CENTERPOINT ENERGY, INC. QUALIFIED PERFORMANCE AWARD AGREEMENT JANUARY 1, 20XX – DECEMBER 31, 20XX PERFORMANCE CYCLE
Exhibit
10(kk)(2)
CENTERPOINT ENERGY, INC.
2009 LONG TERM INCENTIVE PLAN
JANUARY 1, 20XX – DECEMBER 31, 20XX PERFORMANCE
CYCLE
Pursuant to this Qualified Performance Award Agreement (the
“Award Agreement”), CenterPoint Energy, Inc. (the
"Company") hereby grants to the Participant, an employee of the Company, these
target shares of Common Stock (the "Target Shares"), such number of shares being
subject to adjustment as provided in Section 14 of the CenterPoint Energy, Inc.
2009 Long Term Incentive Plan (the "Plan"), conditioned upon the Company's
achievement of the Performance Goals over the course of the 20XX – 20XX
Performance Cycle, and subject to the following terms and
conditions:
1. Relationship to the
Plan. This grant of Target Shares is subject to all of the
terms, conditions and provisions of the Plan in effect on the date hereof and
administrative interpretations thereunder, if any, adopted by the
Committee. To the extent that any provision of this Award Agreement
conflicts with the express terms of the Plan, it is hereby acknowledged and
agreed that the terms of the Plan shall control and, if necessary, the
applicable provisions of this Award Agreement shall be hereby deemed amended so
as to carry out the purpose and intent of the Plan. References to the
Participant herein also include the heirs or other legal representatives of the
Participant.
2. Definitions. Except
as defined herein, capitalized terms shall have the same meanings ascribed to
them under the Plan. For purposes of this Award
Agreement:
"Achievement
Percentage" means the percentage of achievement determined by the
Committee after the end of the Performance Cycle in accordance with Section 4
that reflects the extent to which the Company achieved the Performance Goals
during the Performance Cycle.
"Change in Control
Closing Date" means the date a Change in Control is consummated during
the Performance Cycle.
"Disability"
means that the Participant is (i) eligible for and in receipt of benefits
under the Company's long-term disability plan and (ii) not eligible for
Retirement.
"Employment"
means employment with the Company or any of its
Subsidiaries.
"Performance
Cycle" means the period beginning on January 1, 20XX and ending on
December 31, 20XX.
"Retirement"
means a Separation from Service on or after the attainment of age 55 and with at
least five years of service with the Company; provided,
however, that such Separation from Service is not by the Company for
Cause. For purposes of this Award Agreement, "Cause" means the
Participant's (a) gross negligence in the performance of his or her duties, (b)
intentional and continued failure to perform his or her duties, (c) intentional
engagement in conduct which is materially injurious to the Company or its
Subsidiaries (monetarily or otherwise) or (d) conviction of a felony or a
misdemeanor involving moral
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turpitude. For this purpose, an act or failure
to act on the part of the Participant will be deemed "intentional" only if done
or omitted to be done by the Participant not in good faith and without
reasonable belief that his or her action or omission was in the best interest of
the Company, and no act or failure to act on the part of the Participant will be
deemed "intentional" if it was due primarily to an error in judgment or
negligence.
"Separation from
Service" means a separation from service with the Company or any of its
Subsidiaries within the meaning of Treasury Regulation § 1.409A-1(h) (or any
successor regulation).
"Target
Shares" means the actual number of shares originally granted to the
Participant pursuant to this Award Agreement, with such number of shares to be
actually awarded to the Participant at the close of the Performance Cycle if the
Company attains an Achievement Percentage of 100% for the Performance Goals
associated with such Target Shares.
"Vested
Shares" means the shares of Common Stock actually awarded to the
Participant following the Participant's satisfaction of the vesting provisions
of Section 5 and, if applicable, the determination by the Committee of the
extent to which the Company has achieved the Performance Goals for the
Performance Cycle pursuant to Section 4.
3. Establishment of
Award Account. The grant of Target Shares pursuant to this
Award Agreement shall be implemented by a credit to a bookkeeping account
maintained by the Company evidencing the accrual in favor of the Participant of
the unfunded and unsecured right to receive shares of Common Stock of the
Company, which right shall be subject to the terms, conditions and restrictions
set forth in the Plan and to the further terms, conditions and restrictions set
forth in this Award Agreement. Except as otherwise provided in this
Award Agreement, the Target Shares of Common Stock credited to the Participant’s
bookkeeping account may not be sold, assigned, transferred, pledged or otherwise
encumbered until the Participant has been registered as a holder of shares of
Common Stock on the records of the Company as provided in Section 6 or 7 of this
Award Agreement.
4. Award
Opportunity.
