Exhibit 10.60
FORM OF
CHANGE IN CONTROL AGREEMENT
FOR PERSONS OTHER THAN THE CEO, CFO AND COO
This
Change in Control Agreement (“Agreement”) is by and
between Reliant Energy, Inc. (the “Company”), Reliant
Energy Corporate Services, LLC (the “Employer”) and
(“Executive”).
The
Company and the Employer consider it essential to the interests of
the Company’s stockholders to secure the continued employment
of key management personnel. The Board of Directors of the Company
recognizes that the possibility of a Change in Control (as defined
below) exists and that the uncertainty this raises may result in
the departure or distraction of management personnel to the
detriment of the Company and its stockholders. In order to
encourage the continued attention and dedication of key management
personnel, this Agreement is being entered into by the Company, the
Employer and Executive.
The
Company, the Employer and Executive agree as follows:
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Definitions
: Capitalized terms are defined in Exhibit A. |
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Severance
Benefits : If Executive (a) experiences a Covered
Termination, (b) executes and returns to the Company a Waiver and
Release within the time period prescribed in the Waiver and Release
following the Covered Termination, and (c) does not revoke
such Waiver and Release within the time period prescribed in the
Waiver and Release, then Executive will be entitled to receive from
the Employer the following severance benefits: |
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(a) |
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Severance Payment Based on Salary. An amount
equal to the sum of 2 times Salary plus 2 times the
Executive’s target award under the AICP for the year in which
the Covered Termination occurs. |
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(b) |
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Severance Payment Based on Bonus. |
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(1) |
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Current Performance Year . An amount equal to the
product of (A) the Salary and (B) the Target Bonus
Percentage, with the product of (A) and (B) prorated
based on the number of days Executive was employed during the bonus
year in which Executive’s employment terminated. |
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(2) |
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Prior Performance Year. An Executive whose
termination date occurs before the date on which awards under the
AICP are paid out for the prior calendar year, or the date on which
the Company announces that awards under the AICP will not be paid,
will be entitled to an amount equal to the product of (A) the
Salary and (B) the Target Bonus Percentage (or, if greater,
the actual amount of the bonus determined under the AICP for such
prior calendar |
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year). Any prepayments of AICP awards made during the prior
calendar year will be deducted from the amount calculated under the
preceding sentence of Section 2(b)(2). |
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The severance benefits provided for in Sections
2(a) and 2(b) above will be paid in one lump sum payment as soon as
practicable after the expiration of the Waiver and Release
revocation period (subject to any delay required to comply with the
requirements of Section 409A of the Code). |
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(c) |
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Welfare Benefit Coverage. |
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(1) |
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Active Coverage . The Employer will provide, or
will cause to be provided, continued Welfare Benefit Coverage (as
in effect from time to time for similarly situated active
employees) for Executive and Executive’s eligible dependents
at the active employee rate for a period of 2 years following
the date of Executive’s Covered Termination. |
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(2) |
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Post Retirement Coverage . |
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If Executive would be entitled to post-retirement medical
coverage within 2 years following termination of employment,
if Executive had remained employed, the Company or the Employer
will provide the coverage as follows: |
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(A) |
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the coverage provided will be the coverage in effect
immediately before the Covered Termination; and |
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(B) |
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coverage will begin on the later of (i) the date on which the
post-retirement coverage would have become available or
(ii) the date on which the benefits under Section 2(c)(1)
end. |
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(3) |
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Reduction for Other Coverage . Benefits otherwise
receivable by Executive pursuant to this Section 2(c) will be
reduced to the extent Executive becomes eligible to receive
benefits pursuant to a government-sponsored health insurance or
health care program. |
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(d) |
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Outplacement . The Employer will provide or cause
to be provided outplacement services for a period of 12 months
in connection with Executive’s efforts to obtain new
