EXHIBIT 10.5
LONG-TERM INCENTIVE PLAN OF CENTERPOINT ENERGY, INC.
(AMENDED AND RESTATED EFFECTIVE AS OF MAY 1, 2004)
1. PLAN. This Long-Term Incentive Plan of CenterPoint Energy, Inc. (the
"Plan") was adopted by CenterPoint Energy, Inc. (the "Company") to reward
certain corporate officers, independent contractors and employees of the
Company, by providing for certain cash benefits and by enabling them to acquire
shares of common stock of the Company.
2. OBJECTIVES. The purpose of this Plan is to further the interests of the
Company, its Subsidiaries and its shareholders by providing incentives in the
form of awards to employees and independent contractors. Such awards will
recognize and reward outstanding performances and individual contributions and
give Participants in the Plan an interest in the Company parallel to that of the
shareholders, thus enhancing the proprietary and personal interest of such
Participants in the Company's continued success and progress. This Plan will
also enable the Company and its Subsidiaries to attract and retain such
employees and independent contractors.
3. DEFINITIONS. As used herein, the terms set forth below shall have the
following respective meanings:
"AUTHORIZED OFFICER" means the Chairman of the Board or the Chief
Executive Officer of the Company (or any other senior officer of the
Company to whom either of them shall delegate the authority to execute any
Award Agreement, where applicable).
"AWARD" means an Employee Award or an Independent Contractor Award.
"AWARD AGREEMENT" means any Employee Award Agreement or Independent
Contractor Award Agreement.
"BOARD" means the Board of Directors of the Company.
"CASH AWARD" means an award denominated in cash.
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
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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 "beneficial owner" is used as it is defined for
purposes of Rule 13d-3 under the Exchange Act;
(2) 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;
(3) the term "election contest" is used as it is defined for
purposes of Rule 14a-11 under the Exchange Act;
(4) the term "Exchange Act" means the Securities Exchange Act
of 1934, as amended from time to time;
(5) the term "group" is used as it is defined for purposes of
Section 13(d)(3) of the Exchange;
(6) the term "Incumbent Director" means a director of the
Company (x) who was a director of the Company on January 1, 2001 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;
(7) 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;
(8) 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
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stock) shall be determined based on the combined
voting power of such securities;
(9) 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
(10) the term "Person" means an individual, entity or group.
Notwithstanding anything herein to the contrary, the spin-off of Reliant
Resources, Inc. from the Company does not constitute a Change of Control
as contemplated herein.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COMMITTEE" means the Compensation Committee of the Board or such
other committee of the Board as is designated by the Board to administer
the Plan.
"COMMON STOCK" means the common stock, $0.01 par value, of the
Company.
"COMPANY" means CenterPoint Energy, Inc., a Texas corporation.
"DIVIDEND EQUIVALENTS" means, with respect to shares of Restricted
Stock that are to be issued at the end of the Restriction Period, an
amount equal to all dividends and other distributions (or the economic
equivalent thereof) that are payable to stockholders of record during the
Restriction Period on a like number of shares of Common Stock.
"EMPLOYEE" means (i) an employee of the Company or any of its
Subsidiaries and (ii) an individual who has agreed to become an employee
of the Company or any of its Subsidiaries and is expected to become such
an employee within the following six months.
"EMPLOYEE AWARD" means any Option, SAR, Stock Award, Cash Award or
Performance Award granted, whether singly, in combination or in tandem, to
a Participant who is an Employee pursuant to such applicable terms,
conditions and limitations (including treatment as a Performance Award) as
the Committee may establish in order to fulfill the objectives of the
Plan.
"EMPLOYEE AWARD AGREEMENT" means a written agreement setting forth
the terms, conditions and limitations applicable to an Employee Award.
