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EXHIBIT 10(cc)
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the
"Agreement") by and between HOUSTON INDUSTRIES INCORPORATED, a Texas
corporation (said corporation, together with its successors and assigns
permitted under this Agreement, hereinafter referred to as the "Company"), and
XXX X. XXXXXX (the "Executive"), dated this 25th day of February, 1997.
W I T N E S S E T H:
WHEREAS, on June 4, 1994, the Company and the Executive
entered into an Amended and Restated Employment Agreement (the "Prior
Agreement") under which the Executive would receive certain employment rights
and benefits; and
WHEREAS, the parties to said Prior Agreement desire to
completely amend and restate said Prior Agreement to provide for the employment
of the Executive through June 1, 1999 and for the consulting services of the
Executive thereafter through June 1, 2000 on such terms and conditions as are
set forth herein; and
WHEREAS, Section 15(A) of the Prior Agreement contemplates the
amendment of the Prior Agreement with the mutual consent of the parties and the
parties desire to amend and restate the Prior Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree that the Prior Agreement
shall be amended and restated in its entirety to read as follows:
1. Certain Definitions:
"ACCRUED OBLIGATIONS" shall have the meaning set forth in
Section 5(A)(i).
"AFFILIATED COMPANIES" shall mean and include any company
controlled by, controlling or under common control with the Company within the
meaning of Section 414(o) of the Code.
"ANNUAL BASE SALARY" shall mean the salary of the Executive
provided for in Section 3(B)(i), as adjusted and in effect from time to time.
"BASE AMOUNT" shall mean the Executive's base amount, at the
time of a Change of Control, within the meaning of Code Section 280G.
"BENEFICIARY" shall mean the person or persons, trustee or
trustees of a trust, partnership, corporation, limited liability partnership,
limited liability company or other entity named,
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in a writing filed with the Company, to receive any compensation or benefit
payable hereunder following the Executive's death or, in the event no such
person or entity is named or survives the Executive, his estate. In the event
of the Executive's death or a judicial determination of his incompetence,
reference in this Agreement to the Executive shall be deemed, where
appropriate, to refer to his Beneficiary, estate or other legal representative.
"BOARD" shall mean the Board of Directors of the Company.
"CAUSE" shall mean (i) repeated violations by the Executive of
the Executive's obligations under Section 3(A) (other than as a result of
incapacity due to physical or mental illness) which are demonstrably willful
and deliberate on the Executive's part, which are committed in bad faith or
without reasonable belief that such violations are in the best interests of the
Company and which are not remedied in a reasonable period of time after receipt
of written notice from the Company specifying such violations or (ii) the
conviction of the Executive of a felony involving moral turpitude.
A "CHANGE OF CONTROL" shall be deemed to have occurred upon
the occurrence of any of the following events:
(a) Any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a "Person") becomes the
beneficial owner (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 30% or more of either (i) the then outstanding
shares of common stock of the Company (the "Outstanding Company Common
Stock") or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this paragraph (a), the
following shall not in and of themselves constitute a Change of
Control: (i) any acquisition of securities of the Company made
directly from the Company and approved by a majority of the directors
then comprising the Incumbent Board (as defined below), (ii) any
increase in the percentage of the Outstanding Company Common Stock or
the Outstanding Company Voting Securities beneficially owned by such
Person that results solely from the acquisition, purchase or
redemption of securities of the Company by the Company so long as such
action by the Company was approved by a majority of the directors then
comprising the Incumbent Board, unless and until such Person shall
thereafter otherwise acquire or become the beneficial owner of
additional shares of Outstanding Company Common Stock or Outstanding
Company Voting Securities, or (iii) any acquisition by any corporation
pursuant to a transaction that complies with clauses (i), (ii) and
(iii) of paragraph (c) hereof; or
(b) Individuals who, as of January 1, 1997,
constituted the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to January 1, 1997 whose
election, or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then
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comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;
or
(c) Consummation of a reorganization, merger or
consolidation to which the Company is a party or sale or other
disposition of all or substantially all the assets of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities that were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially
owned, directly or indirectly, more than 70% of, respectively, the
then outstanding shares of common stock and 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 parent
corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all the Company's
assets either directly or through one or more subsidiaries) in
substantially the same relative proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the
case may be, (ii) no Person (excluding any corporation resulting from
such Business Combination) beneficially owns, directly or indirectly,
30% or more of, respectively, the then outstanding shares of common
stock of the parent corporation resulting from such Business
Combination (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially
all the Company's assets either directly or through one or more
subsidiaries) or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (iii) at least
a majority of the members of the board of directors of the parent
corporation resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial
agreement, or of the initial action of the Board, providing for such
Business Combination; or
(d) Approval by the shareholders of the Company
of a complete liquidation or dissolution of the Company, unless such
liquidation or dissolution is approved as a part of a plan of
liquidation and dissolution involving a sale or other disposition of
all or substantially all the assets of the Company that complies with
clauses (i), (ii) and (iii) of paragraph (c) hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as in
effect on the Effective Date and as thereafter amended.