employment. Executive must notify the Employer or the outplacement
firm designated by the Employer, in writing, within 180 days
of termination of employment if the Executive wishes to utilize
this outplacement benefit. |
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(e) |
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Financial Planning : The Employer will provide,
or cause to be provided, continued access, for the remainder of the
calendar year in which the |
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Covered Termination occurs or for 60 days (if greater), to
the financial planning services available to executive employees at
the time of the Covered Termination. |
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Change in Control
Equity-Based Benefits : Immediately upon any Change in
Control, Executive will be entitled to receive benefits with
respect to any equity-based compensation in accordance with the
applicable plans and agreements. |
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Special Internal
Revenue Code Requirements : It is the intent of the
Company that the provisions of this Agreement comply with
Section 409A of the Code and related regulations and
Department of the Treasury pronouncements. Accordingly,
notwithstanding any provision in this Agreement to the contrary,
this Agreement will be interpreted, applied and to the minimum
extent necessary, unilaterally amended by the Company in its sole
discretion, without the consent of Executive, as the Company deems
appropriate for the Agreement to satisfy the requirements of
Section 409A. |
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Certain Additional
Payments : Whether or not Executive becomes entitled to
the payments or benefits pursuant to Section 2 of this
Agreement, if any of the payments or benefits received or to be
received by Executive (including any payment or benefit received or
to be received in connection with a Change in Control or
Executive’s termination of employment, whether pursuant to
the terms of this Agreement or any other plan, arrangement or
agreement) (all such payments and benefits, excluding the Gross-Up
Payment described below, being hereinafter referred to as the
“Total Payments”) will be subject to the tax under
Section 4999 of the Code (the “Excise Tax”), the
Company will pay to the Executive an additional amount (the
“Gross-Up Payment”) such that the net amount retained
by the Executive, after deduction of any Excise Tax on the Total
Payments and any federal, state and local income and employment
taxes and Excise Tax upon the Gross-Up Payment, and after taking
into account the phase out of itemized deductions and personal
exemptions attributable to the Gross-Up Payment, is equal to the
Total Payments. In the event that the amount of the Total Payments
does not exceed 110% of the largest amount that would result in no
portion of the Total Payments being subject to the Excise Tax (the
“Safe Harbor”), then the preceding provisions of this
Section will not apply and any noncash payments or benefits will
first be reduced ( if necessary, to zero), and any cash payments
will thereafter be reduced (if necessary, to zero) so that the
amount of the Total Payments is equal to the Safe Harbor;
provided , however , that the Executive may elect to
have the cash payments reduced (or eliminated) before any reduction
of the noncash payments or benefits. |
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For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise
Tax, (i) all of the Total Payments will be treated as
“parachute payments” (within the meaning of
Section 280G(b)(2) of the Code) unless, in the opinion of tax
counsel (“Tax Counsel”) reasonably acceptable to
Executive and selected by the accounting firm which was,
immediately prior to the Change in Control, the Company’s
independent auditor (the “Auditor”), such payments or
benefits (in whole or in part) do not constitute parachute
payments, including by reason of Section 280G(b)(4)(A) of the Code,
(ii) all “excess parachute payments” within the
meaning of |
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Section 280G(b)(l) of the Code will be treated as subject
to the Excise Tax unless, in the opinion of Tax Counsel, such
excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered (within the
meaning of Section 280G(b)(4)(B) of the Code) in excess of the base
amount allocable to such reasonable compensation (within the
meaning of Section 280G of the Code), or are otherwise not
subject to the Excise Tax, and (iii) the value of any noncash
benefits or any deferred payment or benefit will be determined by
the Auditor in accordance with the principles of Sections
280G(d)(3) and (4) of the Code. For purposes of determining
the amount of the Gross-Up Payment, (1) the Executive will be
deemed to pay federal income tax at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the
Executive’s residence on the date of the Covered Termination,
net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes and
(2) Executive will be deemed to be subject to the loss of
itemized deductions and personal exemptions to the maximum extent
provided by the Code for each dollar of incremental income. |
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In the event that the Excise Tax is finally determined to be
less than the amount taken into account hereunder in calculating
the Gross-Up Payment, Executive must repay to the Company, within
five (5) business days following the time that the amount of
such reduction in the Excise Tax is finally determined, the portion
of the Gross-Up Payment attributable to such reduction (plus that
