CHANGE IN CONTROL AGREEMENT
Exhibit 10.4
THIS CHANGE IN CONTROL AGREEMENT (“Agreement”) is made as of this ___day of
2007, by and between CENTERPOINT ENERGY, INC., a Texas corporation (the
“Company”), and [NAME] (“Executive”).
1. Definitions:
All terms defined in this Section 1 shall, throughout this Agreement, have the meanings given
herein:
“Affiliate” means any company controlled by, controlling or under common control with the
Company within the meaning of Section 414 of the Code.
“Board” means the board of directors of the Company.
“Cause” means Executive’s (a) gross negligence in the performance of Executive’s duties, (b)
intentional and continued failure to perform Executive’s duties, (c) intentional engagement in
conduct which is materially injurious to the Company or its Affiliates (monetarily or otherwise) or
(d) conviction of a felony or a misdemeanor involving moral turpitude. For this purpose, an act or
failure to act on the part of Executive will be deemed “intentional” only if done or omitted to be
done by Executive not in good faith and without reasonable belief that his action or omission was
in the best interest of the Company, and no act or failure to act on the part of Executive will be
deemed “intentional” if it was due primarily to an error in judgment or negligence.
A “Change in 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 Beneficial
Ownership of Outstanding Voting Stock (including any acquisition of Beneficial
Ownership deemed to have occurred pursuant to Rule 13d-5 under the Exchange Act) and
is, immediately thereafter, the Beneficial Owner of 30% or more of the then
Outstanding Voting Stock, unless such acquisition is made by a Parent Corporation
resulting from a Business Combination (other than the Company) if, following such
Business Combination, the conditions specified in clauses (i), (ii), (iii) and (iv)
of subsection (c) of this definition are satisfied; or any Group is formed that is
the Beneficial Owner of 30% or more of the Outstanding Voting Stock; or
(b) Board Majority Change: Individuals who are Incumbent Directors cease for
any reason to constitute a majority of the members of the Board; or
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(c) Major Mergers and Acquisitions: Approval by the shareholders of the
Company of a Business Combination (or if there is no such approval by shareholders,
consummation of such 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 will (or do) 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) will not (or 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 Parent Corporation resulting from a
Business Combination) will (or does) beneficially own, 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 immediately prior to consummation of such
Business Combination; or
(d) Major Asset Dispositions: Approval by the shareholders of the Company of a
Major Asset Disposition (or if there is no such approval by shareholders
consummation of such 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 will
(or do) 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 immediately prior to consummation
of such Major Asset Disposition.
For purposes of the foregoing, the term:
(1) “Beneficial Owner,” “Beneficial Ownership” and “Beneficially Own” are used
as defined for purposes of Section 13(d)(3) under the Exchange Act.
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(2) “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) “Election Contest” is used as it is defined for purposes of Rule 14a-11
under the Exchange Act.
(4) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(5) “Group” is used as it is defined for purposes of Section 13(d)(3) of the
Exchange Act.
(6) “Incumbent Director” means a director of the Company (x) who was a director
of the Company on the date of this Agreement, 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 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) “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) “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.
(9) “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 of the Company’s assets either directly or
through one or more subsidiaries.
(10) “Person” means an individual, entity or Group.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” means the common stock, $0.01 par value, of the Company.
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“Company” means CenterPoint Energy, Inc., a Texas corporation, and any successor thereto.
“Compensation” means the greater of (a) the sum of Executive’s annual base salary plus Target
Bonus determined immediately prior to the date on which a Change in Control occurs, or (b) the sum
of Executive’s annual base salary plus Target Bonus determined immediately prior to the date of his
Covered Termination.
“Covered Termination” means any termination of Executive’s employment with the Company or any
Affiliate thereof:
(a) that does not result from any of the following:
(i) death;
(ii) disability entitling Executive to benefits under the Company’s
long-term disability plan;
(iii) termination on or after age 65;
(iv) involuntary termination for Cause; or
(v) resignation by Executive, unless such resignation is for Good
Reason; and
(b) that occurs:
(i) after the execution of a binding agreement to effect a Change in
Control, subject to the Change in Control occurring; or
(ii) within two years after the date upon which a Change in Control
occurs.
