EXHIBIT 10.9
ANNEX A
AMENDED AND RESTATED KEY EXECUTIVE RETENTION, RESTRUCTURING
BONUS
AND SEVERANCE AGREEMENT
BETWEEN
NRG ENERGY, INC.
AND
XXXXX X. XXXXXX
TABLE OF CONTENTS
Article 1. Establishment, Term and Purpose.................................................................1
Article 2. Definitions.....................................................................................1
Article 3. Restructuring Bonus.............................................................................4
Article 4. Severance Benefits..............................................................................4
Article 5. Excise Tax......................................................................................6
Article 6. Outplacement Assistance.........................................................................7
Article 7. The Company's Payment Obligation................................................................7
Article 8. Withholding.....................................................................................8
Article 9. Non-Competition Other Than Upon Change in Control...............................................8
Article 10. Non-Disparagement..............................................................................10
Article 11. Successors and Assignment......................................................................10
Article 12. Miscellaneous..................................................................................11
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SEVERANCE AGREEMENT
Article 1. Establishment, Term and Purpose
1.1 Establishment of the Agreement. NRG Energy, Inc., hereby enters
into this Key Executive Retention, Restructuring Bonus
and Severance Agreement
with Xxxxx X. Xxxxxx (the "Participant") as of July 1, 2003.
1.2 Term of the Agreement. This Agreement shall be effective on the
date indicated above and shall remain in effect until the earlier of: (a) a
Restructuring Event or (b) termination of the Participant's employment with the
Company.
1.3 Purpose of the Agreement. The purpose of the Agreement is to
provide an executive officer and key person of the Company (i) compensation for
contributing to a Restructuring Event and (ii) financial security in the event
of a termination of employment from the Company. This Agreement shall supercede
any other restructuring incentive, severance or severance-related plan or
agreement in which the Participant had participated. The Board has determined
that Xxxxx X. Xxxxxx is eligible to participate in the Agreement as of the
Effective Date.
Article 2. Definitions
Whenever used in this Agreement, the following terms shall have the
meanings set forth below:
2.1 "Agreement" means this Amended and Restated Key Executive
Retention, Restructuring Bonus
and Severance Agreement between the Company and
Xxxxx X. Xxxxxx.
2.2 "Bankruptcy Code" means title 11 of the United States Code, 11
U.S.C. Sections 101-1330.
2.3 "Base Salary" means an amount equal to the Participant's base
annual salary as of the date of his termination of employment or the Effective
Date, as applicable. As of July 1, 2003, Participant's Base Salary shall be
$500,000.00. Subsequent to the Effective Date and payment of any Restructuring
Bonus, Participant's Base Salary shall be $300,000.00. For this purpose, "Base
Salary" shall not include bonuses, long-term incentive compensation, or any
remuneration other than base annual salary.
2.4 "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
2.5 "Beneficiary" means the persons or entities designated or deemed to
be designated by the Participant.
2.6 "Board" means the Board of Directors of the Company.
2.7 "Cause" means the occurrence of any one or more of the following
events:
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(a) The continued failure by the Participant to
substantially and effectively perform his normal
duties (other than any such failure resulting from
the Participant's Disability), after a written demand
for substantial performance, signed by the CEO or the
Participant's immediate supervisor, is delivered to
the Participant, that identifies the manner in which
the Participant has not substantially and effectively
performed his duties, and the Participant has failed
to remedy the situation within thirty (30) business
days of receiving such notice;
(b) The Participant's conviction or guilty plea for
committing an act of fraud, embezzlement, theft, or
other act constituting a felony; or the Participant's
violation of the Company Code of Conduct; or
(c) The engaging by the Participant in willful, reckless
or grossly negligent conduct materially and
demonstrably injurious to the Company. However, no
act, or failure to act on the Participant's part,
shall be considered "willful" unless done, or omitted
to be done, by the Participant not in good faith and
without reasonable belief that his action or omission
was in the best interest of the Company.
2.8 "Code" means the United States Internal Revenue Code of 1986, as
amended.