"CONSULTING PERIOD" shall mean the period commencing on June
2, 1999 and ending on June 1, 2000.
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"DATE OF TERMINATION" shall mean (i) if the Executive's
employment is terminated by the Company for Cause, or by the Executive for Good
Reason, the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive's employment is
terminated by the Company other than for Cause or Disability, the date on which
the Company notifies the Executive of such termination, and (iii) if the
Executive's employment is terminated by reason of death or Disability, the date
of death of the Executive or the Disability Effective Date, as the case may be.
"DISABILITY" shall mean the absence of the Executive from the
Executive's duties with the Company on a full-time basis for 180 consecutive
business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative, such agreement as to acceptability by the Executive not to be
withheld unreasonably.
"DISABILITY EFFECTIVE DATE" shall mean the date so described
in Section 4(A).
"EFFECTIVE DATE" shall mean January 8, 1997.
"EICP" shall mean the Company's Executive Incentive
Compensation Plan, as in effect from time to time, or any similar successor
plan adopted by the Company.
"EMPLOYMENT PERIOD" shall mean the period commencing on the
Effective Date and ending on June 1, 1999.
"GOOD REASON" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties
or responsibilities as contemplated by Section 3(A), or any other
action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith
and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any
of the provisions of Section 3(B), other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be
based at any office or location other than that described in Section
3(A)(i) or the Company's failure to provide the residence required by
Section 3(A)(i);
(iv) any purported termination by the Company of
the Executive's employment otherwise than as expressly permitted by
this Agreement; or
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(v) any failure by the Company to comply with and
satisfy Section 11(C), provided that the successor described in
Section 11(C) has received at least ten days' prior written notice
from the Company or the Executive of the requirements of Section
11(C).
"LICP" shall mean the Company's Long-Term Incentive
Compensation Plan, as in effect from time to time, or any similar successor
plan adopted by the Company.
"NOTICE OF TERMINATION" shall mean a written notice that (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets 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 and (iii) if the Date of
Termination is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than 15 days after the giving of
such notice except in the case of a Disability Effective Date).
"OTHER BENEFITS" shall mean the amounts so described in
Section 5(A)(v).
"PERFORMANCE SHARES" shall mean the shares of Stock so
described in Section 3(B)(ii).
"SERP" shall mean the Benefit Restoration Plan of the Company.
"SPOUSE" shall mean the person who is legally married to the
Executive.
"STOCK AWARD" shall mean the award made to the Executive
pursuant to Section 3(B)(ii).
"SUPPLEMENTAL RETIREMENT BENEFIT" shall mean the benefit so
described in Section 5(A)(iii).
"VESTED SHARES" shall mean the shares of Stock so described in
Section 3(B)(ii).
"WELFARE BENEFIT CONTINUATION" shall mean the continuation of
benefits so described in Section 5(A)(iv).
2. Employment Period: The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company, in accordance with the terms and provisions of this
Agreement, for the Employment Period.
3. Terms of Employment:
A. Position and Duties: During the Employment Period:
(i) The Executive shall be employed as the
Chairman of the Board and Chief Executive Officer of the Company and
shall be responsible for the general management of the affairs of the
Company. The Executive, in carrying out his duties
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under this Agreement, shall report only to the Board. The Executive's
position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at
least commensurate in all material respects with the most significant
of those held by, exercised by or assigned to the Executive at the
Effective Date. The Executive's services shall be performed at the
location where the Executive was employed immediately preceding the
Effective Date or any office which is the headquarters of the Company
and is less than 50 miles from such location. It is hereby agreed and
understood that the Executive may be required by the Company to move
his business office (within the 50-mile limit set forth above) but not
his principle place of residence. In the event that the Company
requires the Executive to move his main office outside of Xxxxxx
County, the Company shall provide, at no expense to the Executive, an
apartment or townhome in the new location which is commensurate with
the Executive's standard of living.
(ii) Excluding any periods of vacation and sick
leave to which the Executive is entitled, the Executive agrees to
devote reasonable attention and time during normal business hours to
the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities assigned to the Executive hereunder,
to use the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities. It shall not be a violation of
this Agreement for the Executive to (a) serve on corporate, civic or
charitable boards or committees, (b) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (c)
manage personal investments, so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent
that any such activities have been conducted by the Executive prior to
the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent
to the Effective Date shall not thereafter be deemed to interfere with
the performance of the Executive's responsibilities to the Company.
B. Compensation:
(i) Annual Base Salary: During the Employment
Period, the Executive shall receive an Annual Base Salary at a monthly
rate at least equal to the monthly base salary paid to the Executive
by the Company at the Effective Date. Annual Base Salary shall not be
reduced.
