Executive
Change-in-Control
and General Severance Plan
(Amended
and Restated December 9, 2008)
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Article 1.
Establishment and Term of the Plan
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1
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2
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Article 3.
Severance Benefits
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6
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Article 4.
Confidentiality and Noncompetition
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10
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Article 5.
Excise Tax Equalization Payment
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12
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Article 6.
Legal Fees and Notice
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13
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Article 7.
Successors and Assignment
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13
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NRG
Energy, Inc.
Executive Change-in-Control
and General Severance Plan for Tier I and Tier II
Executives
Article 1.
Establishment and Term of the Plan
1.1 Establishment of the Plan . NRG Energy, Inc.
(hereinafter referred to as the “ Company ”)
adopted the NRG Executive & Key Management Change-in-Control
& General Severance Plan effective May 24, 2006, which was
amended and restated on April 25, 2007 (the “
Original Plan ”). The Company hereby continues the
Original Plan, effective December 9, 2008 as applied to Tier I
and Tier II Executives, as amended and restated as set forth
herein. This amended plan is to be known as the “NRG Energy,
Inc. Executive Change-in-Control and General Severance Plan”
(the “ Plan ”). The Plan provides severance
benefits to certain employees of the Company (each an “
Executive ” and collectively the “
Executives ”) upon certain terminations of employment
from the Company.
The
Company considers the establishment and maintenance of a sound and
vital management to be essential to protecting and enhancing the
best interests of the Company and its stockholders. In this
connection, the Company recognizes that, as is the case with many
publicly held corporations, the possibility of a change in control
may arise and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the
departure or distraction of management personnel to the detriment
of the Company and its stockholders.
Accordingly,
the Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of
members of the Company’s management to their assigned duties
without distraction in circumstances arising from the possibility
of a Change in Control of the Company.
1.2 Initial Term . This Plan will commence on May 24,
2006 (the “ Effective Date ”) and shall continue
in effect for a period of three (3) years (the “
Initial Term ”).
1.3 Successive Periods . The term of this Plan shall
automatically be extended for one (1) additional year at the end of
the Initial Term, and then again after each successive one
(1) year period thereafter (each such one (1) year period
following the Initial Term is referred to as a “
Successive Period ”). However, the Committee may
terminate this Plan at the end of the Initial Term, or at the end
of any Successive Period thereafter, by giving the Executives
written notice of intent to terminate the Plan, delivered at least
six (6) months prior to the end of such Initial Term or
Successive Period. If such notice is properly delivered by the
Company, this Plan, along with all corresponding rights, duties,
and covenants, shall automatically expire at the end of the Initial
Term or Successive Period then in progress.
1.4 Change-in-Control Renewal . Notwithstanding the
provisions of Section 1.3 above, in the event that a Change
in Control of the Company occurs during the Initial Term or any
Successive Period, upon the effective date of such Change in
Control, the term of this Plan shall automatically and irrevocably
be renewed for a period of two (2) years from the effective
date of such Change in Control. Further, this Plan may be assigned
to the successor in such Change in Control, as further provided in
Article 8 herein. This Plan shall thereafter
automatically
terminate following such two (2) year Change-in-Control
renewal period; provided that such termination shall not affect or
diminish the rights of Executives who become entitled to benefits
or payments under this Plan.
Whenever
used in this Plan, the following terms shall have the meanings set
forth below and, when the meaning is intended, the initial letter
of the word is capitalized.
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(a)
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“ Base Salary ” means the greater of the
Executive’s annual rate of salary, whether or not deferred,
at: (i) the Effective Date of Termination or (ii) at the
date of the Change in Control.
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(b)
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“ Beneficiary ” means the persons or entities
designated or deemed designated by the Executive pursuant to
Section 8.6 herein.
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(c)
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“ Board ” means the Board of Directors of the
Company.
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(d)
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“ Cause ” shall mean one or more of the
following:
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(i)
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The conviction of, or an agreement to a plea of nolo contendere to,
any felony or other crime involving moral turpitude; or
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(ii)
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The Executive’s willful and continuing refusal to
substantially perform duties as reasonably directed by the Board
under this or any other agreement (after receipt of written notice
from the Board setting forth such duties and responsibilities to be
performed); or
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(iii)
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In carrying out the Executive’s duties, the Executive engages
in conduct that constitutes willful gross neglect or willful gross
misconduct which, in either case, results in demonstrable harm to
the business, operations, prospects, or reputation of the Company;
or
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(iv)
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Any other material breach of Article 4 of this Plan
which is not cured to the Board’s reasonable satisfaction
within fifteen (15) days after written notice thereof to the
Executive.