2.9 "Company" means NRG Energy, Inc., a Delaware corporation or any
successor thereto as provided in Article 12 herein.
2.10 "Disability" means the definition provided in the Company's long
term disability plan.
2.11 "Effective Date" shall have the meaning ascribed to it in the
Plan.
2.12 "Effective Date of Termination" means the date on which
Participant's employment termination occurs that triggers the payment of
Severance Benefits hereunder.
2.13 "Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
2.14 "Good Reason" means, without the Participant's express written
consent, the occurrence of any one or more of the following:
(a) Any reduction in the Participant's Base Salary or
target annual bonus below the amount in effect
immediately preceding the reduction (including all
increases following July 1, 2003), except in the case
of a reduction that similarly applies to all
executives on a nondiscriminatory basis.
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(b) Any significant and material reduction in the
Participant's benefits package, except in the case of
a reduction that similarly applies to all executives
on a nondiscriminatory basis.
(c) Any assignment of new duties that requires the
Participant to relocate his domicile more than fifty
(50) miles from the Participant's current work
location.
(d) Any significant and material reduction or diminution
in the duties, responsibilities, or position of the
Participant from that in effect immediately prior to
such reduction or diminution, provided that the sale
of a Company division or sale of a division of a
subsidiary company will not automatically be deemed
to result in the significant reduction or diminution
in the duties, responsibilities, or position of the
Participant without a specific showing of such
reduction or diminution.
(e) Any significant increase in responsibility without
corresponding compensation (with "responsibility"
defined as those responsibilities as in effect as of
the Effective Date).
The Participant's right to terminate employment for Good
Reason shall not be affected by the Participant's incapacity
due to Disability. The Participant's continued employment for
fewer than 30 days after any event or change giving rise to a
significant and material reduction or diminution shall not
constitute consent to, or a waiver of rights with respect to,
any circumstance constituting Good Reason herein.
2.15 "Notice of Termination" means a written notice that indicates the
specific termination provision in this Agreement relied upon, and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Participant's employment under the provision so
indicated.
2.16 "Participant" means Xxxxx X. Xxxxxx, an executive officer and key
person of the Company.
2.17 "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d).
2.18 "Plan" means the Company's chapter 11 plan of reorganization
currently filed with the United States Bankruptcy Court for the Southern
District of New York, as such plan may be subsequently amended.
2.19 "Restructuring Bonus" means the payment described in Section 3.2
herein.
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2.20 "Retirement" means retirement as defined in the applicable NRG
Energy, Inc. retirement program in which the Participant is eligible, which may
be amended from time to time as directed by the Board.
2.21 "Severance Benefits" means the payment of severance compensation
as provided in Article 4 herein.
2.22 "Xcel" shall mean Xcel Energy, Inc, a Minnesota corporation, or
any successor thereto.
Article 3. Restructuring Bonus
3.1 Right to Restructuring Bonus.
Subject to the provisions herein, upon the occurrence of the
Effective Date, the Participant shall be entitled to receive from the Company a
Restructuring Bonus, as described in Section 3.2 herein, to be paid to the
Participant in a lump sum within 30 days following the Effective Date. Payment
of the Restructuring Bonus shall be conditioned upon the Effective Date
occurring by the date specified in the Plan, unless the conditions to the
Effective Date contained in the Plan regarding occurrence by a specified date
shall have been waived under the Plan in accordance with its terms.
3.2 Description of Restructuring Bonus.
If the Participant is entitled to receive a Restructuring Bonus, the
amount of the Restructuring Bonus shall equal one and one-half (1.5) times the
Participant's Base Salary.
3.3 Termination of Participant
The Participant shall not be entitled to a Restructuring Bonus if he
is terminated for Cause, or if his employment with the Company ends due to
Disability, Retirement, or due to a voluntary termination of employment by the
Participant without Good Reason.
Article 4. Severance Benefits
4.1 Right to Severance Benefits. Subject to the provisions herein, the
Participant shall be entitled to receive from the Company Severance Benefits as
described in Section 4.2 herein, if the Participant's employment with the
Company is terminated by the Company without Cause or the Participant terminates
employment for Good Reason.