(ii) Stock Award: The Executive shall be granted,
subject to the terms and conditions herein set forth, an award (the
"Stock Award") with respect to 300,000 shares of Common Stock, without
par value, of the Company ("Stock"), effective as of the Effective
Date. The Stock Award shall be implemented by a credit to a
bookkeeping account maintained by the Company evidencing the accrual
in favor of the Executive of the unfunded right to receive shares of
Stock of the Company, subject to the following terms and conditions:
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(a) Executive shall not have any rights
as a stockholder in respect of the Stock Award, and the rights
of Executive in respect of the shares of Stock deliverable
thereunder may not be sold, assigned, transferred, pledged or
otherwise encumbered, from the Effective Date unless and until
the Executive is registered as the holder of such Stock on the
records of the Company following the vesting of the
Executive's rights with respect to such Stock Award as
provided herein.
(b) The Executive's right to 150,000
shares of Stock (the "Vested Shares") shall vest on June 1,
1999, provided that the Executive has remained in the
continuous employment of the Company during the Employment
Period. If, during the Employment Period, the Company
terminates the Executive's employment for Cause or the
Executive voluntarily terminates employment without Good
Reason, the Executive shall forfeit all right to receive the
Vested Shares as of the Date of Termination. If, during the
Employment Period, the Company terminates the Executive's
employment without Cause, or the Executive terminates
employment for Good Reason, or the Executive's employment
terminates by reason of death, Disability or retirement
pursuant to Section 5(F), the Executive's right to receive the
Vested Shares shall vest as of the Date of Termination.
(c) The Executive's right to 150,000
shares of Stock (the "Performance Shares") shall generally be
subject to achievement of certain performance goals as
described in this paragraph (c); provided, however, that (1)
if, during the Employment Period, the Company terminates the
Executive's employment without Cause or the Executive
terminates employment for Good Reason, the Executive's right
to the Performance Shares shall vest as of the Date of
Termination, (2) if, during the Employment Period, the Company
terminates the Executive's employment for Cause or the
Executive voluntarily terminates employment without Good
Reason, the Executive shall forfeit all right to the
Performance Shares as of the Date of Termination, and (3) if,
prior to the end of the Employment Period and during calendar
year 1997, the Executive's employment terminates by reason of
death, Disability or retirement pursuant to Section 5(F), the
Executive shall forfeit all right to Performance Shares as of
the Date of Termination.
If, prior to the end of the Employment Period and during
calendar year 1998 or 1999, the Executive's employment
terminates by reason of death, Disability or retirement
pursuant to Section 5(F), (x) the Committee will determine the
degree to which the performance goals applicable to the
Executive for the LICP performance cycle
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commencing in 1997 are expected to be achieved through the end
of the year of termination of employment and the number (if
any) of Performance Shares to which the Executive would be
entitled based upon that level of performance if the
Performance Shares had been the Executive's restricted stock
award under the LICP for the 1997 LICP performance cycle
(without regard to the potential for any award of "Opportunity
Shares" under the LICP), (y) effective as of the Date of
Termination, the Executive's right to receive a portion of the
number of Performance Shares determined under part (x) of this
sentence shall vest in the same proportion as the number of
days elapsed from and including January 1, 1997 through and
including the Date of Termination bears to 881 (the number of
days from and including January 1, 1997 through and including
May 31, 1999), and (z) effective as of the Date of
Termination, the Executive shall forfeit all right to receive
the remaining Performance Shares.
Upon Executive's completion of the Employment Period without
termination of employment, (1) the Committee (within the
meaning of the LICP) will determine the degree to which the
performance goals applicable to the Executive for the LICP
performance cycle commencing in 1997 are expected to be
achieved through the end of that performance cycle and (2)
effective as of June 1, 1999, the Executive shall have a
vested right to receive the number (if any) of Performance
Shares to which the Executive would be entitled, based upon
the level of performance determined under part (1) of this
sentence, if the Performance Shares had been the Executive's
restricted stock award for the 1997 LICP performance cycle
(without regard to the potential for any award of "Opportunity
Shares" under the LICP).
The determinations of the Committee under this Section
3(B)(ii)(c) shall be final and binding on all parties.
(d) Shares of Stock shall be registered
in the name of the Executive and certificates representing
such shares of Stock shall be delivered to the Executive as
soon as practicable following the date on which Executive's
right to receive such shares vests. Unless the Company
determines otherwise, shares of Stock delivered to the
Executive shall consist of shares of Stock theretofore held by
the Company in its treasury or by a subsidiary of the Company.
(e) Dividends shall not be paid to the
Executive with respect to any share of Stock prior to the
date that such share is registered in the name of the
Executive on the books of the Company; provided, however, that
an amount equal to the total amount of dividends payable with
respect to such share from the Effective Date
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through the date that such share is delivered to the Executive
(taking into account any adjustments pursuant to the following
paragraph (f)) shall be paid to the Executive in cash on the
date that the share of Stock is registered in the name of the
Executive on the books of the Company.