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"FAIR MARKET VALUE" of a share of Common Stock means, as of a
particular date, (i) if shares of Common Stock are listed on a national
securities exchange, the average of the highest and lowest sales price per
share of Common Stock on the consolidated transaction reporting system for
the principal national securities exchange on which shares of Common Stock
are listed on that date, or, if there shall have been no such sale so
reported on that date, on the next preceding date on which such a sale was
so reported, or, at the discretion of the Committee, the price prevailing
on the exchange at the time of exercise, (ii) if shares of Common Stock
are not so listed but are quoted on the Nasdaq National Market, the
average of the highest and lowest sales price per share of Common Stock
reported by the Nasdaq National Market on that date, or, if there shall
have been no such sale so reported on that date, on the next preceding
date on which such a sale was so reported, or, at the discretion of the
Committee, the price prevailing on the Nasdaq National Market at the time
of exercise, (iii) if the Common Stock is not so listed or quoted, the
average of the closing bid and asked price on that date, or, if there are
no quotations available for such date, on the next preceding date on which
such quotations shall be available, as reported by the Nasdaq Stock
Market, or, if not reported by the Nasdaq Stock Market, by the National
Quotation Bureau Incorporated or (iv) if shares of Common Stock are not
publicly traded, the most recent value determined by an independent
appraiser appointed by the Company for such purpose.
"GRANT DATE" means the date an Award is granted to a Participant
pursuant to the Plan.
"GRANT PRICE" means the price at which a Participant may exercise
his or her right to receive cash or Common Stock, as applicable, under the
terms of an Award.
"INCENTIVE STOCK OPTION" means an Option that is intended to comply
with the requirements set forth in Section 422 of the Code.
"INDEPENDENT CONTRACTOR" means a person providing services to the
Company or any of its Subsidiaries, or who will provide such services,
except an Employee.
"INDEPENDENT CONTRACTOR AWARD" means any Nonqualified Stock Option,
SAR, Stock Award, Cash Award or Performance Award granted, whether singly,
in combination or in tandem, to a Participant who is an Independent
Contractor pursuant to such applicable terms, conditions and limitations
as the Committee may establish in order to fulfill the objectives of the
Plan.
"INDEPENDENT CONTRACTOR AWARD AGREEMENT" means a written agreement
setting forth the terms, conditions and limitations applicable to an
Independent Contractor Award.
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"NONQUALIFIED STOCK OPTION" means an Option that is not an
Incentive Stock Option.
"OPTION" means a right to purchase a specified number of shares of
Common Stock at a specified Grant Price, which may be an Incentive Stock
Option or a Nonqualified Stock Option.
"PARTICIPANT" means an Employee or Independent Contractor to whom an
Award has been granted under this Plan.
"PERFORMANCE AWARD" means an award made pursuant to this Plan to a
Participant who is an Employee or Independent Contractor that is subject
to the attainment of one or more Performance Goals.
"PERFORMANCE GOAL" means a standard established by the Committee to
determine in whole or in part whether a Performance Award shall be earned.
"RESTRICTED STOCK" means Common Stock that is restricted or subject
to forfeiture provisions.
"RESTRICTION PERIOD" means a period of time beginning as of the
Grant Date of an Award of Restricted Stock and ending as of the date upon
which the Common Stock subject to such Award is no longer restricted or
subject to forfeiture provisions.
"STOCK APPRECIATION RIGHT" OR "SAR" means a right to receive a
payment, in cash or Common Stock, equal to the excess of the Fair Market
Value or other specified valuation of a specified number of shares of
Common Stock on the date the right is exercised over a specified Grant
Price, in each case, as determined by the Committee.
"STOCK AWARD" means an Award in the form of shares of Common Stock
or units denominated in shares of Common Stock, including an award of
Restricted Stock.
"SUBSIDIARY" means (i) in the case of a corporation, any corporation
of which the Company directly or indirectly owns shares representing 50%
or more of the combined voting power of the shares of all classes or
series of capital stock of such corporation which have the right to vote
generally on matters submitted to a vote of the stockholders of such
corporation and (ii) in the case of a partnership or other business entity
not organized as a corporation, any such business entity of which the
Company directly or indirectly owns 50% or more of the voting, capital or
profits interests (whether in the form of partnership interests,
membership interests or otherwise).
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4. ELIGIBILITY.
(a) EMPLOYEES. All Employees are eligible for the grant of Employee
Awards under this Plan.