The Participant shall not be entitled to receive Severance Benefits
under Section 4.2 herein if he is terminated for Cause, or if his employment
with the Company ends due to Disability, Retirement, or due to a voluntary
termination of employment by the Participant without Good Reason.
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4.2 Description of Severance Benefits. If the Participant becomes
entitled to receive Severance Benefits, as provided in Section 4.1 herein, the
Participant shall receive the following Severance Benefits:
(a) Two (2) times the sum of: (i) the Participant's Base
Salary; and (ii) the greater of : (a) the
Participant's average annual bonus earned over the
two (2) most recent full fiscal years prior to the
Effective Date of Termination; or (b) the
Participant's target annual bonus established for the
bonus plan year in which the Participant's Effective
Date of Termination occurs.
(b) An Amount equal to the Participant's unpaid targeted
annual incentive, established for the plan year in
which the Participant's Effective Date of Termination
occurs, multiplied by a fraction, the numerator of
which is the number of days completed in the then
existing fiscal year through the Effective Date of
Termination, and the denominator of which is three
hundred sixty-five (365).
(c) A net cash payment equivalent to the COBRA premiums
as in effect as of the Participant's termination of
employment of the medical insurance and dental
insurance for a period of eighteen (18) months. This
cash payment shall be made in one lump sum (net of
applicable withholding).
COBRA election and continuation shall be the
responsibility of the participant and/or qualified
beneficiaries.
In the event the COBRA premium shall change for all
employees of the Company, the premium, likewise,
shall change for the Participant in a corresponding
manner.
(d) A cash payment of vacation and/or paid time off time
earned prior to the Effective Date of Termination,
but not taken by the Participant.
4.3 Termination due to Disability. If the Participant's employment is
terminated due to Disability during the term of this Agreement, the Participant
shall receive his Base Salary and accrued vacation and/or paid time off through
his termination of employment and continuation of the medical insurance, dental
insurance and group term life insurance shall be subject to the terms under the
applicable disability plan of the Company.
4.4 Termination Due to Retirement or Death. If the Participant's
employment is terminated by reason of Retirement or death, the Participant or,
where applicable, the Participant's Beneficiaries, shall receive the
Participant's Base Salary and accrued vacation/paid time off through his
termination of employment, and continuation of the welfare benefits of medical
insurance, dental insurance, and group term life insurance shall be subject to
the treatment provided under the applicable retirement or health and welfare
plan of the Company. If the Participant's employment is terminated by reason of
death the amounts to be paid under this Agreement shall be paid to the
Participant's estate.
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4.5 Termination for Cause or by the Participant Other Than for Good
Reason. If the Participant's employment is terminated either: (a) by the Company
for Cause; or (b) by the Participant without Good Reason, the Company shall pay
the Participant his unpaid Base Salary and accrued vacation/paid time off
through his termination of employment, at the rate then in effect, plus all
other amounts to which the Participant is entitled under any compensation plans
of the Company, at the time such payments are due; and the Company shall have
not further obligations to the Participant under this Agreement.
4.6 Notice of Termination. Any termination by the Company for Cause or
by the Participant for Good Reason shall be communicated to the other party at
least one hundred twenty (120) days prior to the date on which such termination
shall be effective. The Company can terminate the employment of the Participant
with no notice in which case the Company shall provide the Participant with
continuation of pay of one hundred twenty (120) days.
4.7 Form and Timing of Severance Benefits. At the discretion of the
Company, all cash payments set forth in Section 4.2 shall be made in 30 equal
monthly installments, net of appropriate withholdings, or in one (1) lump sum,
net of appropriate withholdings, within a reasonable period of time, commencing
or paid at a time not to exceed one hundred twenty (120) days after the
Effective Date of Termination.