The foregoing notwithstanding,
“Good Reason” means any one or more of the following:
(a) a failure to maintain Executive in the position, or a substantially
equivalent position, with the Company and/or an Affiliate, as the case may be, which
Executive held immediately prior to the Change in Control;
(b) a significant adverse change in the authorities, powers, functions,
responsibilities or duties which Executive held immediately prior to the Change in
Control;
(c) a reduction in Executive’s annual base salary as in effect immediately
prior to the date on which a Change in Control occurs;
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(d) a significant reduction in Executive’s qualified retirement benefits,
nonqualified benefits and welfare benefits provided to Executive immediately prior
to the date on which a Change in Control occurs; provided, however, that a
contemporaneous diminution of or reduction in qualified retirement benefits and/or
welfare benefits which is of general application and which uniformly and
contemporaneously reduces or diminishes the benefits of all covered employees shall
be ignored and not be considered a reduction in remuneration for purposes of this
paragraph (d);
(e) a reduction in Executive’s overall compensation opportunities (as
contrasted with overall compensation actually paid or awarded) under the STI Plan, a
long-term incentive plan or other equity plan (or in such substitute or alternative
plans) from that provided to Executive immediately prior to the date on which a
Change in Control occurs;
(f) a change in the location of Executive’s principal place of employment with
the Company by more than 50 miles from the location where Executive was principally
employed immediately prior to the date on which a Change in Control occurs; or
(g) a failure by the Company to provide directors and officers liability
insurance covering Executive comparable to that provided to Executive immediately
prior to the date on which a Change in Control occurs;
provided, however, that no later than 15 days after learning of the action (or inaction)
described herein as the basis for a termination of employment for Good Reason, Executive
shall advise the Company in writing that the action (or inaction) constitutes grounds for a
termination of his employment for Good Reason, in which event the Company shall have 30
days to correct such action (or inaction) and if such action (or inaction) is timely
corrected, then Executive shall not be entitled to terminate his employment for Good Reason
as a result of such action (or inaction).
“Retirement Plan” mean the CenterPoint Energy, Inc. Retirement Plan, as amended and restated
effective January 1, 1999, and as thereafter amended.
“STI Plan” means the CenterPoint Energy, Inc. Short Term Incentive Plan or any successor plan
or program thereto.
“Target Bonus” means Executive’s target incentive award opportunity under the STI Plan in
effect for the year with respect to which the target bonus amount is being determined or, if no
such plan is then in effect, for the last year in which such a plan was in effect, expressed as a
dollar amount based upon Executive’s annual base salary for the year of such determination.
“Waiver and Release” means a legal document, in the form attached hereto as Exhibit A or such
other form as may be prescribed by the Company, but which form may not be altered, amended or
modified after execution of a binding agreement to effect a Change in Control without the consent
of Executive, in which Executive, in exchange for severance benefits described in Section 2, among
other things, releases the Company, the Affiliates, their
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directors, officers, employees and agents, their employee benefit plans and the fiduciaries
and agents of said plans from liability and damages in any way related to Executive’s employment
with or separation from the Company or any of its Affiliates.
“Welfare Benefit Coverage” means each of medical, dental and vision benefit coverage.
2. Severance Benefits: If Executive experiences a Covered Termination,
executes and returns to the Company a Waiver and Release within a time period prescribed by the
Company following the date of Executive’s Covered Termination and does not revoke such Waiver and
Release within the time period prescribed by the Company after the date of execution (the “Waiver
and Release Revocation Period”), then Executive shall be entitled to receive, as additional
compensation for services rendered to the Company (including its Affiliates), the following
severance benefits:
(a) Severance Amount: A lump sum cash payment in an amount equal to
Executive’s Compensation multiplied by [two] [three], subject to applicable withholding for
income and employment taxes. Such severance payment shall be paid as soon as
practicable following the expiration of the Waiver and Release Revocation Period.
(b) Vacation Payment: A lump sum cash payment in an amount equal to his
earned, but not taken, vacation days through the date of Executive’s Covered
Termination, subject to applicable withholding for income and employment taxes.
Such vacation payment shall be paid as soon as practicable following his Covered
Termination date.
(c) Pro-Rated Bonus: A lump sum cash payment in an amount equal to the Target
Bonus in effect at the time of Executive’s Covered Termination based on Executive’s
eligible earnings under the STI Plan as of the date of his Covered Termination, but
reduced by any amount payable under the terms of the STI Plan for the performance
year in which the Change in Control is consummated, subject to applicable
withholding for income and employment taxes. Such pro-rated bonus shall be paid as
soon as practicable following the expiration of the Waiver and Release Revocation
Period.
(d) Welfare Benefit Coverage: Subject to Executive’s payment of applicable
premiums on the same basis as similarly situated active executives of the Company,
continued Welfare Benefit Coverage for Executive and his eligible dependents for a
period of two years following the date of Executive’s Covered Termination.
(e) Outplacement: Outplacement services for a 9-month period after the date of
Executive’s Covered Termination in connection with Executive’s efforts to obtain new
employment under the outplacement program adopted by the Company. Executive shall
not be entitled to a cash payment in lieu of such services.
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(f) Benefit Restoration Plan: Benefits pursuant to the Company’s Benefit
Restoration Plan in which Executive is a participant in an amount not less than the
amount that Executive would have been entitled to receive pursuant to the Retirement
Plan and the Benefit Restoration Plan (i) if Executive were fully vested in his
Retirement Plan benefits and (ii) had Executive remained an employee of the Company
or its Affiliates throughout the [two] [three]-year period following the date of the Change
in Control (provided, however, that in no event shall this clause (ii) cause
Executive to have more than 35 years of service for purposes of the Benefit
Restoration Plan). If Executive’s Retirement Plan benefit is pursuant to the cash
balance formula, his annual compensation for each of the [two] [three] years following the
Change in Control shall be based on his Compensation. The Company agrees to amend
the Benefit Restoration Plan to the extent necessary to provide for the payment of
this benefit, which shall be offset by, and not in addition to, any benefit actually
payable pursuant to the qualified Retirement Plan. Such benefit shall be paid in
accordance with the terms and conditions of the Benefit Restoration Plan.