(b) INDEPENDENT CONTRACTORS. All Independent Contractors are
eligible for the grant of Independent Contractor Awards under this Plan.
5. COMMON STOCK AVAILABLE FOR AWARDS. Subject to the provisions of
paragraph 14 hereof, no Award shall be granted if it shall result in the
aggregate number of shares of Common Stock issued under the Plan plus the number
of shares of Common Stock covered by or subject to Awards then outstanding
(after giving effect to the grant of the Award in question) to exceed 15,000,000
shares of Common Stock. No more than 7,500,000 shares of Common Stock shall be
available for Stock Awards, and no more than 2,000,000 shares of Common Stock
shall be available for Incentive Stock Options. The number of shares of Common
Stock that are subject to Awards under this Plan that are forfeited or
terminated, expire unexercised, are settled in cash in lieu of Common Stock or
in a manner such that all or some of the shares covered by an Award are not
issued to a Participant or are exchanged for Awards that do not involve Common
Stock, shall again immediately become available for Awards hereunder. The
Committee may from time to time adopt and observe such procedures concerning the
counting of shares against the Plan maximum as it may deem appropriate. The
Board and the appropriate officers of the Company shall from time to time take
whatever actions are necessary to file any required documents with governmental
authorities, stock exchanges and transaction reporting systems to ensure that
shares of Common Stock are available for issuance pursuant to Awards.
6. ADMINISTRATION.
(a) This Plan shall be administered by the Committee except as
otherwise provided herein.
(b) Subject to the provisions hereof, the Committee 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 Committee
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 Committee may, in its discretion, provide for the extension
of the exercisability of an Award, accelerate the vesting or
exercisability of an Award, eliminate or make less restrictive any
restrictions applicable to an Award, waive any restriction or other
provision of this Plan or an Award or otherwise amend or modify an Award
in any manner that is either (i) not adverse to the Participant to whom
such Award was granted or (ii) consented to by such Participant. The
Committee may grant an Award to an Employee who it expects to become an
employee of the Company or any of its
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Subsidiaries within the following six months, with such Award being
subject to the individual's actually becoming an employee within such time
period, and subject to such other terms and conditions as may be
established by the Committee. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in this Plan or in any
Award in the manner and to the extent the Committee deems necessary or
desirable to further the Plan purposes. Any decision of the Committee 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.
(c) No member of the Committee or officer of the Company to whom the
Committee has delegated authority in accordance with the provisions of
paragraph 7 of this Plan shall be liable for anything done or omitted to
be done by him or her, by any member of the Committee 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.
7. DELEGATION OF AUTHORITY. The Committee may delegate to the Chief
Executive Officer and to other senior officers of the Company its duties under
this Plan pursuant to such conditions or limitations as the Committee may
establish. The Committee may engage or authorize the engagement of a third party
administrator to carry out administrative functions under the Plan.
8. EMPLOYEE AND INDEPENDENT CONTRACTOR AWARDS.
(a) The Committee shall determine the type or types of Employee
Awards to be made under this Plan and shall designate from time to time
the Employees who are to be the recipients of such Awards. Each Employee
Award shall be embodied in an Employee Award Agreement, which shall
contain such terms, conditions and limitations as shall be determined by
the Committee in its sole discretion and, if required by the Committee,
shall be signed by the Participant to whom the Employee Award is granted
and by an Authorized Officer for and on behalf of the Company. Employee
Awards may consist of those listed in this paragraph 8(a) and may be
granted singly, in combination or in tandem. Employee Awards may also be
granted in combination or in tandem with, in replacement of, or as
alternatives to, grants or rights under this Plan or any other employee
plan of the Company or any of its Subsidiaries, including the plan of any
acquired entity. An Employee Award may provide for the grant or issuance
of additional, replacement or alternative Employee Awards upon the
occurrence of specified events, including the exercise of the original
Employee Award granted to a Participant. All or part of an Employee Award
may be subject to conditions established by the Committee, which may
include, but are not limited to, continuous service with the Company and
its Subsidiaries, achievement of specific business objectives, increases
in specified indices, attainment of specified growth rates and other
comparable measurements of performance. Upon the death, disability or
termination of employment by a
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Participant who is an Employee, any unexercised, deferred, unvested or
unpaid Employee Awards shall be treated as set forth in the applicable
Employee Award Agreement.