Article 5. Excise Tax
5.1 Excise Tax Equalization Payment. If the Participant becomes
entitled to severance benefits or any other payment or benefit under this
Agreement, or under any other agreement or plans of the Company (in the
aggregate, the "Total Payments"), and any of the Total Payments will be subject
to the tax (the "Excise Tax") imposed by Section 4999 of the Code (or any
similar tax that may hereafter be imposed), the Company shall pay to the
Participant in cash an additional amount (the "Gross-Up Payment") such that the
net amount retained by the Participant after deduction of any Excise Tax upon
the Total Payments and any federal, state and local income tax and Excise Tax
upon the Gross-Up Payment provided for by this Section 5.1 (including FICA and
FUTA), shall be equal to the Total Payments. Such payment shall be made by the
Company to the Participant as soon as practicable following the effective date
of termination, but in no event beyond forty-five (45) days from such date.
5.2 Tax Computation. For purposes of determining whether any of the
Total Payments will be subject to the Excise Tax and the amounts of such Excise
Tax:
(a) Any other payments or benefits received or to be
received by the Participant in connection with a
Restructuring Bonus or the Participant's termination
of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement, or
agreement with the Company, or with any person (which
shall have the meaning set forth in Section 3(a)(9)
of the Securities Exchange Act of 1934, including a
"group" as defined in Section 13(d) therein) whose
actions result in a Change in Control of the Company
or any person affiliated with the Company or such
persons) shall be treated as "parachute payments"
within the meaning of Section 280G(b)(1) of the Code
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and shall be treated as subject to the Excise Tax,
unless in the opinion of tax counsel as supported by
the Company's independent auditors and acceptable to
the Participant, such other payments or benefits (in
whole or in part) do not constitute parachute
payments, or unless such excess parachute payments
(in whole or in part) represent reasonable
compensation for services actually rendered within
the meaning of Section 280G(b)(4) of the Code in
excess of the base amount within the meaning of
Section 280G(b)(3) of the Code, or are otherwise not
subject to the Excise Tax;
(b) The amount of the Total Payments which shall be
treated as subject to the Excise Tax shall be equal
to the lesser of: (i) the total amount of the Total
Payments; or (ii) the amount of excess parachute
payments within the meaning of Section 280G(b)(3)
(after applying clause (a) above); and
(c) The value of any non-cash benefits or any deferred
payment or benefit shall be determined by the
Company's independent auditors in accordance with the
principles of Section 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, the
Participant shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made, and state and local income taxes at the highest marginal
rate of taxation in the state and locality of the Participant's residence on the
effective date of termination, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes.
5.3 Subsequent Recalculation. If the Internal Revenue Service adjusts
the computation of the Company under Section 5.2 herein so that the Participant
did not receive the greatest net benefit, the Company shall reimburse the
Participant for the full amount necessary to make the Participant whole, plus a
market rate of interest, as determined by the Committee.
Article 6. Outplacement Assistance
Following a termination of employment in which Severance Benefits are
payable hereunder, the Participant shall be reimbursed by the Company for the
costs of all outplacement services obtained by the Participant within the two
(2) year period after the Effective Date of Termination; provided, however, that
the total reimbursement shall be limited to $15,000.
Article 7. The Company's Payment Obligation
7.1 Payment Obligations Absolute. Except as provided herein, the
Company's obligation to make the payments and the arrangements provided for
herein shall be absolute and unconditional, and shall not be affected by any
circumstances, including, without limitation, any offset, counterclaim,
recoupment, defense, or other right which the Company may have against the
Participant or anyone else; provided that the Company shall retain a setoff and
right to recoupment in the event of any breach by the Participant of his
fiduciary duty at common law or a violation of the provisions of Articles 9.1 or
9.2. All amounts payable by the Company hereunder shall be paid
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without notice or demand. Except as provided herein, each and every payment made
hereunder by the Company shall be final, and the Company shall not seek to
recover all or any part of such payment from the Participant or from whomever
may be entitled thereto. Notwithstanding the foregoing, the Company reserves the
right to conduct an independent investigation for the sole purpose of
determining whether "Cause" exists that would negate a payment hereunder. Until
the conclusion of such investigation (which shall be conducted expeditiously)
the Company reserves the right to suspend payment of benefits or alternatively,
to condition any benefits on the results of such investigation. For purposes of
this section, "expeditiously" shall be defined as a reasonable period of time
not to exceed six (6) months. Participant shall be notified within thirty (30)
days of the conclusion of the investigation.