(g) All Other Benefit Plans or Programs: Executive’s participation in all
other employee benefit plans and/or programs at the Company and the Affiliates shall
cease as of Executive’s Covered Termination date, subject to the terms and
conditions of the governing documents of those employee benefit plans and/or
programs.
3. Certain Additional Payments: Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event it shall be determined that any payment
or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the
Code) to or for the benefit of Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 3 (the “Payment”), would be subject to the excise
tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with
respect to such excise tax (“Excise Tax”), then Executive shall be entitled to receive an
additional payment (a “Gross-Up Payment”) in an amount such that, after payment (whether through
withholding at the source or otherwise) by Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto), employment taxes and Excise Tax imposed
upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payment. Notwithstanding the foregoing provision of this Section 3, if the
Company determines that by reducing the Payment by an amount not to exceed 10% of the Payment
(“Reduced Amount”) the receipt of the Payment will not give rise to any Excise Tax, and thus no
Gross-Up Payment would be required to be made to Executive, then the amount of the Payment shall be
reduced by the minimum Reduced Amount necessary, with such reduction to be made from the amounts
payable under Section 2(a) and (c), to avoid any Excise Tax and no Gross-Up Payment shall be
required under this Section 3 or the Agreement.
Subject to the provisions of this Section 3, all determinations required to be made under this
Section 3, including whether and when a Gross-Up Payment is
required and the
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amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized certified public accounting firm that is
selected by the Company (the “Accounting Firm”) which shall provide detailed supporting
calculations both to the Company and Executive within 15 business days after the receipt of notice
from Executive that there has been a Payment, or such earlier time as is requested by the Company.
In the event that the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control or the Accounting Firm declines or is unable to
serve, Executive shall appoint another nationally recognized certified public accounting firm to
make the determinations required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by
the Company. Any Gross-Up Payment, as determined pursuant to this Section 3, shall be paid by the
Company to Executive within 15 days after the receipt of the Accounting Firm’s determination. If
the Accounting Firm determines that no Excise Tax is payable by Executive, it shall furnish
Executive with a written opinion that failure to report the Excise Tax on Executive’s applicable
federal income tax return would not result in the imposition of negligence or similar penalty. Any
determination by the Accounting Firm shall be binding upon the Company and Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made (“Underpayment”), consistent with the
calculations required to be made hereunder. In the event that the Company exhausts its remedies
pursuant to the following provisions of this Section 3 and Executive thereafter is required to make
a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the Company to or for the
benefit of Executive.
Executive shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than 10 business days after
Executive is informed in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which it gives such notice to
the Company (or such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall:
(a) give the Company any information reasonably requested by the Company
relating to such claim;
(b) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company;
(c) cooperate with the Company in good faith in order to effectively contest
such claim; and
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(d) permit the Company to participate in any proceedings relating to such
claim;
provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall indemnify and
hold Executive harmless, on an after-tax basis, for any Excise Tax, employment tax or income tax
(including interest and penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses. Without limitation of the foregoing provisions of this Section
3, the Company shall control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, that if the Company directs Executive to pay such
claim and xxx for a refund, the Company shall provide the amount of such payment to Executive as an
additional payment (“Supplemental Payment”) (subject to possible repayment as provided in the next
paragraph) and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise
Tax, employment tax or income tax (including interest or penalties with respect thereto) imposed
with respect to such payment or with respect to any imputed income with respect thereto; and
further provided that any extension of the statute of limitations relating to payment of taxes for
the taxable year of Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company’s control of the contest shall
be limited to issues with respect to which a Gross-Up Payment or Supplemental Payment would be
payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing authority.
If, after the receipt by Executive of an amount provided by the Company pursuant to the
foregoing provisions of this Section 3, Executive becomes entitled to receive any refund with
respect to such claim, Executive shall (subject to the Company complying with the requirements of
this Section 3) promptly pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto).
If the Company is obligated to provide Executive with one or more Welfare Benefit Coverages
pursuant to Section 2(d), and the amount of such benefits or the value of such benefit coverage
(including, without limitation, any insurance premiums paid by the Company to provide such
benefits) is subject to any income, employment or similar tax imposed by federal, state or local
law, or any interest or penalties with respect to such tax (such tax or taxes, together with any
such interest and penalties, being hereafter collectively referred to as the “Income Tax”) because
such benefits cannot be provided under a nondiscriminatory health plan described in Section 105 of
the Code or for any other reason, the Company will pay to Executive an additional payment or
payments (collectively, an “Income Tax Payment”). The Income Tax Payment will be in an amount such
that, after payment by Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), Executive retains an amount of the Income Tax Payment equal to the Income
Tax imposed with respect to such welfare benefits or such welfare benefit coverage.
