EXHIBIT 10(b)
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement"
herein) 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 DON D. SYKORA (the "Executive"), dated this 6th day of
June, 1994.
W I T N E S S E T H:
WHEREAS, on May 12, 1994, the Company and Executive entered
into an Employment Agreement (the "Prior Agreement") under which
Executive would receive certain employment rights and benefits upon a
"Change of Control" (as defined therein); and
WHEREAS, the parties to said Prior Agreement desire to
completely amend and restate said Prior Agreement so that the Company
shall have the option to benefit from the continued services of Executive
beyond his attainment of age 65 and Executive has consented to make
himself available to be so employed; and
WHEREAS, Section 15(A) of the Prior Agreement authorizes the
amendment of said Agreement with the mutual consent of the parties and
the parties desire to so amend and restate the Prior Agreement;
NOW, THEREFORE, in consideration and 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 (the Prior Agreement as so amended and restated being hereinafter
called "this Agreement"):
PART A
CHANGE OF CONTROL PERIOD
The Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined below) of the Company. The
Board believes it is imperative to diminish the inevitable distraction of
the Executive by virtue of the personal uncertainties and risks created
by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the Company in the event of
any threatened or pending Change of Control, and to provide the Executive
with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the
Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the
Board has caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS:
A. "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.
B. "ANNUAL BASE SALARY" shall mean the salary of the
Executive provided for in Section 4(B)(i) below, as adjusted and in
effect from time to time.
C. "BENEFICIARY" shall mean the person or persons named in
writing and filed with the Company to receive any compensation or benefit
payable hereunder following Executive's death, or in the event no such
person 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.
D. "BOARD" shall mean the Board of Directors of the Company.
E. "CAUSE" shall mean those specific reasons for Executive's
termination of employment as specified in Section 5(B) hereof.
F. "CHANGE OF CONTROL" shall have the meaning ascribed to it
in Section 2 hereof.
G. "CHANGE OF CONTROL PERIOD" shall mean the period
commencing on the date hereof and ending on the first day of the month
next following the Executive's retirement on or after his Normal
Retirement Date under the Company's tax-qualified retirement plan or any
successor retirement plan (the "Retirement Plan").
H. "CODE" shall mean the Internal Revenue Code of 1986, as
now in effect and as hereafter amended.
I. "DISABILITY" shall mean the absence of the Executive from
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
Executive or Executive's legal representative. Such agreement as to
acceptability by the Executive not to be withheld unreasonably.
J. "EFFECTIVE DATE" shall mean the first date during the
Change of Control Period (as defined in Section 1(G)) on which a Change
of Control occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive's
employment with the Company is terminated or the Executive ceases to be
an officer of the Company prior to the date on which the Change of
Control occurs, and if it is reasonably demonstrated by the Executive
that such termination of employment or cessation of status as a officer
(i) was at the request of a third party who has taken steps reasonably
calculated to effect the Change of Control or (ii) otherwise arose in
connection with or
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anticipation of the Change of Control, then for all purposes of this
Agreement, the "Effective Date" shall mean the date immediately prior to
the date of such termination of employment or cessation of status as an
officer.
K. "EMPLOYMENT PERIOD" shall mean the period commencing on
the Effective Date and ending on the date described in Section 3.
L. "SPOUSE" shall mean the person who is legally married to
the Executive.
2. CHANGE OF CONTROL: For the purpose of this Agreement, a
"Change of Control" shall be deemed to have occurred if:
(a) any "person," including a "group" as determined in accordance
with Section 13(d)(3) of the Securities Exchange Act of 1934
(the "Exchange Act"), is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities;
(b) as a result of, or in connection with, any tender offer or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions
(a "Transaction"), the persons who were directors of the Company before
the Transaction shall cease to constitute a majority of the Board of
Directors of the Company or any successor to the Company;
(c) the Company is merged or consolidated with another corporation
and as a result of such merger or consolidation less than 70% of the
outstanding voting securities of the surviving or resulting corporation
shall then be owned in the aggregate by the former stockholders of the
Company, other than (x) affiliates within the meaning of the Exchange
Act, or (y) any party to such merger or consolidation;
(d) a tender offer or exchange offer is made and consummated for
the ownership of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding voting
securities; or
(e) the Company transfers substantially all of its assets to
another corporation which is not a wholly owned subsidiary of the
Company;
provided, however, that unless the Board of Directors of the
Company determines otherwise prior to the date of any event
described in the foregoing clauses (a) - (e) above ("Event"), a
"Change of Control" shall not have occurred if any Event
results, directly or indirectly, in the beneficial ownership by
the employees, former employees or members of the Board of
Directors of the Company of:
(x) substantially all of the assets of the
Company; or
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(y) securities of the Company representing
30% or more of the combined voting power of the
outstanding securities of the Company or any
successor to the Company.