The Participant shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangement made under any provision of
this Agreement, and the obtaining of any such other employment shall in no event
affect any reduction of the Company's obligations to make the payments and
arrangements required to be made under this Agreement.
7.2 Contractual Rights to Benefits. This Agreement establishes and
vests in the Participant a contractual right to the benefits to which he is
entitled hereunder. However, nothing herein contained shall required or be
deemed to require, or prohibit or be deemed to prohibit, the Company to
segregate, earmark, or otherwise set aside any funds or other assets, in trust
or otherwise, to provide for any payments to be made or required hereunder.
7.3 Bankruptcy Court Approval
Participant acknowledges that the Company has commenced a
reorganization case under chapter 11 of the Bankruptcy Code in the United States
Bankruptcy Court for the Southern District of New York. At Participant's sole
option, the Company shall promptly move the bankruptcy court for an order
authorizing the assumption of this Agreement under section 365 of the Bankruptcy
Code or such other relief as appropriate to ensure compliance with this
Agreement by the Company and receipt by the Participant of the rights granted
hereunder.
Article 8. Withholding
The Company shall be entitled to withhold from any amounts payable
under this Agreement all taxes as legally shall be required (including, without
limitation, any United States federal taxes, and any other state, city, or local
taxes).
Article 9. Non-Competition Other Than Upon Change in Control
9.1 Prohibition on Competition. The Participant agrees that during the
course of the Participant's employment with the Company, without the prior
written consent of the Company, and for one (1) year from the date of the
Participant's voluntary or involuntary termination of employment with the
Company, the Participant shall not:
(a) Directly or indirectly own, manage, consult,
associate with, operate, join, work for, control or
participate in the ownership, management, operation
or
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control of, or be connected in any manner with, any
business (whether in corporate, proprietorship, or
partnership for or otherwise), as more than a 10%
owner in such business or member of a group
controlling such business, which is engaged in any
activity which competes with the business of the
company as conducted one (1) year prior to (and up
through) the date of the Participant's involuntary or
voluntary termination of employment with the Company
or which will compete with any proposed business
activity of the Company in the planning stage on such
date of involuntary or voluntary termination. The
participant and the Company agree that this provision
is reasonably enforced as to any geographic area.
(b) Directly or indirectly solicit, service, contract
with or otherwise engage any past (one year prior),
existing or prospective customer, client or account
who then has a relationship with the Company for
current or prospective business on behalf of a
competitor of the Company, or on the Participant's
own behalf for a competing business. The Participant
and the Company agree that this provision is
reasonably enforced with reference to any geographic
area applicable to such relationships with the
Company.
(c) Cause or attempt to cause any existing or prospective
customer, client, or account, who then has a
relationship with the Company for current or
prospective business, to divert terminate, limit or
in any manner modify, or fail to enter into any
actual or potential business relationship with the
Company. The Participant and the Company agree that
this provision is reasonably enforced with reference
to any geographic area applicable to such
relationships with the Company.
(d) The Company agrees that the terms "activity", "which
competes with the business of the Company",
"competitor of the Company", "competing business",
and "relationship with the Company" as used in this
Agreement shall be reasonably construed and applied.
9.2 Disclosure of Information. The Participant recognizes that he has
access to and knowledge of certain confidential and proprietary information of
the Company, which is essential to the performance of his duties as an employee
of the Company. The Participant will not, during or after the term of his
employment with the Company, in whole or in part, disclose such information to
any person, firm, corporation, association, or other entity for any reason or
purpose whatsoever, nor shall he make use of any information for his own
purposes.