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4. Legal Fees And Expenses: It is the intent of the Company that Executive
not be required to incur legal fees and the related expenses associated with the interpretation,
enforcement or defense of Executive’s rights under this Agreement by litigation or otherwise
because the cost and expense thereof would detract from the benefits intended to be extended to
Executive hereunder. Accordingly, if it should appear to Executive that the Company has failed to
comply with any of its obligations under this Agreement or in the event that the Company or any
other person takes or threatens to take any action to declare this Agreement void or unenforceable,
or institutes any litigation or other action or proceeding designed to deny, or to recover from,
Executive the benefits provided or intended to be provided to Executive hereunder, the Company
irrevocably authorizes Executive from time to time to retain counsel of Executive’s choice, at the
expense of the Company as hereafter provided, to advise and represent Executive in connection with
any such interpretation, enforcement or defense, including, without limitation, the initiation or
defense of any litigation or other legal action, whether by or against the Company or any director,
officer, stockholder or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the Company and such
counsel, the Company irrevocably consents to Executive entering into an attorney-client
relationship with such counsel, and in that connection the Company and Executive agree that a
confidential relationship will exist between Executive and such counsel. Without regard to whether
Executive prevails, in whole or in part, in connection with any of the foregoing, the Company will
pay and be solely financially responsible for any and all attorneys’ fees and related expenses
incurred by Executive in connection with any of the foregoing except to the extent that a final
judgment no longer subject to appeal finds that a claim or defense asserted by Executive was
frivolous. In such a case, the portion of such fees and expenses incurred by Executive as a result
of such frivolous claim or defense shall become Executive’s sole responsibility and any funds
advanced by the Company shall be repaid to the Company.
With respect to the Company’s obligations under this Section 4, the fees and expenses of
counsel selected by Executive pursuant to this Section 4 will be paid, or reimbursed to Executive
if paid by Executive, on a regular, periodic basis upon presentation by Executive to the Company of
a statement or statements prepared by such counsel in accordance with its customary practices. The
pendency of a claim by the Company that a claim or defense of Executive is frivolous or otherwise
lacking merit shall not excuse the Company from making periodic payments of legal fees and expenses
until a final judgment is rendered as hereinabove provided. Any failure by the Company to satisfy
any of its obligations under this Section 4 will not limit the rights of Executive hereunder.
Subject to the foregoing, Executive will have the status of a general unsecured creditor of the
Company and will have no right to, or security interest in, any assets of the Company or any
Affiliate.
5. Confidentiality: Executive acknowledges that pursuant to this Agreement,
the Company agrees to provide to him Confidential Information regarding the Company and the
Company’s business and has previously provided him other such Confidential Information. In return
for this and other consideration, provided under this Agreement, Executive agrees that he will not,
while employed by the Company and thereafter, disclose or make available to any other person or
entity, or use for his own personal gain, any Confidential Information, except for such disclosures
as required in the performance of his duties hereunder as may otherwise be required by law or legal
process (in which case Executive shall notify the Company of such legal or judicial proceeding as
soon as practicable following his receipt of notice of such a proceeding,
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and permit the Company to seek to protect its interests and information). For purposes of
this Agreement, “Confidential Information” shall mean any and all information, data and knowledge
that has been created, discovered, developed or otherwise become known to the Company or any of its
Affiliates or ventures or in which property rights have been assigned or otherwise conveyed to the
Company or any of its Affiliates or ventures, which information, data or knowledge has commercial
value in the business in which the Company is engaged, except such information, data or knowledge
as is or becomes known to the public without violation of the terms of this Agreement. By way of
illustration, but not limitation, Confidential Information includes business trade secrets, secrets
concerning the Company’s plans and strategies, nonpublic information concerning material market
opportunities, technical trade secrets, processes, formulas, know-how, improvements, discoveries,
developments, designs, inventions, techniques, marketing plans, manuals, records of research,
reports, memoranda, computer software, strategies, forecasts, new products, unpublished financial
information, projections, licenses, prices, costs, and employee, customer and supplier lists or
parts thereof.
6. Return Of Property: Executive agrees that at the time of leaving the
Company’s employ, he will deliver to the Company (and will not keep in his possession, recreate or
deliver to anyone else) all Confidential Information as well as all other devices, records, data,
notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches,
materials, equipment, customer or client lists or information, or any other documents or property
(including all reproductions of the aforementioned items) belonging to the Company or any of its
Affiliates or ventures, regardless of whether such items were prepared by Executive.
7. Non-Solicitation And Non-Competition:
(a) For consideration provided under this Agreement, including, but not limited
to the Company’s agreement to provide Executive with Confidential Information (as
defined in Section 5) regarding the Company and the Company’s business, Executive
agrees that while employed by the Company and for one year following a Covered
Termination he shall not, without the prior written consent of the Company, directly
or indirectly, (i) hire or induce, entice or solicit (or attempt to induce, entice
or solicit) any employee of the Company or any of its Affiliates or ventures to
leave the employment of the Company or any of its Affiliates or ventures or (ii)
solicit or attempt to solicit the business of any customer or acquisition prospect
of the Company or any of its Affiliates or ventures with whom Executive had any
actual contact while employed at the Company.