(f) The issuance of Stock pursuant to
the Stock Award made hereunder shall be subject to the
provisions of Sections 13.1, 13.2 and 13.3 of the LICP as
though the Stock Award had been granted as a Stock Incentive
thereunder. The Company shall make all appropriate
adjustments with respect to the Stock Award under Section 13.3
of the LICP on a basis no less favorable to the Executive than
corresponding adjustments made with respect to any comparable
award or incentive under the LICP or any other incentive plan
of the Company in which peer executives participate.
Notwithstanding any provision of this Section 3(B)(ii), the
Performance Shares shall not in any respect be deemed an award
under the LICP.
(iii) Benefit and Bonus Plans: During the
Employment Period, except as otherwise set forth in this paragraph
(iii), the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and
programs applicable generally to other peer executives of the Company
and its Affiliated Companies. The Executive and/or the Executive's
family, as the case may be, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company and its Affiliated
Companies (including, without limitation, medical, prescription,
dental, disability, the Executive salary continuance, employee life,
group life, accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer executives
of the Company and its Affiliated Companies. Notwithstanding the
foregoing:
(a) The Executive shall not be granted
awards under the Company's Long-Term Incentive Compensation
Plan for performance cycles commencing in 1998 or 1999; and
(b) The Executive shall be entitled to
receive a separate monthly supplemental retirement benefit
from the Company equal to the excess, if any, of (1) the
benefit payable under the Retirement Plan and the SERP based
on the benefit accrual formulas and actuarial assumptions in
effect at the Effective Date over (2) the Executive's actual
benefit (paid or payable) under the Retirement Plan and the
SERP. Any such benefit shall commence at the same time and be
payable in the same form as the amounts paid under the
Retirement Plan and the SERP.
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(iv) Expenses: During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the
policies, practices and procedures of the Company and its Affiliated
Companies to the extent applicable generally to other peer executives
of the Company and its Affiliated Companies.
(v) Vacation and Fringe Benefits: During the
Employment Period, the Executive shall be entitled to paid vacation
and fringe benefits in accordance with the plans, practices, programs
and policies of the Company and its Affiliated Companies to the extent
applicable generally to other peer executives of the Company and its
Affiliated Companies.
(vi) Other Perquisites: During the Employment
Period, the Executive shall continue to be provided with such
perquisites as were provided to the Executive on the Effective Date of
this Agreement. Such perquisites shall be reviewed annually by the
Compensation Committee of the Board.
4. Termination of Employment:
A. Death or Disability: The Executive's employment
shall terminate automatically upon the Executive's death during the Employment
Period. If the Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period, it may give to the
Executive written notice in accordance with Section 15(B) of its intention to
terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive's duties.
B. Cause: The Company may terminate the Executive's
employment during the Employment Period for Cause.
C. Good Reason: The Executive's employment may be
terminated during the Employment Period by the Executive for Good Reason. For
purposes of this Section 4(C), any good faith determination of Good Reason made
by the Executive shall be conclusive.
D. Notice of Termination: Any termination by the
Company for Cause, or by the Executive for Good Reason, shall be communicated
by Notice of Termination to the other party hereto given in accordance with
Section 15(B). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing
of Good Reason or Cause shall not waive any right of the Executive or the
Company hereunder or preclude the Executive or the Company from asserting such
fact or circumstance in enforcing the Executive's or the Company's rights
hereunder.
