth herein and as from time to time
amended.
"RESTRICTION PERIOD" means the period of time beginning as of
the grant date of a Stock Award and ending on the third anniversary of
the grant date or such earlier time at which the Common Stock subject
to such Stock Award is no longer subject to forfeiture provisions as
provided in Section 5.3.
"STOCK AWARD" means an award of the right to receive shares of
Common Stock granted by the Company to an Outside Director pursuant to,
and subject to the terms, conditions and limitations specified in,
Article V.
"SUBSIDIARY" means a subsidiary corporation of the Company as
defined in Section 424(f) of the Code.
ARTICLE III
SHAREHOLDER APPROVAL, RESERVATION OF SHARES
AND PLAN ADMINISTRATION
3.1 Shareholder Approval: This Plan was originally effective as of
May 22, 1996, and approved by the shareholders of the Company at the May 22,
1996 Annual Meeting of Shareholders ("Prior Plan"). The Plan, as amended and
restated, shall become effective as of May 7, 2003, only if approved by the
affirmative vote, in person or by proxy, of the holders of a majority of the
shares of Common Stock present and entitled to vote at the May 7, 2003 Annual
Meeting of Shareholders. This Plan, as amended and restated, shall automatically
terminate should such shareholder approval not be obtained (and the Prior Plan
as in effect immediately prior to May 7, 2003, shall continue in operation as
then in effect).
3.2 Shares Reserved Under Plan: The aggregate number of shares of
Common Stock which may be issued or delivered under this Plan shall not exceed
350,000 shares, subject to adjustment as hereinafter provided. All or any part
of such 350,000 shares may be issued pursuant to Stock Awards. The shares of
Common Stock which may be granted pursuant to Stock Awards may 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 are hereafter
reacquired by the Company. The number of shares of Common Stock that are subject
to Stock Awards under this Plan that are forfeited or terminated shall again
immediately become available for Stock Awards hereunder. The Board may from time
to time adopt and observe such
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procedures concerning the counting of shares against the Plan maximum as it may
deem appropriate. 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 7.3 and to give effect to any amendment adopted as provided
in Section 6.1.
3.3 Plan Administration:
(a) This Plan shall be administered by the Board. Subject
to the provisions hereof, the Board shall have full and exclusive power
and authority to administer this Plan and to take all actions that are
specifically contemplated hereby or are necessary or appropriate in
connection with the administration hereof. The Board shall also have
full and exclusive power to interpret this Plan and to adopt such
rules, regulations and guidelines for carrying out this Plan as it may
deem necessary or proper, all of which powers shall be exercised in the
best interests of the Company and in keeping with the objectives of
this Plan. The Board may correct any defect or supply any omission or
reconcile any inconsistency in this Plan or in any Stock Award in the
manner and to the extent the Board deems necessary or desirable. Any
decision of the Board in the interpretation and administration of this
Plan shall lie within its sole and absolute discretion and shall be
final, conclusive and binding on all parties concerned. The Board may
engage in or authorize the engagement of a third party administrator to
carry out administrative functions under the Plan.
(b) No member of the Board or officer of the Company to
whom the Board has delegated authority in accordance with the
provisions of this Section shall be liable for anything done or omitted
to be done by him or her, by any member of the Board or by any officer
of the Company in connection with the performance of any duties under
this Plan, except for his or her own willful misconduct or as expressly
provided by statute.
ARTICLE IV
PARTICIPATION IN PLAN
4.1 Eligibility to Receive Stock Awards: Stock Awards under this
Plan shall be granted only to persons who are Outside Directors who are eligible
to receive awards under Section 5.1 and/or 5.2.
4.2 Participation Not a Guarantee of Continuing Service as a
Member of the Board: Nothing in this Plan shall in any manner be construed to
(a) limit in any way the right or power of the Company's stockholders to remove
an Outside Director, without regard to the effect of such removal on any rights
such Outside Director would otherwise have under this Plan, or (b) give any
right to such an Outside Director (i) to be nominated for reelection or to be
reelected as such and/or (ii) after ceasing to be an Outside Director, to
receive any shares of Common Stock of the Company under this Plan to which such
Outside Director is not entitled under the express provisions of this Plan.
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ARTICLE V
STOCK AWARDS
5.1 Initial Awards: On or after the date an individual first
becomes an Outside Director, at the discretion of the Board, such Outside
Director may be granted a one-time, initial Stock Award consisting of the right
to receive up to, but not to exceed, 5,000 shares of Common Stock, as determined
by the Board, with such award subject to the terms, conditions and limitations
set forth in this Plan; provided, however, that such Outside Director is then in
office as of the grant date of such initial Stock Award. Any Stock Award under
this Section 5.1 shall be in addition to, and not in lieu of, any Stock Award
granted under Section 5.2.
5.2 Annual Awards: As of each Annual Award Date, at the discretion
of the Board, each Outside Director then in office may be granted a Stock Award
consisting of the right to receive up to, but not to exceed, 5,000 shares of
Common Stock, as determined by the Board, with such awards subject to the terms,
conditions and limitations set forth in this Plan.