(i) OPTION. An Employee Award may be in the form of an Option,
which may be an Incentive Stock Option or a Nonqualified Stock
Option. The Grant Price of an Option shall be not less than the Fair
Market Value of the Common Stock on the Grant Date; provided,
however, that the Committee may, in its sole discretion, make grants
of Nonqualified Stock Options as Employee Awards with an exercise
price per share that is less than the Fair Market Value of the
Common Stock on the Grant Date with respect to no more than
1,000,000 shares of Common Stock. Subject to the foregoing
provisions, the terms, conditions and limitations applicable to any
Options awarded to Employees pursuant to this Plan, including the
Grant Price, the term of the Options and the date or dates upon
which they become exercisable, shall be determined by the Committee.
(ii) STOCK APPRECIATION RIGHTS. An Employee Award may be in
the form of an SAR. The terms, conditions and limitations applicable
to any SARs awarded to Employees pursuant to this Plan, including
the Grant Price, the term of any SARs and the date or dates upon
which they become exercisable, shall be determined by the Committee.
(iii) STOCK AWARD. An Employee Award may be in the form of a
Stock Award. The terms, conditions and limitations applicable to any
Stock Awards granted pursuant to this Plan shall be determined by
the Committee.
(iv) CASH AWARD. An Employee Award may be in the form of a
Cash Award. The terms, conditions and limitations applicable to any
Cash Awards granted pursuant to this Plan shall be determined by the
Committee.
(v) PERFORMANCE AWARD. Without limiting the type or number of
Employee Awards that may be made under the other provisions of this
Plan, an Employee Award may be in the form of a Performance Award. A
Performance Award shall be paid, vested or otherwise deliverable
solely on account of the attainment of one or more pre-established,
objective Performance Goals established by the Committee prior to
the earlier to occur of (x) 90 days after the commencement of the
period of service to which the Performance Goal relates or (y) the
lapse of 25% of the period of service (as scheduled in good faith at
the time the goal is
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established), and in any event while the outcome is substantially
uncertain. A Performance Goal is objective if a third party having
knowledge of the relevant facts could determine whether the goal is
met. Such a Performance Goal may be based on one or more business
criteria that apply to the Employee, one or more business units of
the Company, or the Company as a whole, and may include one or more
of the following: earnings per share, earnings per share growth,
total shareholder return, economic value added, cash return on
capitalization, increased revenue, revenue ratios (per employee or
per customer), net income, stock price, market share, return on
equity, return on assets, return on capital, return on capital
compared to cost of capital, return on capital employed, return on
invested capital, shareholder value, net cash flow, operating
income, earnings before interest and taxes, cash flow, cash from
operations, cost reductions, cost ratios (per employee or per
customer), proceeds from dispositions, project completion time and
budget goals, net cash flow before financing activities, customer
growth and total market value. Goals may also be based on
performance relative to a peer group of companies. Unless otherwise
stated, such a Performance Goal need not be based upon an increase
or positive result under a particular business criterion and could
include, for example, maintaining the status quo or limiting
economic losses (measured, in each case, by reference to specific
business criteria). In interpreting Plan provisions applicable to
Performance Goals and Performance Awards, it is the intent of the
Plan to conform with the standards of Section 162(m) of the Code and
Treasury Regulation Section 1.162-27(e)(2)(i), and the Committee in
establishing such goals and interpreting the Plan shall be guided by
such provisions. Prior to the payment of any compensation based on
the achievement of Performance Goals, the Committee must certify in
writing that applicable Performance Goals and any of the material
terms thereof were, in fact, satisfied. Subject to the foregoing
provisions, the terms, conditions and limitations applicable to any
Performance Awards made pursuant to this Plan shall be determined by
the Committee.