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5. Obligations of the Company Upon Termination during Employment
Period:
A. Good Reason, Other Than for Cause, Death or
Disability: If, during the Employment Period, the Executive shall terminate
employment for Good Reason or the Company shall terminate the Executive's
employment (excluding a termination for Cause, for Disability or following a
Change of Control as described in Section 5(E)), then:
(i) the Company shall pay to the Executive in a
lump sum in cash (or common stock of the Company with respect to
certain payments under the LICP), within 30 days after the Date of
Termination, determined without any reduction for the present value of
such lump-sum payment, the aggregate of:
(a) the Annual Base Salary payable to
the Executive for the remainder of the Employment Period as if
there had been no termination of employment;
(b) all bonuses payable to the Executive
for the remainder of the Employment Period as if there had
been no termination of employment (including, but not by way
of limitation, all bonuses awarded to the Executive under the
EICP and the LICP and all bonuses that would have been awarded
to the Executive under the EICP and LICP during the remainder
of the Employment Period), assuming, for purposes of
determining the amount of any bonus, (i) that bonus awards
continued to be granted at the levels most recently granted to
the Executive prior to the Date of Termination (unless a
reduction in the level of any bonus award was the basis for a
termination for Good Reason, in which case reference shall be
made to the level in effect prior to such reduction) and (ii)
that any applicable performance objectives were met at the
"target" level; and
(c) any accrued vacation pay;
in each case to the extent not theretofore paid (the sum of the
amounts described in clauses (a) - (c) above shall be hereinafter
referred to as the "Accrued Obligations");
(ii) the benefits accrued up to the Date of
Termination under the Retirement Plan and the SERP or any successor
plan thereto shall commence thereunder in such form and at such time
as elected by the Executive in accordance with the terms of said
Plans, subject to the requirements of Section 16;
(iii) the Company shall pay a separate monthly
supplemental retirement benefit equal to the difference between (1)
the benefit payable under the Retirement Plan and the SERP or any
other successor supplemental and/or excess retirement plan of the
Company and its Affiliated Companies providing benefits for the
Executive which the Executive would receive if the Executive's
employment continued at the compensation level provided for in Section
3(B) for the remainder
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of the Employment Period, assuming for this purpose that (a) all
accrued benefits are fully vested and (b) benefit accrual formulas and
actuarial assumptions are no less advantageous to the Executive than
those in effect at the Effective Date, and (2) the Executive's actual
benefit (paid or payable), if any, under the Retirement Plan and the
SERP (the amount of such benefit calculated under this Section
5(A)(iii), which shall commence at the same time and be payable in the
same form as the amounts described in Section 5(A)(ii), shall be
hereinafter referred to as the "Supplemental Retirement Benefit");
(iv) for the remainder of the Employment Period,
or such longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive and/or
the Executive's family at least equal to those which would have been
provided to them in accordance with the welfare benefit plans,
programs, practices and policies described in Section 3(B)(iii) if the
Executive's employment had not been terminated; provided, however,
that if the Executive becomes reemployed with another employer and is
eligible to receive medical or other welfare benefits under another
employer provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other
plan during such applicable period of eligibility (such continuation
of such benefits for the applicable period herein set forth shall be
hereinafter referred to as "Welfare Benefit Continuation");
(v) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to the Executive
and/or the Executive's family any other amounts or benefits required
to be paid or provided or which the Executive and/or the Executive's
family is eligible to receive pursuant to this Agreement and under any
plan, program, policy or practice or contract or agreement of the
Company and its Affiliated Companies as in effect and applicable
generally to other peer executives and their families (such other
amounts and benefits, payable as described in this paragraph, shall be
hereinafter referred to as the "Other Benefits"); provided, however,
that the Company and the Board hereby agree to cause the Deferred
Compensation Plan to be administered or amended so that any and all
amounts of salary and/or bonus theretofore deferred by the Executive
and held under the Deferred Compensation Plan of the Company with
instructions from the Executive to pay in 15 annual installments shall
be paid in said 15 installments commencing on June 1, 2000,
notwithstanding any provision of the Deferred Compensation Plan to the
contrary; and
(vi) the Company shall pay to the Executive in a
lump sum in cash, within 30 days after the Date of Termination, the
amount it would have contributed as an employer contribution to the
tax-qualified Savings Plan of the Company for the remainder of the
Employment Period had the Executive contributed at the maximum rate
during said period and had the terms of said Savings Plan as in effect
on the Effective Date remained unchanged during said remainder of the
Employment Period;
(vii) the Company shall timely deliver to the
Executive all shares of Stock to which he has a vested right pursuant
to Section 3(B)(ii), together with a cash
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amount equal to all dividends that were payable with respect to such
shares of Stock from the Effective Date through the date of delivery
as provided in Section 3(B)(ii); and
(viii) the Company shall fulfill the requirements of
Section 3(B)(iii)(b), Section 5(G)-(I) and Section 16.
B. Death: If the Executive's employment is terminated
by reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's Beneficiary or
other legal representatives under this Agreement, other than for (i) payment of
Accrued Obligations (which shall be paid to the Executive's Beneficiary in a
lump sum in cash (or common stock of the Company with respect to certain
payments under the LICP) within 30 days of the Date of Termination), (ii) the
timely payment or provision of the Welfare Benefit Continuation and Other
Benefits in accordance with Section 5(A), (iii) the timely delivery of all
shares of Stock to which the Executive has a vested right pursuant to Section
3(B)(ii), together with a cash amount equal to all dividends that were payable
with respect to such shares of Stock from the Effective Date through the date
of delivery as provided in Section 3(B)(ii), and (iv) fulfillment of the
requirements of Section 3(B)(iii)(b), Section 5(H) and Section 16.
C. Disability: If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment
Period, this Agreement shall terminate without further obligations to the
Executive under this Agreement, other than for (i) payment of Accrued
Obligations (which shall be paid to the Executive in a lump sum in cash (or
common stock of the Company with respect to certain payments under the LICP)
within 30 days of the Date of Termination), (ii) the timely payment or
provision of the Welfare Benefit Continuation and Other Benefits in accordance
with Section 5(A), (iii) the timely delivery of all shares of Stock to which
the Executive has a vested right pursuant to Section 3(B)(ii), together with a
cash amount equal to all dividends that were payable with respect to such
shares of Stock from the Effective Date through the date of delivery as
provided in Section 3(B)(ii), and (iv) fulfillment of the requirements of
Section 3(B)(iii)(b), Section 5(G)-(I) and Section 16.