3. 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 period commencing on the Effective Date and
ending on the earlier to occur of (i) the third anniversary of such
Effective Date or (ii) the first day of the month coinciding with or next
following the Executive's attainment of age 67.
4. TERMS OF EMPLOYMENT:
A. POSITION AND DUTIES:
(i) During the Employment Period and until the date
of his termination of employment hereunder, the Executive shall
be employed as the President of the Company and be responsible
for the general management of the affairs of the Company. It
is the intention of the parties that during the Employment
Period the Executive shall continue to be elected to and serve
on the Board for approximately one year and that he will not
seek reelection in 1995. The Executive, in carrying out his
duties under this Agreement, shall report only to the Chairman
of the Board. During the Employment Period, (a) 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, exercised and assigned at
any time during the 90-day period immediately preceding the
Effective Date, except as otherwise provided immediately above
and (b) 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 250 miles from such location. It
is hereby agreed and understood that Executive may be required
by the Company to move his business office (within the 250-mile
limit set forth above) but not his principle place of
residence. In the event that the Company requires Executive to
move his main office outside of Harris County, the Company
shall provide, at no expense to Executive, an apartment or
townhome in the new location which is commensurate with
Executive's standard of living.
(ii) During the Employment Period, and 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.
During the Employment Period 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
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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 highest monthly base salary
paid to the Executive by the Company during the 12-month period
immediately preceding the month in which the Effective Date
occurs. Thereafter, the Annual Base Salary shall increase by
not less than 5% each year (unless a smaller percentage is
agreed upon between the parties) with the increases being
effective on the same date that similar salary changes are
effective for other members of the senior group of executives
of the Company. During the Employment Period and subject to
the provisions of the preceding sentence, the Annual Base
Salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be
substantially consistent with increases in base salary
generally awarded in the ordinary course of business to other
peer executives of the Company and its Affiliated Companies.
Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any
such increase and the term Annual Base Salary as utilized in
this Agreement shall refer to Annual Base Salary as so
increased.
(ii) ANNUAL BONUS: In addition to Annual Base
Salary, the Executive shall be awarded, for each fiscal year
ending during the Employment Period, an annual bonus
(the "Annual Bonus") in cash and/or common stock of the Company
as determined in accordance with the existing bonus plans of
the Company, the Executive Incentive Compensation Plan ("EICP")
and the Long-Term Incentive Compensation Plan ("LICP"), or any
successor plan or plans, if any successor of the Company has a
superior bonus plan or plans. Each such Annual Bonus shall be
in an amount not less than the greater of (1) 125% of Annual
Base Salary or (2) the bonus payable to the Executive for the
applicable year under the EICP and LICP or said successor
superior plan assuming that any performance objectives
thereunder had been met at the "target" level; and, such Annual
Bonus shall be paid at the same time or times as similar
bonuses are paid to other peer executives of the Company,
unless the Executive shall elect to defer the receipt of such
Annual Bonus. For all purposes of this Agreement, "Annual
Bonus" shall be deemed to include but not necessarily limited
to the aggregate of (a) cash paid during a given year under the
EICP for short-term annual awards thereunder and (b) the dollar
value of shares of the Company's common stock paid out during a
given year under the LICP based on the achievement of certain
performance goals, plus dividend equivalent accruals during the
performance period.
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(iii) INCENTIVE, SAVINGS AND RETIREMENT
PLANS: During the Employment Period, 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, but in no event shall such plans,
practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any,
that such distinction is applicable), savings opportunities and
retirement benefit opportunities, in each case, less favorable,
in the aggregate, than the most favorable of those provided by
the Company and its Affiliated Companies for the Executive
under such plans, practices, policies and programs as in effect
at any time during the 90-day period immediately preceding the
Effective Date or if more favorable to the Executive, those
provided generally at any time after the Effective Date to
other peer executives of the Company and its Affiliated
Companies.