(b) Additionally, for consideration provided under this Agreement, including,
but not limited to the Company’s agreement to provide Executive with Confidential
Information regarding the Company and the Company’s business, Executive agrees that
while employed by the Company and for one year following a Covered Termination he
will not, without the prior written consent of the Company, acting alone or in
conjunction with others, either directly or indirectly, engage in any business that
is in competition with the Company or accept employment with or render services to
such a business as an officer, agent, employee, independent contractor or
consultant, or otherwise engage in activities that are in competition with the
Company.
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(c) The restrictions contained in this Section 7 are limited to a 50-mile
radius around any geographical area in which the Company engages (or has definite
plans to engage) in operations or the marketing of its products or services at the
time of a Covered Termination.
(d) Executive acknowledges that these restrictive covenants under this
Agreement, for which Executive received valuable consideration from the Company as
provided in this Agreement, including, but not limited to the Company’s agreement to
provide Executive with Confidential Information regarding the Company and the
Company’s business are ancillary to otherwise enforceable provisions of this
Agreement that the consideration provided by the Company gives rise to the Company’s
interest in restraining Executive from competing and that the restrictive covenants
are designed to enforce Executive’s consideration or return promises under this
Agreement. Additionally, Executive acknowledges that these restrictive covenants
contain limitations as to time, geographical area, and scope of activity to be
restrained that are reasonable and do not impose a greater restraint than is
necessary to protect the goodwill or other legitimate business interests of the
Company, including, but not limited to, the Company’s need to protect its
Confidential Information.
8. Conflicts With Other Agreements: In the event that Executive becomes
entitled to benefits under a prior or subsequent agreement pertaining to Executive’s employment by
the Company or any Affiliate thereof (other than this Agreement) or the benefits to which Executive
is entitled as a result of such employment and such benefits conflict with the terms of this
Agreement, Executive will receive the greater and more favorable of each of the benefits provided
under either this Agreement or such other agreement or benefits, on an individual benefit basis.
9. Notices: For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
| If to Company: | CenterPoint Energy, Inc. | |||
| 0000 Xxxxxxxxx | ||||
| Xxxxxxx, Xxxxx 00000 | ||||
| Attention: President and Chief Executive Officer | ||||
| If to Executive: | [NAME] | |||
| [ADDRESS] | ||||
| [CITY, STATE, ZIP] |
or to such other address as either party may furnish to the other in writing in accordance
herewith, except that notices of changes of address shall be effective only upon receipt.
10. Litigation Assistance: Executive agrees to assist the Company with any
litigation matters related to the Company or any of its subsidiaries or affiliates as may be
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reasonably requested by the Company’s General Counsel. The Company shall reimburse Executive
for any reasonable travel or other business expenses incurred in connection with providing such
assistance and cooperation. Executive shall provide such services as an independent contractor and
such services shall be limited solely to those matters with which Executive is suitably experienced
and knowledgeable by reason of Executive’s education, training, background and prior employment
with the Company. The Company and Executive agree to work out reasonable accommodations for the
provision of such assistance so that it does not unreasonably interfere with any of Executive’s
personal affairs, business endeavors or future employment.
11. Prior Agreements/Modification: This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and supersedes all prior
agreements or understandings, whether written or oral, between the parties with respect thereto.
This Agreement may be amended only by an agreement in writing signed by the parties hereto;
provided, however, that Executive’s compensation may be increased at any time by the Company
without in any way affecting any of the other terms and conditions of this Agreement which in all
other respects shall remain in full force and effect. The provisions of this Agreement will be
binding upon, and will inure to the benefit of, the respective heirs, legal representatives and
successors of the parties hereto. Executive represents to the Company that he is not a party to
any agreement or subject to any legal restriction that would prevent him from fulfilling his duties
hereunder.
12. Section 409A: The Company and Executive mutually desire to avoid
imposition of an excise tax under Code Section 409A and related regulations and Treasury
pronouncements (“Section 409A”). Accordingly, if any provision provided herein results in the
imposition of an excise tax under the provisions of Section 409A, the parties agree to fully
cooperate and take appropriate reasonable actions to reform the Agreement to avoid any such
imposition as Executive and the Company determine is appropriate to comply with Section 409A.
Moreover, notwithstanding any provision of this Agreement to the contrary, the parties agree that
any benefit or benefits under this Agreement that the Company determines are subject to the
suspension period under Code Section 409A(a)(2)(B) shall not be paid or commence until a date that
is six months and two days after Executive’s Covered Termination date, or if earlier, Executive’s
death.
13. Applicable Law: The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance with the substantive
laws of the State of Texas, including the Texas statute of limitations, but without giving effect
to the principles of conflict of laws of such State.
14. Severability: If a court of competent jurisdiction determines that any
provision of this Agreement is invalid or unenforceable, then the invalidity or unenforceability of
that provision shall not affect the validity or enforceability of any other provision of this
Agreement and all other provisions shall remain in full force and effect.