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For purposes of this Plan, there shall be no termination for Cause
pursuant to subsections (i) through (iv) above, unless a
written notice, containing a detailed description of the grounds
constituting Cause hereunder, is delivered to the Executive stating
the basis for the termination. Upon receipt of such notice, the
Executive shall be given thirty (30) days to fully cure and
remedy the neglect or conduct that is the basis of such claim. If
the Executive fails to fully cure and remedy such neglect or
misconduct within such thirty (30) day period, the Executive
shall have an opportunity to be heard before the full Board. After
such hearing, a termination for Cause shall only occur if there is
a vote of three-quarters (3/4) of the Board to terminate the
Executive for Cause.
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(e)
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“ Change in Control ” shall mean the first to
occur of any of the following events:
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(i)
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Any “person” (as that term is used in Sections 13
and 14(d)(2) of the Securities Exchange Act of 1934
(“Exchange Act”)) becomes the “Beneficial
Owner” (as that term is used in Section 13(d) of the Exchange
Act), directly or indirectly, of fifty percent (50%) or more of the
Company’s capital stock entitled to vote in the election of
directors, excluding any “person” who becomes a
“beneficial owner” in connection with a Business
Combination (as defined in paragraph (iii) below) which does
not constitute a Change in Control under said paragraph (iii);
or
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(ii)
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Persons who on the Effective Date constitute the Board (the
“Incumbent Directors”) cease for any reason, including
without limitation, as a result of a tender offer, proxy contest,
merger, or similar transaction, to constitute at least a majority
thereof, provided that any person becoming a director of the
Company subsequent to the Effective Date shall be considered an
Incumbent Director if such person’s election or nomination
for election was approved by a vote of at least two-thirds (2/3) of
the Incumbent Directors; but provided further, that any such person
whose initial assumption of office is in connection with an actual
or threatened election contest relating to the election of members
of the Board or other actual or threatened solicitation of proxies
or consents by or on behalf of a “person” (as defined
in Sections 13(d) and 14(d) of the Exchange Act) other than the
Board, including by reason of agreement intended to avoid or settle
any such actual or threatened contest or solicitation, shall not be
considered an Incumbent Director; or
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(iii)
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Consummation of a reorganization, merger, consolidation, or sale or
other disposition of all or substantially all of the assets of the
Company (a “Business Combination”), in each case,
unless, following such Business Combination, all or substantially
all of the individuals and entities who were the beneficial owners
of outstanding voting securities of the Company immediately prior
to such Business Combination beneficially own, directly or
indirectly, more than fifty percent (50%) of the combined voting
power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
company resulting from such Business Combination (including,
without limitation, a company which, as a result of such
transaction, owns the Company or all or substantially all of the
Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the
outstanding voting securities of the Company; or
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(iv)
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The stockholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company.
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(f)
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“ Code ” means the United States Internal
Revenue Code of 1986, as amended, and any successors
thereto.
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(g)
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“ Committee ” means the Compensation Committee
of the Board or any other committee appointed by the Board to
perform the functions of the Compensation Committee.
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(h)
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“ Company ” means NRG Energy, Inc., a Delaware
corporation, or any successor thereto as provided in
Article 7 herein.
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(i)
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“ Disability ” shall mean the Executive’s
inability to perform the essential duties, responsibilities, and
functions of his position with the Company and its affiliates as a
result of any mental or physical disability or incapacity even with
reasonable accommodations of such disability or incapacity,
provided by the Company and its affiliates, or if providing such
accommodations would be unreasonable, for a period of twelve
(12) months. The Executive shall cooperate in all respects
with the Company if a question arises as to whether he has become
disabled (including, without limitation, submitting to an
examination by a medical doctor or other health care specialists
selected by the Company and reasonably acceptable to the Executive
and authorizing such medical doctor or such other health care
specialist to discuss the Executive’s condition with the
Company).
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(j)
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“ Effective Date ” means the commencement date
of this Plan as specified in Section 1.2 of this
Plan.
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(k)
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“ Effective Date of Termination ” means the date
on which a Qualifying Termination occurs, as defined hereunder,
which triggers the payment of Severance Benefits
hereunder.
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(l)
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“ Former Parent Company ” means Xcel Energy,
Inc., a Minnesota corporation, or any successor thereto.