(iv) WELFARE BENEFIT PLANS: During the Employment
Period, 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, 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, but in no event shall such plans,
practices, policies and programs provide the Executive with
benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs
in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any
time after the Effective Date to other peer executives of the
Company and its Affiliated Companies.
(v) 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 most favorable policies, practices and procedures of
the Company and its Affiliated Companies in effect for the
Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its
Affiliated Companies.
(vi) FRINGE BENEFITS: During the Employment Period, the
Executive shall be entitled to fringe benefits in accordance with
the most favorable plans, practices, programs and policies of the
Company and its Affiliated Companies in effect for the Executive at
any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its Affiliated Companies.
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(vii) OFFICE AND SUPPORT STAFF: During the
Employment Period, the Executive shall be entitled to an office
or offices of a size and with furnishings and other
appointments, and to exclusive personal secretarial and other
assistance, at least equal to the most favorable of the
foregoing provided to the Executive by the Company and its
Affiliated Companies at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as provided generally at any time thereafter
with respect to other peer executives of the Company and its
Affiliated Companies.
(viii) VACATION: During the Employment Period,
the Executive shall be entitled to paid vacation in accordance
with the most favorable plans, policies, programs and practices
of the Company and its Affiliated Companies as in effect for
the Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its
Affiliated Companies.
(ix) 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 Personnel Committee of the Board. In addition,
the Executive shall be entitled to reimbursement for expenses
incurred with respect to the preparation of his personal income
tax returns and for financial counseling in an amount not to
exceed $10,000 per calendar year.
5. 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 this
Agreement 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. For purposes of this
Agreement, "Cause" shall mean (i) repeated violations by the Executive of
the Executive's obligations under Section 4(A) of this Agreement (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.
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C. GOOD REASON: The Executive's employment may be terminated
during the Employment Period by the Executive for Good Reason. For
purposes of this Agreement, "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 4(A) of this Agreement, 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 4(B) of this Agreement, 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 4(A)(i) hereof or the Company's failure to provide the
residence required by Section 4(A)(i);
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 11(C) of this Agreement, provided that such
successor has received at least ten days' prior written notice
from the Company or the Executive of the requirements of
Section 11(C) of this Agreement.
For purposes of this Section 5(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) of this Agreement. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (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 (as defined below) 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). 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
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from asserting such fact or circumstance in enforcing the Executive's or
the Company's rights hereunder.
E. DATE OF TERMINATION: "Date of Termination" means (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 of Termination shall be 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 Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION:
A. GOOD REASON, OTHER THAN FOR CAUSE, DEATH OR
DISABILITY: If, during the Employment Period, the Company shall
terminate the Executive's employment other than for Cause or Disability
or the Executive shall terminate employment for Good Reason, 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 LICP), within 30 days after the Date of
Termination, the aggregate of (1) the Executive's Annual Base
Salary and Annual Bonus remaining owing to the Executive for
the Employment Period as if there had been no termination
determined without any reduction for the present value of such
lump-sum payment and (2) any accrued vacation pay, in each case
to the extent not theretofore paid (the sum of the amounts
described in clauses (1) and (2) 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 Benefit
Restoration Plan of the Company or any successor plan thereto
("SERP" herein) shall commence immediately thereunder in such
form as elected by the Executive in accordance with the terms
of said Plans and, notwithstanding 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 under
the SERP may be commuted and paid in a lump sum by the Company;
(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 Sections 4(B)(i) and 4(B)(ii) of this Agreement
for the remainder of the Employment Period, assuming for this
purpose that all accrued benefits are fully vested and that
benefit accrual formulas and actuarial assumptions are no less
advantageous to the Executive than those in effect during the
90-day period immediately
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preceding 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 6(A)(iii) which shall commence at the same time and be
payable in the same form as the amounts described in
Section 6(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 plans,
programs, practices and policies described in Section 4(B)(iv)
of this Agreement if the Executive's employment had not been
terminated in accordance with the most favorable plans,
practices, programs or policies of the Company and its
Affiliated Companies as in effect and applicable generally to
other peer executives and their families during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company
and its Affiliated Companies and their families; 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"). For purposes
of determining eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained
employed until the end of the Employment Period and to have
retired on the last day of such period;
(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 during the 90-day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally thereafter with
respect to other peer executives of the Company and its
Affiliated Companies and their families (such other amounts and
benefits 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 so that any and all amounts of salary and/or bonus
theretofore deferred by Executive and held under the Deferred
Compensation Plan of the Company with instructions from
Executive to pay in 15 annual installments shall be paid in
said 15 installments commencing at the end of the Employment
Period and shall not be commuted
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and paid in a lump sum, notwithstanding any provision of the
Deferred Compensation Plan to the contrary; and
(vi) the Company shall pay to 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 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.