15. Withholding of Taxes: The Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as may be required pursuant to
any law or governmental regulation or ruling.
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16. No Employment Agreement: Nothing in this Agreement shall give Executive
any rights to (or impose any obligations for) continued employment by the Company or any Affiliate
thereof or successor thereto, nor shall it give the Company any rights (or impose any obligations)
with respect to continued performance of duties by Executive for the Company or any Affiliate
thereof or successor thereto.
17. No Assignment; Successors: Executive’s right to receive payments or
benefits hereunder shall not be assignable or transferable, whether by pledge, creation or a
security interest or otherwise, whether voluntary, involuntary, by operation of law or otherwise,
other than a transfer by will or by the laws of descent or distribution, and in the event of any
attempted assignment or transfer contrary to this Section 17 the Company shall have no liability to
pay any amount so attempted to be assigned or transferred. This Agreement shall inure to the
benefit of and be enforceable by Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
This Agreement shall be binding upon and inure to the benefit of the Company, its successors
and assigns (including, without limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or other disposition of all or
substantially all of its assets unless either (a) the person or entity acquiring such assets or a
substantial portion thereof shall expressly assume by an instrument in writing all duties and
obligations of the Company hereunder or (b) the Company shall provide, through the establishment of
a separate reserve therefor, for the payment in full of all amounts which are or may reasonably be
expected to become payable to Executive hereunder.
18. Payment Obligations Absolute: Except for the requirement of Executive
to execute and return to the Company a Waiver and Release in accordance with Section 2, the
Company’s obligation to pay (or cause one of its Affiliates to pay) Executive the amounts and to
make the arrangements provided herein shall be absolute and unconditional and shall not be affected
by any circumstances, including, without limitation, any set-off, counter-claim, recoupment,
defense or other right which the Company (including its Affiliates) may have against him or anyone
else. All amounts payable by the Company (including its Affiliates hereunder) shall be paid
without notice or demand. Executive shall not be obligated to seek other employment in mitigation
of the amounts payable or arrangements made under any provision of this Agreement, and, subject to
the restrictions in Section 7, the obtaining of any other employment shall in no event affect any
reduction of the Company’s obligations to make (or cause to be made) the payments and arrangements
required to be made under this Agreement.
The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place. As
used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise. If a Business Combination is consummated that would have resulted
in a Change in Control but for the satisfaction of the conditions specified in clauses (i), (ii),
(iii) and (iv) of subsection (c) of the definition of “Change in Control” in Section 1 and if the
Parent Corporation resulting from the Business Combination
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is other than the Company (hereinafter a “New Parent”), then, as a condition to consummation
of this Business Combination, the New Parent shall be considered a successor for purposes of this
paragraph.
19. Number and Gender: Wherever appropriate herein, words used in the
singular shall include the plural and the plural shall include the singular. The masculine gender
where appearing herein shall be deemed to include the feminine gender.
20. Term: The effective date of the Agreement is January 1, 2007
(“Effective Date”). The term of this Agreement shall commence on the Effective Date and shall end
on December 31, 2007; provided, however, that on each January 1st thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, prior to any such January
1st, the Board decides not to extend the term of this Agreement, in which event the term shall,
without further action, expire, and this Agreement shall terminate, on the December 31st of the
year in which the Board makes such decision. The foregoing to the contrary notwithstanding, (a)
if, prior to a Change in Control, Executive ceases for any reason other than due to a Covered
Termination to be an employee of the Company, then the term shall, without further action, expire,
and this Agreement shall terminate, as of such termination date; and (b) upon the Company entering
into a binding agreement to effect a Change in Control, if the Agreement has not expired prior to
such date, the term of this Agreement shall automatically be extended until the end of the two-year
period commencing as of the date of the Change in Control; provided, however, that, the foregoing
clause (b) notwithstanding, if the board of directors of the parties to such binding agreement
agree, as evidenced by their resolutions, not to consummate the Change in Control, the term of this
Agreement shall be determined as otherwise provided in this Section 20 without regard to clause
(b).
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of
the date first above written, but effective as of the Effective Date.
| CENTERPOINT ENERGY, INC. |
||||
| By: | ||||
| Xxxxx X. XxXxxxxxxx | ||||
| President and Chief Executive Officer | ||||
| EXECUTIVE | ||||
| [NAME] | ||||
-15-
Exhibit A
Waiver And Release
In exchange for the payment to me of the Severance Benefits described in Section 2 of the
Change in Control Agreement between CenterPoint Energy, Inc., and me effective as of January 1,
2007 (the “Agreement”), which I understand is incorporated herein by reference, and of other
remuneration and consideration provided for in the Agreement (the “Severance Benefits”), which is
in addition to any remuneration or benefits to which I am already entitled, I agree to waive all of
my claims against and release (i) CenterPoint Energy, Inc. and its predecessors, successors and
assigns (collectively referred to as the “Company”), (ii) all of the affiliates (including, but not
limited to, CenterPoint Energy Services Company, CenterPoint Energy Southern Gas Operations,
CenterPoint Energy Resources Corp. d/b/a CenterPoint Energy Texas Gas Operations, CenterPoint
Energy Resources Corp. d/b/a CenterPoint Energy Arkansas Gas, CenterPoint Energy Resources Corp.