9.3 Covenants Regarding Other Employees. During the period ending one
(1) year following the payment of Severance Benefits under this Agreement, the
Participant agrees to not directly or indirectly solicit, employ or conspire
with others to employ any of the Company's employees. The term "employ" for
purposes of this paragraph means to enter into an arrangement for services as a
full-time or part-time employee, independent contractor, consultant, agent or
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otherwise. The Participant and the Company agree that this provision is
reasonably enforced as to any geographic area.
Article 10. Non-Disparagement
10.1 Disparagement. The Participant and the Company, each agrees not to
make any disparaging or negative statements about the Company or the
Participant, including but not limited to its products, services or management
any person or entity whatsoever, including but not limited to past, present and
prospective employees or employers, customers, clients, analysts, investors,
vendors and suppliers; provided that, following the expiration of the
non-compete period set forth in Article 9, the non-disparagement provisions set
forth herein is shall not restrain the parties from engaging in legitimate
competition with each other, which could include, but would not be limited to,
legitimate but unfavorable comparisons of products, services or management of
each other.
10.2 Release. In order to receive the benefits provided under the
Agreement (other than accrued vacation and paid time-off), the Participant will
be required to provide the Company with a release in a form to be provided by
the Company, or, if Xcel provides the benefits, the Participant will be required
to provide Xcel and the Company with a release in a form to be provided by Xcel.
Such release shall fully release the Company or Xcel, as applicable, and all of
its officers, agents, directors, employees, and representatives, any affiliated
companies, businesses or entities, and all other persons and entities from each
and every legal claim or demand of any kind that the Participant ever had or
might have arising out of any action, conduct or decision taking place during
the Participant's employment with the Company, or arising out of the
Participant's separation from that employment, whether or not any such claim
known at the time of separation.
Article 11. Successors and Assignment
11.1 Successors to the Company. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
of all or substantially all of the business and/or assets of the Company or of
any division or subsidiary thereof that employed the Participant at the time of
Termination of Employment to expressly assume and agree to perform the Company's
obligations under this Agreement in the same manner and to the same extent that
the Company would be required to perform them if no such succession had taken
place. Failure of the Company to obtain such assumption and agreement prior to
the effective date of any such succession shall be a breach of this Agreement
and shall entitle the Participant to compensation from the Company in the same
amount and on the same terms as he would be entitled to hereunder if he had
terminated his employment with the Company voluntarily for Good Reason. Except
for the purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Effective Date of Termination.
11.2 Assignment by the Participant. This Agreement shall inure to the
benefit of and be enforceable by the Participant's personal or legal
representatives, executors, administrators, successors, heirs, distributes,
devisees, and legatees. If the Participant dies while any amount would still be
payable to him hereunder had he continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement, to the Participant's Beneficiary. If the Participant has not named a
Beneficiary, then such amounts shall be paid to the
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Participant's devisee, legatee, or other designee, or if there is not such
designee, to the Participant's estate.
Article 12. Miscellaneous
12.1 Beneficiaries. The Participant may designate one or more persons
or entities as the primary and/or contingent beneficiaries of any Severance
Benefits or Change in Control Severance Benefits owing to the Participant under
this Agreement. Such designation must be in the form of a signed writing
acceptable to the Company. The Participant may make or change such designations
at any time.
12.2 Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine, the
feminine shall include the masculine; the plural shall include the singular, and
the singular shall include the plural.
12.3 Severability. In the event any provision of this Agreement shall
be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Agreement, and the Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included. Further, the captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.
12.4 Modification. No provision of this Agreement may be modified,
waived, or discharged unless such modification, waiver, or discharge is agreed
to in writing and signed by the Participant and by an authorized representative
of the Company, or by the respective parties' legal representative and
successors.
12.5 Applicable Law. To the extent not preempted by the laws of the
United States, the laws of the State of Minnesota, shall be the controlling law
in all matters relating to this Agreement.
/S/ XXXXX X. XXXXXX
--------------------------------------------
Participant's Signature
Date: July 1, 2003
NRG ENERGY, INC.
By: /S/ Xxxx X. Xxxxx
----------------------------------------
Xxxx X. Xxxxx
Title: President and Chief Operating Officer
-------------------------------------
Date: July 1, 2003
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