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 LICP) within 30 days of
the Date of Termination) and the timely payment or provision of the
Welfare Benefit Continuation and Other Benefits and (ii) payment to the
Executive's Beneficiary in a lump sum in cash within 30 days of the Date
of Termination of an amount equal to the actuarial equivalent (utilizing
for this purpose the assumptions utilized with respect to the Retirement
Plan on the Effective Date) of the Supplemental Retirement Benefit.
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
LICP) within 30 days of the Date of Termination) and the timely payment
or provision of the Welfare Benefit Continuation and Other Benefits and
(ii) payment to the Executive in a lump sum in cash within 30 days of the
Date of Termination of an amount equal to the actuarial equivalent
(utilizing for this purpose the assumptions utilized with respect to the
Retirement Plan on the Effective Date) of the Supplemental Retirement
Benefit.
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 terminates employment during the Employment Period,
excluding a termination for Good Reason or by reason of death or
Disability, this Agreement shall terminate without further obligations to
the Executive other than the obligation to pay to 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, and the timely provision of Other Benefits.
In such case, 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.
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E. 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 Executive and other employees of the
Company under the Group Life Insurance Plan of the Company, and, if the
election is made, 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 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
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.
F. RETIREMENT: If 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 6(A) had the Executive terminated employment for Good Reason.
Furthermore, 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
Executive on the Effective Date. In this connection, Executive shall
also be afforded reasonable use of any Company aircraft.
G. OFFICE: Upon a termination of employment during the
Employment Period for any reason other than death or for Cause, the
Company shall provide 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 Executive
until such time as mutually agreed by the parties to be no longer
necessary.
H. SALARY CONTINUATION PLAN: Upon a termination of
employment during the Employment Period for any reason, the Company
hereby agrees that 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 4(B)(i).
7. NON-EXCLUSIVITY OF RIGHTS: Except as provided in Section 6 of
this Agreement, 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.
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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 6(A)(iv) of this Agreement,
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 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 Executive during his employment
with the Company.
B. If there shall be any dispute between the Company and the
Executive (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 6(A) hereof 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 ADDITIONAL PAYMENTS BY THE COMPANY:
A. Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for 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
additional payments required under this Section 9) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and
penalties, are
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hereinafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment (whether through
withholding at the source or otherwise) by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto), employment taxes and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
B. Subject to the provisions of Section 9(C), all
determinations required to be made under this Section 9, including
whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, 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 receipt of notice from
the Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by the Company to
the Executive within five days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, it shall furnish the Executive with a written
opinion that failure to report the Excise Tax on the Executive's
applicable federal income tax return would not result in the imposition
of a negligence or similar penalty. Any determination by the Accounting
Firm shall be binding upon the Company and the Executive. As a result of
the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the
Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 9(C) and the Executive
thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company
to or for the benefit of the Executive.
C. The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than ten business days
after the Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid. The Executive shall not pay such
claim prior to the expiration of the 30-day period following the date on
which it gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the Executive
shall:
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(i) give the Company any information reasonably
requested by the Company relating to such claim;
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing
from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
reasonably selected by the Company;
(iii) cooperate with the Company in good faith in
order effectively to contest such claim; and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax, employment tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 9(C), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo
any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole
option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however,
that if the Company directs the Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax,
employment tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
D. If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(C), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive
shall (subject to the Company's complying with the requirements of
Section 9(C)) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(C), a determination is made
that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of
its intent to contest
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such denial of refund prior to the expiration of 30 days after such
termination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
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 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. 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 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.