(a) The
Performance Goals established for the Performance Cycle are attached hereto and
made a part hereof for all purposes. Except as otherwise provided in
Section 5(b)(ii) and Section 6, the Vested Shares awarded to the Participant
shall be the product of the number of Target Shares and the Achievement
Percentage that is based upon the Committee's determination of whether and to
what extent the Performance Goals have been achieved during the Performance
Cycle.
(b) No
later than 60 days after the close of the Performance Cycle, the Committee shall
determine the extent to which each Performance Goal has been
achieved. If the Company has performed at or above the threshold
level of achievement for a Performance Goal, the Achievement Percentage shall be
between 50% and 150%, with a target level of achievement resulting in an
Achievement Percentage of 100%. In no event shall the Achievement
Percentage exceed 150%. The combined level of achievement is the sum
of the weighted achievements of the Performance Goals as approved by the
Committee. Upon completing its determination of the level at which the
Performance Goals have been achieved, the Committee shall notify the
Participant, in the form and manner as determined
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by the Committee, of the number of Vested Shares that will
be issued to the Participant pursuant to Section 7.
5. Vesting
of Shares.
(a) Unless
earlier forfeited in accordance with Section 5(b)(i) or unless earlier vested in
accordance with Section 5(b)(ii) or Section 6, the Participant's right to
receive shares pursuant to this Award Agreement, if any, shall vest on the date
the Committee determines that each Performance Goal has been met (as provided in
Section 4). As soon as administratively practicable, but in no event
later than 70 days, after the close of the Performance Cycle, the Committee
shall notify the Participant as required by Section 4 of the level at which the
Performance Goals established for the Performance Cycle have been
achieved.
(b) If
the Participant's Separation from Service date occurs prior to the close of the
Performance Cycle or the occurrence of a Change in Control, then the applicable
of the following clauses shall apply with respect to the Target Shares subject
to this Award Agreement:
(i) Forfeiture
of Entire Award. If the Participant's Employment is
terminated, such that the Participant has a Separation from Service, by the
Company or any of its Subsidiaries or by the Participant for any reason other
than due to death, Disability or Retirement, then the Participant's right to
receive any Target Shares shall be forfeited in its entirety as of the date of
such Separation from Service.
(ii) Death or
Disability. If the Participant's Employment is terminated due
to death or Disability, the Participant's right to receive the Target Shares
shall vest on the date of such Separation from Service in the proportion of the
number of days elapsed in the Performance Cycle as of the date of Separation
from Service by the total number of days in the Performance
Cycle. The Participant's right to receive any additional shares
pursuant to this Award Agreement shall be forfeited at such
time.
(iii) Retirement. If
the Participant's Employment is terminated due to Retirement, the Participant's
right to receive shares pursuant to this Award Agreement, if any, shall vest on
the date the Committee determines that each Performance Goal has been met (as
provided in Section 4) in a pro-rata amount determined by multiplying (1) the
number of Vested Shares awarded to the Participant based upon the
Committee's determination of achievement of Performance Goals as provided in
Section 4, by (2) a fraction, the numerator of which is the number of days
elapsed in the Performance Cycle as of the date of the Participant's Separation
from Service, and the denominator of which is the total number of days in the
Performance Cycle. The Participant's right to receive any additional
shares pursuant to this Award Agreement shall be forfeited at such
time.
(c) In
accordance with the provisions of this Section 5, the Vested Shares shall be
distributed as provided in Section 7 hereof.
6. Distribution Upon a
Change in Control. Notwithstanding anything herein to the
contrary and without regard to the Performance Goals, if there is a Change in
Control during
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the Performance Cycle, upon the Change in Control Closing
Date, the Participant's right to receive the Target Shares shall vest and be
settled by the distribution to the Participant of:
(a) shares
of Common Stock equal to the Target Shares; plus
(b) shares
of Common Stock (rounded up to the nearest whole share) having a Fair Market
Value equal to the amount of dividends that would have been declared on the
number of such shares determined under clause (a) above during the period
commencing at the beginning of the Performance Cycle and ending on the date
immediately preceding the Change in Control Closing Date.
In lieu of the foregoing distribution in shares, the
Committee, in its sole discretion, may direct that such distribution be made to
the Participant in a lump cash payment equal to:
(x) the
product of (i) the Fair Market Value per share of Common Stock on the date
immediately preceding the Change in Control Closing Date and (ii) the Target
Shares; plus
(y) the
amount of dividends that would have been declared on the number of shares of
Common Stock determined under clause (a) above during the period commencing at
the beginning of the Performance Cycle and ending on the date immediately
preceding the Change in Control Closing Date.
Such distribution, whether in the form of shares of Common
Stock or, if directed by the Committee, in cash, shall be made to the
Participant no later than the 70th day after the Change in Control Closing Date,
and shall satisfy the rights of the Participant and the obligations of the
Company under this Award Agreement in full. In the event a Change in
Control occurs after the Participant has had a Separation from Service due to
Retirement, the Target Shares such Participant shall receive under this Section
6 shall be pro-rated based on the number of days that elapsed in the Performance
Cycle as of his Separation from Service date over the total number of days in
the Performance Cycle.