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(m)
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“ Good Reason ” shall mean without the
Executive’s express written consent the occurrence of any one
or more of the following:
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(i)
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The Company materially reduces the amount of the Executive’s
then current Base Salary or the target for his annual bonus;
or
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(ii)
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A material reduction in the Executive’s benefits under or
relative level of participation in the Company’s employee
benefit or retirement plans, policies, practices, or arrangements
in which the Executive participates as of the Effective Date of
this Plan; or
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(iii)
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A material diminution in the Executive’s title, authority,
duties, or responsibilities or the assignment of duties to the
Executive which are materially inconsistent with his position;
or
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(iv)
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The failure of the Company to obtain in writing the obligation to
perform or be bound by the terms of this Plan by any successor to
the Company or a purchaser of all or substantially all of the
assets of the Company within fifteen (15) days after a merger,
consolidation, sale, or similar transaction.
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For
purposes of this Plan, the Executive is not entitled to assert that
his termination is for Good Reason unless the Executive gives the
Board written notice of the event or events which are the basis for
such claim within ninety (90) days after the event or events
occur, describing such claim in reasonably sufficient detail to
allow the Board to address the event or events and a period of not
less than thirty (30) days after to cure or fully remedy the
alleged condition.
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(n)
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“ Notice of Termination ” shall mean a written
notice which shall indicate the specific termination provision in
this Plan relied upon, and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination
of the Executive’s employment under the provision so
indicated.
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(o)
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“ Qualifying Termination ” means:
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(i)
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If such event occurs within twenty-four (24) months
immediately following a Change in Control:
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(A)
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An involuntary termination of the Executive’s employment by
the Company for reasons other than Cause, death, or Disability
pursuant to a Notice of Termination delivered to the Executive by
the Company; or
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(B)
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A voluntary termination by the Executive for Good Reason pursuant
to a Notice of Termination delivered to the Company by the
Executive; or
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(ii)
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If such event occurs at any other time:
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(A)
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An involuntary termination of the Executive’s employment by
the Company for reasons other than Cause, death, or Disability
pursuant to a Notice of Termination delivered to the Executive by
the Company.
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(p)
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“ Retirement ” shall have the meaning ascribed
to such term in the Company’s tax-qualified retirement plan
or under the successor or replacement of such retirement plan if it
is then no longer in effect.
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(q)
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“ Severance Benefits ” means the payment of
Change-in-Control or General (as appropriate) Severance
compensation as provided in Article 3 herein.
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(r)
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“ Specified Employee ” means any Executive
described in section 409A(a)(2)(B)(i) of the Code.
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(s)
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“ Tier I Executives ” shall include those
employees of the Company holding the title EVP immediately prior to
the Change in Control, or such other employee who is designated as
a Tier I Executive in the Company’s human resources records
immediately prior to the Change in Control other than the
CEO.
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(t)
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“ Tier II Executives ” shall include those
employees of the Company holding the title SVP immediately prior to
the Change in Control, or such other employee who is designated as
a Tier II Executive in the Company’s human resources records
immediately prior to the Change in Control.
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Article 3.
Severance Benefits
3.1 Right to Severance Benefits .
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(a)
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Change-in-Control Severance Benefits
. The Executive shall be entitled to receive from the Company
Change-in-Control Severance Benefits, as described in Section
3.2 herein, if a Qualifying Termination of the
Executive’s employment has occurred within twenty-four
(24) months immediately following a Change in Control of the
Company.
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(b)
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General Severance Benefits
. The Executive shall be entitled to receive from the Company
General Severance Benefits, as described in Section 3.3
herein, if a Qualifying Termination of the Executive’s
employment has occurred other than during the twenty-four
(24) months immediately following a Change in
Control.
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(c)
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No Severance Benefits
. The Executive shall not be entitled to receive Severance Benefits
if the Executive’s employment with the Company ends for
reasons other than a Qualifying Termination.
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(d)
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General Release and Acknowledgement of Restrictive
Covenants
. As a condition to receiving Severance Benefits under either
Section 3.2 or 3.3 herein, the Executive shall be
obligated to execute a general release of claims in favor of the
Company, its current and former affiliates and stockholders, and
the current and former directors, officers, employees, and agents
of the Company in a form acceptable to the Company, and any
revocation period for such release must have expired, in each case
within 60 days of the date of termination. The date upon which
the executed release is no longer subject to revocation shall be
referred to herein as the “ Release Effective Date
”. The Executive must also execute a notice acknowledging the
restrictive covenants in Article 4 within 60 days
of the date of termination. Any payments under Section 3.2
or 3.3 shall commence only after execution of the release
and acknowledgement, and in the manner provided in Section
3.4 .
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(e)
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No Duplication of Severance Benefits
. If the Executive becomes entitled to Change-in-Control Severance
Benefits, the Severance Benefits provided for under Section
3.2 hereunder shall be in
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