portion of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income and employment taxes imposed on the
Gross-Up Payment being repaid by Executive), to the extent that
such repayment results in a reduction in the Excise Tax and a
dollar-for-dollar reduction in Executive’s taxable income and
wages for purposes of federal, state and local income and
employment taxes, plus interest on the amount of such repayment at
120% of the rate provided in Section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder in calculating the Gross-Up
Payment (including by reason of any payment the existence or amount
of which cannot be determined at the time of the Gross-Up Payment),
the Company will make an additional Gross-Up Payment in respect of
such excess (plus any interest, penalties or additions payable by
the Executive with respect to such excess) within five
(5) business days following the time that the amount of such
excess is finally determined. Executive and the Company must each
reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or
amount of liability for Excise Tax with respect to the Total
Payments. |
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Confidentiality :
Executive agrees that he will not, while employed by the Company or
the Employer or an Affiliate 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 are required in the performance of his duties
hereunder or as may otherwise be required by law or legal process
(in which case Executive must notify the Company of such legal or
judicial proceeding as soon as practicable, and permit the Company
to seek to protect its interests and information). |
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Return of
Property : Executive agrees that at the time of leaving
his or her employ, he will deliver to the Employer (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, regardless of whether such items were prepared by
Executive. |
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Non-Solicitation
: Executive agrees that while employed by the Company or the
Employer or an Affiliate and for one year following a Covered
Termination, he will not, without the prior written consent of the
Company, directly or indirectly, hire or induce, entice or solicit
(or attempt to induce entice or solicit) any employee of the
Company or any of its Affiliates to leave the employment of the
Company or any of its Affiliates. |
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Notices :
For purposes of this Agreement, notices and all other
communications must be in writing and will be deemed to have been
given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows: |
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If to Company or the
Employer:
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Reliant Energy, Inc. |
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1000 Main Street |
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Houston, Texas 77002 |
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ATTENTION: General Counsel |
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If to
Executive:
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or to such other address as either party may furnish to the
other in writing in accordance with this Section. |
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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, but
without giving effect to the principles of conflict of laws of such
State. |
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Severability : If any
provision of this Agreement is determined to be invalid or
unenforceable, then the invalidity or unenforceability of that
provision will not affect the validity or enforceability of any
other provision of this Agreement and all other provisions will
remain in full force and effect. |
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Withholding of
Taxes : The Company or the Employer, as applicable, may
withhold from any payments under this Agreement all federal, state,
local or other taxes as may be required pursuant to any law or
governmental regulation or ruling. |
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No Assignment;
Successors : Executive’s right to receive payments
or benefits under this Agreement will not be assignable or
transferable, whether by pledge, creation of 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 13 the Company or Employer
will have no liability to pay any amount so attempted to be
assigned or transferred. This Agreement inures to the benefit of
and is enforceable by Executive’s personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. |
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This Agreement is binding upon and inures to the benefit of the
Company and the Employer and their respective successors and
assigns (including, without limitation, any company into or with
which the Company may merge or consolidate). |
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Payment Obligations
Absolute : Except for the requirement of Executive to
execute and return to the Company the Waiver and Release in
accordance with Section 2, the Company’s and the
Employer’s obligation to pay Executive the amounts and to
make the arrangements provided herein are absolute and
unconditional and may not be affected by any circumstances,
including, without limitation, any set-off, counter-claim,
recoupment, defense or other right which the Company or the
Employer (including their Affiliates) may have against Executive or
anyone else. All amounts payable or arrangements to be made
hereunder by the Company or the Employ |
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