(b) Notwithstanding anything to the contrary contained in this Plan,
the following limitations shall apply to any Employee Awards made
hereunder:
(i) no Participant may be granted, during any calendar year,
Employee Awards consisting of Options or SARs that are exercisable
for more than 1,500,000 shares of Common Stock;
(ii) no Participant may be granted, during any calendar year,
Stock Awards covering or relating to more than 500,000 shares of
Common Stock (the limitation set forth in this clause (ii),
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together with the limitation set forth in clause (i) above, being
hereinafter collectively referred to as the "Stock Based Awards
Limitations"); and
(iii) no Participant may be granted Employee Awards consisting
of cash or in any other form permitted under this Plan (other than
Employee Awards consisting of Options or SARs or Stock Awards) in
respect of any calendar year having a value determined on the Grant
Date in excess of $3,500,000.
(c) The Committee shall have the sole responsibility and authority
to determine the type or types of Independent Contractor Awards to be made
under this Plan and the terms, conditions and limitations applicable to
such Awards, except that Independent Contractor Awards may not be in the
form of Incentive Stock Options.
9. PAYMENT OF AWARDS.
(a) GENERAL. Payment made to a Participant pursuant to an Award may
be made in the form of cash or Common Stock, or a combination thereof, and
may include such restrictions as the Committee shall determine, including,
in the case of Common Stock, restrictions on transfer and forfeiture
provisions. If such payment is made in the form of Restricted Stock, the
applicable Award Agreement relating to such shares shall specify whether
they are to be issued at the beginning or end of the Restriction Period.
In the event that shares of Restricted Stock are to be issued at the
beginning of the Restriction Period, the certificates evidencing such
shares (to the extent that such shares are so evidenced) shall contain
appropriate legends and restrictions that describe the terms and
conditions of the restrictions applicable thereto. In the event that
shares of Restricted Stock are to be issued at the end of the Restricted
Period, the right to receive such shares shall be evidenced by book entry
registration or in such other manner as the Committee may determine.
(b) DEFERRAL. With the approval of the Committee, amounts payable in
respect of Awards may be deferred and paid either in the form of
installments or as a lump-sum payment. The Committee may permit selected
Participants to elect to defer payments of some or all types of Awards or
any other compensation otherwise payable by the Company in accordance with
procedures established by the Committee. Any deferred payment pursuant to
an Award, whether elected by the Participant or specified by the Award
Agreement or by the Committee, may be forfeited if and to the extent that
the Award Agreement so provides.
(c) DIVIDENDS, EARNINGS AND INTEREST. Rights to dividends or
Dividend Equivalents may be extended to and made part of any Stock Award,
subject to such terms, conditions and restrictions as the Committee may
establish. The Committee may also establish rules and procedures for the
crediting of
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interest or other earnings on deferred cash payments and Dividend
Equivalents for Stock Awards.
(d) SUBSTITUTION OF AWARDS. Subject to the limitations set forth in
Section 8(a)(i) and (b), at the discretion of the Committee, a Participant
may be offered an election to substitute an Award for another Award or
Awards of the same or different type.
(e) CASH-OUT OF AWARDS. At the discretion of the Committee, an Award
that is an Option or SAR may be settled by a cash payment equal to the
difference between the Fair Market Value per share of Common Stock on the
date of exercise and the Grant Price of the Award, multiplied by the
number of shares with respect to which the Award is exercised.
10. OPTION EXERCISE. The Grant Price shall be paid in full at the time of
exercise in cash or, if permitted by the Committee and elected by the optionee,
the optionee may purchase such shares by means of tendering Common Stock or
surrendering another Award, including Restricted Stock, valued at Fair Market
Value on the date of exercise, or any combination thereof. The Committee shall
determine acceptable methods for Participants to tender Common Stock or other
Awards. The Committee may provide for procedures to permit the exercise or
purchase of such Awards by use of the proceeds to be received from the sale of
Common Stock issuable pursuant to an Award. Unless otherwise provided in the
applicable Award Agreement, in the event shares of Restricted Stock are tendered
as consideration for the exercise of an Option, a number of the shares issued
upon the exercise of the Option, equal to the number of shares of Restricted
Stock used as consideration therefor, shall be subject to the same restrictions
as the Restricted Stock so submitted as well as any additional restrictions that
may be imposed by the Committee. The Committee may adopt additional rules and
procedures regarding the exercise of Options from time to time, provided that
such rules and procedures are not inconsistent with the provisions of this
paragraph.