D. Cause; Other than for Good Reason: If the
Executive's employment shall be terminated for Cause during the Employment
Period or if the Executive voluntarily terminates employment during the
Employment Period (excluding a termination for Good Reason, retirement pursuant
to Section 5(F) or termination by reason of death or Disability), this
Agreement shall terminate without further obligations to the Executive other
than (i) the obligation to pay to the Executive the Annual Base Salary through
the Date of Termination plus the amount of any compensation previously deferred
by the Executive, in each case to the extent theretofore unpaid, (ii) the
timely provision of Other Benefits without regard to the June 1, 2000
installment payment commencement date required by Section 5(A)(v), and (iii)
fulfillment of the requirements of Section 3(B)(iii)(b), Sections 5(G)-(I) and
Section 16. Accordingly, the Executive shall forfeit all right to the Stock in
accordance with Section 3(b)(ii) and the Executive shall have no right to
receive the dividend-related payment described in Section 3(B)(ii). Any unpaid
but due Annual Base Salary shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination under this paragraph.
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E. Change of Control: In the event that (i) the Company
terminates the employment of the Executive (excluding a termination for Cause
or for Disability), or (ii) the Executive terminates his employment for Good
Reason, during the Employment Period and after consummation of a Change of
Control, (a) the Company shall pay the Executive, within 30 days after the Date
of Termination, an amount equal to the Executive's Base Amount multiplied by
2.99 and (b) the Company shall timely deliver to the Executive all shares of
Stock to which he has a vested right pursuant to Section 3(B)(ii), together
with a cash amount equal to all dividends that were payable with respect to
such shares of Stock from the Effective Date through the date of delivery as
provided in Section 3(B)(ii). Upon such payment and delivery of Stock, this
Agreement shall terminate without further obligations to the Executive other
than (a) the obligation to pay to the Executive the Annual Base Salary through
the Date of Termination to the extent theretofore unpaid, (b) the timely
provision of Other Benefits in accordance with Section 5(A), and (c)
fulfillment of the requirements of Section 3(B)(iii)(b), Section 5(G)-(I) and
Section 16. Any unpaid but due Annual Base Salary shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination under
this paragraph.
F. Retirement: If the Executive terminates his
employment with the Company by reason of retirement with the consent of the
Company during the Employment Period, he shall be entitled to receive under
this Agreement, in addition to all other benefits otherwise due from the
Company upon retirement, the prompt payment of all benefits due under Section
5(A) had the Executive terminated employment for Good Reason; provided,
however, that Executive's rights with respect to the Performance Shares shall
be governed by the applicable provisions of Section 3(B)(ii). Furthermore, the
Executive shall be entitled until the end of the Employment Period to the
prompt reimbursement of all expenses incurred for civic or industry activities
undertaken on behalf of the Company which are of a similar nature and scope to
those expenses reimbursable by the Company to the Executive on the Effective
Date. In this connection, the Executive shall also be afforded reasonable use
of any Company aircraft.
G. Group Life Insurance: Upon a termination of
employment during or at the end of the Employment Period for any reason other
than death or for Cause, the Executive may elect to retain the group life
insurance coverage provided to the Executive and other employees of the Company
under the Group Life Insurance Plan of the Company, and, if the election is
made, the Executive shall pay, or reimburse the Company for the cost of, the
premiums for such insurance paid by the Company at the same rate charged active
employees of the Company for similar coverage utilizing the same method or
procedure for calculating the premium as in effect and applicable for the
Executive as of the date of execution hereof. Such right to maintain group
coverage shall be in the minimum amount of three times Annual Base Salary and
shall continue for the life of the Executive. It is hereby understood and
agreed that there shall be no increase in said premium because of any
reallocation due to age or risk that may occur after the date of execution
hereof.
H. Salary Continuation Plan: Upon a termination of
employment during the Employment Period for any reason, the Company hereby
agrees that the Executive shall be fully vested in the benefit provided under
the Salary Continuation Plan, as in effect on the Effective Date, and that the
benefit payable thereunder shall be based on his Annual Base Salary as provided
in Section 3(B)(i).
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15
I. Office: Upon a termination of employment during the
Employment Period for any reason other than death or for Cause, the Company
shall provide the Executive with suitable executive office space and
secretarial help at an acceptable location outside the premises of any Company
location. Such office and secretary shall be provided the Executive until such
time as mutually agreed by the parties to be no longer necessary.