7. Distribution
of Vested Shares.
(a) If
the Participant's right to receive shares pursuant to this Award Agreement has
vested pursuant to Section 5(a) or Section 5(b)(iii), a number of shares of
Common Stock equal to the number of Vested Shares shall be registered in the
name of the Participant and shall be delivered to the Participant no later than
March 15th of the calendar year following the calendar year in which occurs the
last day of the Performance Cycle.
(b) If
the Participant's right to receive shares pursuant to this Award Agreement has
vested pursuant to Section 5(b)(ii), a number of shares of Common Stock equal to
the number of Vested Shares shall be registered in the name of the Participant
(or his or her estate, if applicable) and shall be delivered to the Participant
(or his or her estate, if applicable) not later than the 70th day after the
Participant's Separation from Service date.
(c) The
Company shall have the right to withhold applicable taxes from any such
distribution of Vested Shares or from other compensation payable to the
Participant at the time of such vesting and delivery pursuant to Section 11 of
the Plan (but subject to compliance with the requirements of Section 409A of the
Internal Revenue Code ("Section 409A"), if applicable).
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(d) Upon
delivery of the Vested Shares pursuant to Section 7(a) or 7(b) above, the
Participant shall also be entitled to receive a cash payment equal to the sum of
all dividends, if any, declared on the Vested Shares after the commencement of
the Performance Cycle but prior to the date the Vested Shares are delivered to
the Participant.
8. Confidentiality. The
Participant agrees that the terms of this Award Agreement are confidential and
that any disclosure to anyone for any purpose whatsoever (save and except
disclosure to financial institutions as part of a financial statement,
financial, tax and legal advisors, or as required by law) by the Participant or
his or her agents, representatives, heirs, children, spouse, employees or
spokespersons shall be a breach of this Award Agreement and the Company may
elect to revoke the grant made hereunder, seek damages, plus interest and
reasonable attorneys' fees, and take any other lawful actions to enforce this
Award Agreement.
9. Notices. For
purposes of this Award Agreement, notices to the Company shall be deemed to have
been duly given upon receipt of written notice by the Corporate Secretary of
CenterPoint Energy, Inc., 1111 Louisiana, Houston, Texas 77002, or to such other
address as the Company may furnish to the Participant.
Notices to the Participant shall be deemed effectively
delivered or given upon personal, electronic, or postal delivery of written
notice to the Participant, the place of Employment of the Participant, the
address on record for the Participant at the human resources department of the
Company, or such other address as the Participant hereafter designates by
written notice to the Company.
10. Shareholder
Rights. The Participant shall have no rights of a shareholder
with respect to the Target Shares, unless and until the Participant is
registered as the holder of shares of Common Stock.
11. Successors and
Assigns. This Award Agreement shall bind and inure to the
benefit of and be enforceable by the Participant, the Company and their
respective permitted successors and assigns except as expressly prohibited
herein and in the Plan. Notwithstanding anything herein or in the
Plan to the contrary, the Target Shares are transferable by the Participant to
Immediate Family Members, Immediate Family Member trusts, and Immediate Family
Member partnerships pursuant to Section 13 of the Plan.
12. No Employment
Guaranteed. Nothing in this Award Agreement shall give the
Participant any rights to (or impose any obligations for) continued Employment
by the Company or any Subsidiary or any successor thereto, nor shall it give
such entities any rights (or impose any obligations) with respect to continued
performance of duties by the Participant.
13. Waiver.
Failure of either party to demand strict compliance with any of the terms
or conditions hereof shall not be deemed a waiver of such term or condition, nor
shall any waiver by either party of any right hereunder at any one time or more
times be deemed a waiver of such right at any other time or times. No
term or condition hereof shall be deemed to have been waived except by written
instrument.
14. Exclusion from
Section 409A. At all times prior to the date that the
Committee determines that
each Performance Goal has been met (following the last date of the Performance
Cycle) or, if applicable under Section 6 or 7(b), the Change in Control Closing
Date or the Participant's Separation from Service, respectively, the benefit
payable under this Award
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Agreement is subject to a
substantial risk of forfeiture within the meaning of Treasury Regulation § 1.409A-1(d) (or any successor
regulation). Accordingly, this Award is not subject to Section
409A under the short term deferral exclusion, and this Award Agreement shall be
interpreted and administered consistent therewith.
15. Compliance with
Recoupment Policy. Any amounts payable, paid,
or distributed under this Award Agreement are subject to the recoupment policy
of the Company as in effect from time to time.
16. Modification of
Award Agreement. Any modification of this Award Agreement shall be
binding only if evidenced in writing and signed by an authorized representative
of the Company.
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