d/b/a CenterPoint Energy Oklahoma Gas, CenterPoint Energy Resources Corp. d/b/a CenterPoint Energy
Minnesota Gas, CenterPoint Energy Houston Gas, CenterPoint Energy Pipeline Services, Inc.,
CenterPoint Energy Services, Inc., CenterPoint Energy Field Services, Inc., CenterPoint Energy Gas
Transmission Company, CenterPoint Energy Mississippi River Transmission Corporation, and all wholly
or partially owned subsidiaries) of the Company and their predecessors, successors and assigns
(collectively referred to as the “Company Affiliates”) and (iii) the Company’s and Company
Affiliates’ directors and officers, employees and agents, insurers, employee benefit plans and the
fiduciaries and agents of the foregoing (collectively, with the Company and Company Affiliates,
referred to as the “Corporate Group”) from any and all claims, demands, actions, liabilities and
damages arising out of or relating in any way to my employment with or separation from the Company
or the Company Affiliates. All payments under the Agreement are voluntary and are not required by
any legal obligation other than the Agreement itself.
I understand that signing this Waiver and Release is an important legal act. I acknowledge
that I have been advised in writing to consult an attorney before signing this Waiver and Release.
I understand that, in order to be eligible for Severance Benefits under the Agreement, I must sign
and return (to Xxxxx Xxxxxxxx, Vice President, Corporate Compliance Officer and Associate General
Counsel, Legal Department, at CenterPoint Energy Tower, 46th Floor, 1111 Louisiana, Houston, Texas
77002) this Waiver and Release. I acknowledge that I have been given at least 45 days to consider
whether to execute this Waiver and Release.
In exchange for the payment to me of Severance Benefits pursuant to the Agreement, which is in
addition to any remuneration or benefits to which I am already entitled, (1) I agree not to xxx in
any local, state and/or federal court or to file a grievance regarding or relating in any way to my
employment with or separation from the Company or the Company Affiliates, and (2) I knowingly and
voluntarily waive all claims and release the Corporate Group from any and all claims, demands,
actions, liabilities, and damages, whether known or unknown, arising out of or relating in any way
to my employment with or separation from the Company or the Company Affiliates, except to the
extent that my rights are vested under the terms of employee benefit plans sponsored by the Company
or the Company Affiliates and except with respect to such rights or claims as may arise after the
date this Waiver and Release is executed. This Waiver and Release includes, but is not limited to,
claims and causes of action under: Title
1
VII of the Civil Rights Act of 1964, as amended (“Title VII”); the Age Discrimination in Employment
Act of 1967, as amended, including the Older Workers Benefit Protection Act of 1990 (“ADEA”); the
Civil Rights Act of 1866, as amended; the Civil Rights Act of 1991; the Americans with Disabilities
Act of 1990 (“ADA”); the Energy Reorganization Act, as amended, 42 U.S.C. § 5851; the Workers
Adjustment and Retraining Notification Act of 1988; the Pregnancy Discrimination Act of 1978; the
Employee Retirement Income Security Act of 1974, as amended; the Family and Medical Leave Act of
1993; the Fair Labor Standards Act; the Occupational Safety and Health Act; claims in connection
with workers’ compensation or “whistle blower” statutes; and/or contract, tort, defamation,
slander, wrongful termination or any other state or federal regulatory, statutory or common law.
Further, I expressly represent that no promise or agreement which is not expressed in the Agreement
or this Waiver and Release has been made to me in executing this Waiver and Release, and that I am
relying on my own judgment in executing this Waiver and Release, and that I am not relying on any
statement or representation of any member of the Corporate Group or any of their agents.
I agree that this Waiver and Release is valid, fair, adequate and reasonable, is with my full
knowledge and consent, was not procured through fraud, duress or mistake and has not had the effect
of misleading, misinforming or failing to inform me. I acknowledge and agree that the Company
will withhold any taxes required by federal or state law from the Severance Benefits otherwise
payable to me and that the Severance Benefits otherwise payable to me shall be reduced by any
monies owed by me to the Company (or a Company Affiliate), including, but not limited to, any
overpayments made to me by the Company (or a Company Affiliate) and the balance of any loan by the
Company (or a Company Affiliate) to me that is outstanding at the time that the Severance Benefits
are paid.