5.3 Vesting of Stock Awards: Each Stock Award granted under this
Plan shall be subject to a Restriction Period and shall vest in increments of
one-third (1/3) of the total number of shares of Common Stock that are subject
thereto on the first, second and third anniversaries of the grant date of the
Stock Award such that all shares of Common Stock that are subject thereto shall
be fully vested on the third anniversary of such grant date. Notwithstanding the
foregoing, a Stock Award shall become immediately vested in full with respect to
all shares of Common Stock that are subject to a Stock Award as of such date (a)
if the Outside Director terminates his or her status as a member of the Board by
reason of the Outside Director's death or (b) upon the date of a Change of
Control. If an Outside Director's service on the Board is terminated for any
reason whatsoever, other than due to death or a Change of Control, all rights to
the unvested portion of his or her Stock Award(s) as of such termination date
shall be immediately and completely forfeited as of such termination date. For
purposes of this Plan, an Outside Director's service on the Board shall be
deemed to have terminated at the close of business on the day preceding the
first date on which he or she ceases to be a member of the Board, unless his or
her termination of service on the Board occurs on or after attaining age 70, in
which case the Outside Director's termination date shall be deemed to be the
last day of the year in which such termination occurs.
5.4 Form of Award: Upon vesting in accordance with Section 5.3,
the number of vested shares of Common Stock subject to the Stock Award shall be
registered in the name of the Outside Director and certificates representing
such Common Stock (unless the Company shall elect to use uncertificated shares)
shall be delivered to the Outside Director as soon as practicable after the date
upon which the Outside Director's right to such shares vested. Upon delivery of
the vested shares of Common Stock pursuant to this Section, the Outside Director
shall also be entitled to receive a cash payment equal to the sum of all
Dividend Equivalents, if any.
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ARTICLE VI
AMENDMENT AND TERMINATION OF PLAN
6.1 Amendment, Modification, Suspension or Termination: The Board
may from time to time amend, modify, suspend or terminate the Plan for the
purpose of meeting or addressing any changes in legal requirements or for any
other purpose permitted by law except that no amendment or alteration shall be
effective prior to approval by the Company's shareholders to the extent such
approval is determined to be required by applicable legal requirements or the
listing standards of the New York Stock Exchange.
6.2 Termination: Subject to satisfaction of the requirements of
Section 3.1, this Plan shall continue indefinitely until all shares of Common
Stock authorized for issuance or delivery hereunder by Section 3.2 hereof have
been issued, except 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. The termination of the Plan shall not affect the
applicability of any provision of the Plan to Stock Awards made prior to such
termination.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 Restrictions Upon Grant of Stock Awards: The listing on 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 Outside Directors
receiving such shares) may be necessary or desirable and, in any such event, if
the Company so determines, issuance or delivery of 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 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.
7.2 Restrictions Upon Resale of Unregistered Stock: If the shares
of Common Stock that have been transferred to an Outside Director 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 Outside Director,
if the Company deems it advisable, may be required to represent and agree in
writing (a) that any shares of Common Stock acquired by such Outside Director
pursuant to this Plan will not be sold except pursuant to an effective
registration statement under the Securities Act of 1933, as amended, or pursuant
to an exemption from registration under said Act and (b) that such Outside
Director is acquiring such shares of Common Stock for such Outside Director's
own account and not with a view to the distribution thereof.
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7.3 Adjustments: In the event of any subdivision or combination of
outstanding shares of Common Stock or declaration of a dividend payable in
shares of Common Stock or other stock split, then (a) the number of shares of
Common Stock reserved under this Plan and (b) the number of shares delivered
under Section 5.4 on any date occurring after the applicable record date or
effective date shall be proportionately adjusted to reflect such transaction.
7.4 Withholding of Taxes: Unless otherwise required by applicable
federal or state laws or regulations, the Company shall not withhold or
otherwise pay on behalf of any Outside Director any federal, state, local or
other taxes arising in connection with a Stock Award under this Plan. The
payment of any such taxes shall be the sole responsibility of each Outside
Director.
7.5 Governing Law: This Plan and all determinations made and
actions taken pursuant hereto shall be governed by the internal laws of the
State of Texas, except as federal law may apply.
7.6 Unfunded Status of Plan; Establishment of Stock Award Account:
This Plan shall be an unfunded plan. The grant of shares of Common Stock
pursuant to a Stock Award under this Plan shall be implemented by a credit to a
bookkeeping account maintained by the Company evidencing the accrual in favor of
the Outside Director of the unfunded and unsecured right to receive shares of
Common Stock of the Company, which right shall be subject to the terms,
conditions and restrictions set forth in the Plan. Such accounts shall be used
merely as a bookkeeping convenience. The Company shall not be required to
establish any special or separate fund or reserve or to make any other
segregation of assets to assure the issuance of any shares of Common Stock
granted under this Plan. Except as otherwise provided in this Plan, the shares
of Common Stock credited to the Outside Director's bookkeeping account may not
be sold, assigned, transferred, pledged or otherwise encumbered until the
Outside Director has been registered as the holder of such shares of Common
Stock on the records of the Company as provided in Section 5.4. Neither the
Company nor the Board shall be required to give any security or bond for the
performance of any obligation that may be created by this Plan.
7.7 No Assignment or Transfer: No rights to receive Stock Awards
under the Plan shall be assignable or transferable by an Outside Director except
by will or the laws of descent and distribution.
CENTERPOINT ENERGY, INC.
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