11. TAXES. The Company or its designated third party administrator shall
have the right to deduct applicable taxes from any Employee Award payment and
withhold, at the time of delivery or vesting of cash or shares of Common Stock
under this Plan, an appropriate amount of cash or number of shares of Common
Stock or a combination thereof for payment of taxes or other amounts required by
law or to take such other action as may be necessary in the opinion of the
Company to satisfy all obligations for withholding of such taxes, provided that
withholding obligations with respect to Options may only be satisfied in cash.
The Committee may also permit withholding to be satisfied by the transfer to the
Company of shares of Common Stock theretofore owned by the holder of the
Employee Award with respect to which withholding is required, except with
respect to Options. 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.
12. AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION OF THE PLAN. The
Board may amend, modify, suspend or terminate this Plan for the purpose of
meeting or addressing any changes in legal requirements or for any other purpose
permitted by law, except
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that (i) no amendment or alteration that would adversely affect the rights of
any Participant under any Award previously granted to such Participant shall be
made without the consent of such Participant and (ii) no amendment or alteration
shall be effective prior to its approval by the stockholders of the Company to
the extent such approval is required by applicable legal requirements.
13. ASSIGNABILITY. Unless otherwise determined by the Committee and
provided in the Award Agreement, no Award or any other benefit under this Plan
shall be assignable or otherwise transferable except by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder. The Committee may prescribe and include in applicable
Award Agreements other restrictions on transfer. Any attempted assignment of an
Award or any other benefit under this Plan in violation of this paragraph 13
shall be null and void.
Subject to approval by the Committee in its sole discretion, all or a
portion of the Awards granted to a Participant under the Plan may be
transferable by the Participant, to the extent and only to the extent specified
in such approval, to (i) the spouse, parent, brother, sister, children or
grandchildren (including adopted and stepchildren and grandchildren) of the
Participant ("Immediate Family Members"), (ii) a trust or trusts for the
exclusive benefit of such Immediate Family Members, or (iii) a partnership or
partnerships in which such Immediate Family Members have at least 99% of the
equity, profit and loss interests; provided that the Award Agreement pursuant to
which such Awards are granted (or an amendment thereto) must expressly provide
for transferability in a manner consistent with this paragraph. Subsequent
transfers of transferred Awards shall be prohibited except by will or the laws
of descent and distribution, unless such transfers are made to the original
Participant or a person to whom the original Participant could have made a
transfer in the manner described herein. No transfer shall be effective unless
and until written notice of such transfer is provided to the Committee, in the
form and manner prescribed by the Committee. Following transfer, any such Awards
shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, and, except as otherwise provided herein, the
term "Participant" shall be deemed to refer to the transferee. The consequences
of termination of employment or service shall continue to be applied with
respect to the original Participant, following which the Awards shall be
exercisable by the transferee only to the extent and for the periods specified
in this Plan and the Award Agreement.
The foregoing notwithstanding, an Option granted under this Plan shall
become transferable by the Employee upon or after his termination of employment
with the Company, to the extent the Option is vested and exercisable at the time
of such transfer, if (i) the former Employee assumes an office or position with
a federal, state or local government or agency or instrumentality thereof
(whether by employment, appointment or election, and whether legislative,
executive, judicial or administrative) and (ii) following written request to the
Committee identifying the office or position and the basis for the requested
determination, the Committee determines, in its sole discretion, that by reason
of the former Employee's holding of such office or position, the holding of such
Option, the exercise thereof or the acquisition, holding or voting of the Common
Stock issuable upon exercise thereof is, or is likely to, (x) be
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prohibited or restricted by law, regulation or order, or (y) give rise to or
result in an actual or potential conflict of interest, disqualification or
similar impediment in or to the exercise of the duties and responsibilities or
such office or position.