I acknowledge that payment of Severance Benefits pursuant to the Agreement is not an admission
by any member of the Corporate Group that they engaged in any wrongful or unlawful act or that any
member of the Corporate Group violated any federal or state law or regulation. I understand that
nothing in this Waiver and Release is intended to prohibit, restrict or otherwise discourage any
individual from engaging in activity protected under 42 U.S.C. § 5851, 10 C.F.R. § 50.7 or the
Xxxxxxxx-Xxxxx Act of 2002, including, but not limited to, providing information to the Nuclear
Regulatory Commission (“NRC”) or to any member of the Corporate Group regarding nuclear safety or
quality concerns, potential violations or other matters within the NRC’s jurisdiction. I
acknowledge that no member of the Corporate Group has promised me continued employment or
represented to me that I will be rehired in the future. I acknowledge that my employer and I
contemplate an unequivocal, complete and final dissolution of my employment relationship. I
acknowledge that this Waiver and Release does not create any right on my part to be rehired by any
member of the Corporate Group and I hereby waive any right to future employment by any member of
the Corporate Group.
I have returned or I agree that I will return immediately, and maintain in strictest
confidence and will not use in any way, any confidential and proprietary business information or
other nonpublic information or documents relating to the business and affairs of the Corporate
Group. For the purposes of this Waiver and Release, “confidential and proprietary business
information” shall mean any information concerning any member of the Corporate Group or their
business which I learn or develop during my employment and which is not generally known or
available outside of the Corporate Group. Such information, without limitation, includes
information, written or otherwise, regarding any member of the Corporate Group’s earnings,
2
expenses, material sources, equipment sources, customers and prospective customers, business plans,
strategies, practices and procedures, prospective and executed contracts and other business
arrangements. I acknowledge and agree that all records, papers, reports, computer programs,
strategies, documents (including, without limitation, memoranda, notes, files and correspondence),
opinions, evaluations, inventions, ideas, technical data, products, services, processes,
procedures, and interpretations that are or have been produced by me or any employee, officer,
director, agent, contractor, or representative of any member of the Corporate Group, whether
provided in written or printed form, or orally, all comprise confidential and proprietary business
information. I agree that for a period of one year following my termination with the Corporate
Group that I will not: (a) solicit, encourage or take any action that is intended, directly or
indirectly, to induce any other employee of the Corporate Group to terminate employment with the
Corporate Group; (b) interfere in any manner with the contractual or employment relationship
between the Corporate Group and any other employee of the Corporate Group; and (c) use any
confidential information to directly, or indirectly, solicit any customer of the Corporate Group.
I understand and agree that in the event of any breach of the provisions of this paragraph, or
threatened breach, by me, any member of the Corporate Group may, in their discretion, discontinue
any or all payments provided for in the Agreement and recover any and all payments already made and
any member of the Corporate Group shall be entitled to apply to a court of competent jurisdiction
for such relief by way of specific performance, restraining order, injunction or otherwise as may
be appropriate to ensure compliance with these provisions. Should I be contacted or served with
legal process seeking to compel me to disclose any such information, I agree to notify the General
Counsel of the Company immediately, in order that the Corporate Group may seek to resist such
process if they so choose. If I am called upon to serve as a witness or consultant in or with
respect to any potential litigation, litigation, arbitration, or regulatory proceeding, I agree to
cooperate with the Corporate Group to the full extent permitted by law, and the Corporate Group
agrees that any such call shall be with reasonable notice, shall not unnecessarily interfere with
my later employment, and shall provide for payment for my time and costs expended in such matters.
Should any of the provisions set forth in this Waiver and Release be determined to be invalid
by a court, agency or other tribunal of competent jurisdiction, it is agreed that such
determination shall not affect the enforceability of other provisions of this Waiver and Release.
I acknowledge that this Waiver and Release and the Agreement set forth the entire understanding and
agreement between me and the Company or any other member of the Corporate Group concerning the
subject matter of this Waiver and Release and supersede any prior or contemporaneous oral and/or
written agreements or representations, if any, between me and the Company or any other member of
the Corporate Group. I understand that for a period of 7 calendar days following the date I sign
this Waiver and Release, I may revoke my acceptance of the offer by delivering a written statement
to the Vice President, Corporate Compliance Officer and Associate General Counsel (or the person
designated by the Vice President, Corporate Compliance Officer and Associate General Counsel) by
hand or by registered-mail, in which case the Waiver and Release will not become effective. In the
event I revoke my acceptance of this offer, I shall not be entitled to any Severance Benefits under
the Agreement. I understand that failure to revoke my acceptance of the offer within 7 calendar
days following the date I sign this Waiver and Release will result in this Waiver and Release being
permanent and irrevocable.
3
I acknowledge that I have read this Waiver and Release, have had an opportunity to ask
questions and have it explained to me and that I understand that this Waiver and Release will have
the effect of knowingly and voluntarily waiving any action I might pursue, including breach of
contract, personal injury, retaliation, discrimination on the basis of race, age, sex, national
origin, religion, veterans status, or disability and any other claims arising prior to the date of
this Waiver and Release. By execution of this document, I do not waive or release or otherwise
relinquish any legal rights I may have which are attributable to or arise out of acts, omissions,
or events of any member of the Corporate Group which occur after the date of the execution of this
Waiver and Release.
Executive’s Printed Name
|
Corporate Group’s Representative | |
Executive’s Signature
|
Corporate Group’s Execution Date | |
Executive’s Signature Date
|
Executive’s Social Security Number |
4