6. Consulting Period and Duties: The Company and the Executive
agree that, upon completion of the Employment Period, the Company shall retain
the services of the Executive as a consultant during the Consulting Period in
accordance with the terms and provisions of this Agreement. During the
Consulting Period, the Executive shall provide such consultation and advice in
connection with the Company's business as the Company may reasonably request;
provided, however, that the Executive shall have no obligation to devote more
than 40 hours per month to such consultation. In consideration of the
Executive's agreement to make himself available to provide the consulting
services described herein, the Company and the Board hereby agree to cause the
Deferred Compensation Plan to be administered or amended so that any and all
amounts of salary and/or bonus theretofore deferred by the Executive and held
under the Deferred Compensation Plan of the Company with instructions from the
Executive to pay in 15 annual installments shall commence on June 1, 2000,
notwithstanding any provision of the Deferred Compensation Plan to the
contrary. Should the Executive refuse to provide such consulting services at
any time during the Consulting Period for any reason not beyond the control of
the Executive, such installments shall immediately commence upon the expiration
of 60 days following the Executive's receipt of written notice from the Company
of his failure to fulfill his obligations hereunder during which the Executive
does not cure such failure.
7. Non-Exclusivity of Rights: Except as provided in Section 5,
nothing in this Agreement shall prevent or limit the Executive's continuing or
further participation in any plan, program, policy or practice provided by the
Company or any of its Affiliated Companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any of
its Affiliated Companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with the Company or any of its
Affiliated Companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract
or agreement except as explicitly modified by this Agreement.
8. Full Settlement; Resolution of Disputes:
A. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and,
except as provided in Section 5(A)(iv), such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to
pay promptly as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome
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thereof) by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Code. In addition and to the
extent not already provided by the terms of any insurance policy owned by the
Company, the Company hereby agrees to pay promptly as incurred, to the full
extent permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any litigation or other legal action filed
against the Executive or his estate arising out of, or in any way connected
with or resulting from, actions taken or omitted to be taken by the Executive
during his employment with the Company.
B. If there shall be any dispute between the Company and
the Executive regarding (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause, or (ii) in
the event of any termination of employment by the Executive, whether Good
Reason existed, then, unless and until there is a final, nonappealable judgment
by a court of competent jurisdiction declaring that such termination was for
Cause or that the determination by the Executive of the existence of Good
Reason was not made in good faith, the Company shall pay all amounts, and
provide all benefits, to the Executive and/or the Executive's family or other
beneficiaries, as the case may be, that the Company would be required to pay or
provide pursuant to Section 5(A) as though such termination were by the Company
without Cause or by the Executive with Good Reason; provided, however, that the
Company shall not be required to pay any disputed amounts pursuant to this
paragraph except upon receipt of an undertaking by or on behalf of the
Executive to repay all such amounts to which the Executive is ultimately
adjudged by such court not to be entitled.
9. Certain Reduction of Payments by the Company:
A. Notwithstanding anything to the contrary in this
Agreement, in the event it shall be determined that any payment or distribution
by the Company to or for the benefit of the Executive (whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any reduction required under this
Section 9) (a "Payment") would be non-deductible by the Company for Federal
income tax purposes because of Section 280G of the Code, then the aggregate
present value of all Payments shall be reduced (but not below zero) such that
such aggregate present value of Payments equals the Reduced Amount. The
"Reduced Amount" shall be an amount expressed in present value which maximizes
the aggregate present value of Payments without causing any Payment to be
non-deductible by the Company because of Section 280G of the Code. For
purposes of this Section 9, present value shall be determined in accordance
with Section 280G(d)(4) of the Code.
B. All determinations required to be made under this
Section 9 (excluding determinations of any legal issues relevant to this
Section 9, which shall be made by regular outside counsel to the Company) shall
be made by Deloitte &Touche (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive within
15 business days of the Date of Termination. In the event that the Accounting
Firm is serving as accountant or auditor for any individual, entity or group
(other than the Company) effecting the Change of Control, the Executive shall
appoint another nationally recognized accounting firm to make the
determinations
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required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). Any such determination by the Accounting Firm (and
any such legal determination by regular outside counsel to the Company) shall
be binding upon the Company and the Executive. All fees and expenses of the
Accounting Firm and regular outside counsel to the Company shall be borne by
the Company. The Executive shall determine which and how much of the Payments
shall be eliminated or reduced consistent with the requirements of this Section
9, provided that, if the Executive does not make such determination within 10
business days of the receipt of the calculations made by the Accounting Firm,
the Company shall elect which and how much of the Payments shall be eliminated
or reduced consistent with the requirements of this Section 9 and shall notify
the Executive promptly of such election. Within five business days thereafter,
the Company shall pay to or distribute to or for the benefit of the Executive
such Payments as are then due to the Executive and shall promptly pay to or
distribute to or for the benefit of the Executive such Payments as become due
to the Executive.