14. ADJUSTMENTS.
(a) The existence of outstanding Awards shall not affect in any
manner the right or power of the Company or its stockholders 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 consolidation of outstanding
shares of Common Stock, declaration of a dividend payable in shares of
Common Stock or other stock split, then (i) the number of shares of Common
Stock reserved under this Plan, (ii) the number of shares of Common Stock
covered by outstanding Awards, (iii) the Grant Price or other price in
respect of such Awards, (iv) the appropriate Fair Market Value and other
price determinations for such Awards, and (v) the Stock Based Awards
Limitations shall each be proportionately adjusted by the Board as
appropriate to reflect such transaction. In the event of any other
recapitalization or capital reorganization of the Company, any
consolidation or merger of the Company with another corporation or entity,
the adoption by the Company of any 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), the Board shall make appropriate adjustments to (i) the number of
shares of Common Stock covered by Awards, (ii) the Grant Price or other
price in respect of such Awards, (iii) the appropriate Fair Market Value
and other price determinations for such Awards, and (iv) the Stock Based
Awards Limitations to reflect such transaction; provided that such
adjustments shall only be such as are necessary to maintain the
proportionate interest of the holders of the Awards and preserve, without
increasing, the value of such Awards. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation,
reorganization or liquidation, the Board shall be authorized (x) to issue
or assume Awards by means of substitution of new Awards, as appropriate,
for previously issued Awards or to assume previously issued Awards as part
of such adjustment or (y) to cancel Awards that are Options or SARs and
give the Participants who are the holders of such Awards notice and
opportunity to exercise for 30 days prior to such cancellation.
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15. RESTRICTIONS. No Common Stock or other form of payment shall be issued
with respect to any Award unless the Company shall be satisfied based on the
advice of its counsel that such issuance will be in compliance with applicable
federal and state securities laws. Certificates evidencing shares of Common
Stock delivered under this Plan (to the extent that such shares are so
evidenced) may be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any securities exchange
or transaction reporting system upon which the Common Stock is then listed or to
which it is admitted for quotation and any applicable federal or state
securities law. The Committee may cause a legend or legends to be placed upon
such certificates (if any) to make appropriate reference to such restrictions.
16. UNFUNDED PLAN. This Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants under this Plan, any
such accounts shall be used merely as a bookkeeping convenience. The Company
shall not be required to segregate any assets for purposes of this Plan or
Awards hereunder, nor shall the Company, the Board or the Committee be deemed to
be a trustee of any benefit to be granted under this Plan. Any liability or
obligation of the Company to any Participant with respect to an Award under this
Plan shall be based solely upon any contractual obligations that may be created
by this Plan and any Award Agreement, and no such liability or obligation of the
Company shall be deemed to be secured by any pledge or other encumbrance on any
property of the Company. Neither the Company nor the Board nor the Committee
shall be required to give any security or bond for the performance of any
obligation that may be created by this Plan.
17. AWARDS TO FOREIGN NATIONALS AND EMPLOYEES OUTSIDE THE UNITED STATES.
To the extent the Committee deems it necessary, appropriate or desirable to
comply with foreign law or practice and to further the purpose of the Plan, the
Committee may, without amending the Plan, (i) establish special rules applicable
to Awards granted to Participants who are foreign nationals, are employed
outside the United States, or both, including rules that differ from those set
forth in this Plan, and (ii) grant Awards to such Participants in accordance
with those rules.
18. GOVERNING LAW. This Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by mandatory provisions of
the Code or the securities laws of the United States, shall be governed by and
construed in accordance with the laws of the State of Texas.
19. EFFECTIVENESS. The Plan was approved by the Board on March 7, 2001,
and by the shareholders of the Company at its annual meeting on May 2, 2001,
effective as of January 1, 2001. This amendment and restated of the Plan was
approved by the Board on April 27, 2004, effective as of May 1, 2004.
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IN WITNESS WHEREOF, the Company has executed this Plan, as amended and
restated, this 13th day of May, 2004, but effective as of May 1, 2004.
CENTERPOINT ENERGY, INC.
/s/ David M. McClanahan
------------------------------
David M. McClanahan
President and Chief Executive Officer
ATTEST:
/s/ Richard Dauphin
- --------------------------
Richard Dauphin
Assistant Secretary
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