C. As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Payments will have been made by
the Company that should not have been made ("Overpayment") or that additional
Payments which will have not have been made by the Company could have been made
("Underpayment"), in each case, consistent with the calculations required to be
made hereunder. In the event that the Accounting Firm determines that an
Overpayment has been made, any such Overpayment shall be treated for all
purposes as a loan to the Executive which the Executive shall repay to the
Company together with interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Code; provided, however, that no amount shall be
payable by the Executive to the Company (or if paid by the Executive to the
Company shall be returned to the Executive) if and to the extent such payment
would not reduce the amount which is subject to taxation under Section 4999 of
the Code. In the event that the Accounting Firm determines that an
Underpayment has occurred, any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive together with interest at the
applicable Federal rate provided for in Section 7872(f)(2) of the Code.
10. Confidential Information: The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its Affiliated
Companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
Affiliated Companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an asserted violation of
the provisions of this Section 10 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
11. Successors:
A. This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws
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of descent and distribution. This Agreement shall inure to the benefit of and
be enforceable by the Executive's legal representatives.
B. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
C. 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.
12. Source of Payments: All payments provided in this Agreement
shall, unless the plan or program pursuant to which they are made provide
otherwise, be paid in cash from the general funds of the Company, and no
special or separate funds shall be established and no other segregation of
assets shall be made to assure payment. The Executive shall have no right,
title or interest whatever in or to any investments which the Company may make
to aid the Company in meeting its obligations hereunder. Nothing contained in
this Agreement, and no action taken pursuant to this provision, shall create or
be construed to create a trust of any kind, or a fiduciary relationship,
between the Company and the Executive or any other person. To the extent that
any person acquires a right to receive payments from the Company hereunder,
such right shall be no greater than the right of an unsecured creditor of the
Company.
13. Effect of Prior Agreements: This Agreement contains the
entire understanding between the parties hereto and supersedes any prior
employment agreement between the Company or any predecessor of the Company and
the Executive, except that this Agreement shall not affect or operate to reduce
(a) any benefit or compensation inuring to the Executive of a kind elsewhere
provided and not expressly provided or modified in this Agreement or (b) the
agreements of the Company set forth in that certain letter to the Executive
from Xxxx X. Xxxxx, as Chairman of the Compensation Committee of the Board,
dated November 28, 1995, regarding the Executive's service with the World
Energy Council. Specifically, but not by way of limitation, this Agreement
supersedes and replaces that certain amended and restated Employment Agreement
between the parties, dated June 4, 1994.
14. Consolidation, Merger or Sale of Assets: Nothing in this
Agreement shall preclude the Company from consolidating or merging into or
with, or transferring all or substantially all of its assets to, another
corporation which assumes this Agreement and all obligations and undertakings
of the Company hereunder; provided that no such action shall diminish the
Executive's rights hereunder, including, without limitation, rights under
Section 4(C). Upon such a consolidation, merger or transfer of assets in
assumption, the term "Company" as used herein shall mean such other
corporation.
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15. Miscellaneous:
A. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without reference to principles
of conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
B. All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified-mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive: Xxx X. Xxxxxx
0 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
If to the Company: Houston Industries Incorporated
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000
ATTENTION: Xx. Xxxx Xxxx Xxxxx
Vice President, General Counsel
and Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
C. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
D. The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
E. The Executive's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 4(C), shall not be
deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.
F. The headings of paragraphs herein are included solely
for convenience and reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
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G. Contemporaneously with execution of this Agreement,
the Executive shall be furnished a certified copy of a resolution of the Board
of Directors authorizing the execution and delivery of this Agreement.
16. Deferred Compensation Plan and SERP Payments: Notwithstanding
any provision herein or any provision of the Deferred Compensation Plan of the
Company to the contrary, the Company and the Board hereby agree to cause the
Deferred Compensation Plan to be administered so that any and all amounts of
salary and/or bonus theretofore deferred by the Executive and held under the
Deferred Compensation Plan with instructions from the Executive to pay in 15
annual installments (a) shall be paid in said 15 installments, (b) shall remain
in said Plan earning interest at the rate prescribed therein until installment
distributions commence, (c) shall commence at the time provided herein (or, if
not provided for herein, at the time provided in said Plan) and (d) shall not
be commuted and paid in a lump sum. Notwithstanding any provision of this
Agreement or any provision of the SERP to the contrary, the Company and the
Board hereby agree to cause the SERP to be administered so that no benefit
payable to or on behalf of the Executive under the SERP may be commuted and
paid in a lump sum.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name and
on its behalf, all as of the day and year first above written.
HOUSTON INDUSTRIES INCORPORATED
By /s/ Xxxx X. Xxxxx
------------------------------------------------
Xxxx X. Xxxxx, Chairman of Compensation
Committee of the Board of Directors
EXECUTIVE
/s/ Xxx X. Xxxxxx
--------------------------------------------------
Xxx X. Xxxxxx
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