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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 Executive, except that this Agreement shall not affect or
operate to reduce any benefit or compensation inuring to Executive of a
kind elsewhere provided and not expressly provided or modified in this
Agreement. Specifically, but not by way of limitation, this Agreement
supersedes and replaces that certain Employment Agreement between the
parties, dated May 12, 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 Executive's rights hereunder, including, without limitation,
rights under paragraph 5(C). Upon such a consolidation, merger or
transfer of assets in assumption, the term "Company" as used herein shall
mean such other corporation.
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: Don D. Sykora
5300 Mercer
#8 Auburn Place
Houston, Texas 77005
IF TO THE COMPANY: Houston Industries Incorporated
Five Post Oak Park
P.O. Box 4567
Houston, Texas 77210
ATTENTION: Mr. Hugh Rice Kelly
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.
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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 5(C)(i)-(v) of this Agreement, 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.
G. Contemporaneously with execution of this Agreement,
Executive shall be furnished a certified copy of a resolution of the
Board of Directors authorizing the execution and delivery of this
Agreement.
PART B
EXTENDED EMPLOYMENT TERM
The Board has determined that it is in the best interests of
the Company and its shareholders to assure that the Company will have the
continued benefit of the Executive's services for a transition period
following the Executive's attainment of age 65 in the event that the
Executive remains employed by the Company on the date he attains age 65.
Therefore, in order to accomplish this objective and in consideration of
Executive's agreement to remain employed beyond normal retirement age,
the Board has caused the Company to enter into this Part B of this
Agreement. This Part B shall be effective immediately upon the execution
of this Agreement and shall be null and void immediately upon (a) a
Change in Control (as defined in Part A above), whereupon the provisions
of Part A shall govern, or (b) the day that the Executive attains age 65
if he is not employed by the Company on such day.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. EMPLOYMENT PRIOR TO AGE 65: The parties hereby agree that the
Executive's employment with the Company is terminable at will by either
party until the date that the Executive attains age 65.
2. CERTAIN DEFINITIONS: Capitalized terms in this Part B shall
have the meanings herein ascribed to them or, if not defined in this
Part B, the meanings ascribed to them in Part A of this Agreement
("Part A").
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3. PROVISIONS INCORPORATED BY REFERENCE: Sections 7, 8 and 10
through 15 of Part A are hereby incorporated by reference into this
Part B.
4. EMPLOYMENT PERIOD: In the event that the Executive is employed
by the Company on the date that he attains age 65, 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 Part B, for the period commencing on the
date immediately following the date the Executive attains age 65 and
ending on the first day of the month coinciding with or next following
the Executive's attainment of age 67 (the "Extended Employment Term").
5. TERMS OF EMPLOYMENT:
A. POSITION AND DUTIES: During the Extended Employment
Term and until the date of his termination of employment hereunder, the
Executive shall be employed as the President of the Company or in such
other executive capacities, consistent with the Executive's years of
experience with the Company, as the Board may determine in its discretion
from time to time. Unless otherwise requested by the Board, Executive
shall resign and relinquish his office as President of the Company
effective as of his attainment of age 65.
B. COMPENSATION:
(i) ANNUAL BASE SALARY: During the Extended
Employment Term, the Executive shall receive an annual base
salary (the "Annual Base Salary") at a monthly rate set by the
Board in its discretion, which salary shall be in an amount
commensurate with the Executive's position, duties and years of
experience with the Company.
(ii) BENEFIT AND BONUS PLANS: During the Extended
Employment Term, (a) 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 and
(b) 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, 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 (the benefits described in clauses (a) and
(b) collectively referred to herein as the "Other Benefits").
(iii) SUPPLEMENTAL RETIREMENT BENEFIT: Executive
may be entitled to a Supplemental Retirement Benefit under this
Agreement; provided that Executive shall not be entitled to
such a benefit if Executive's employment terminates for Cause
or voluntarily during the Extended Employment Term. For
purposes of determining the amount of any Supplemental
Retirement Benefit
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hereunder, Executive's benefit under the SERP (including both
the Retirement Plan Restoration Benefit and the Supplemental
Retirement Benefit) shall be calculated as provided in the SERP
except that for purposes of such calculation Executive's
"Average Monthly Compensation" (as defined in the Retirement
Plan and referenced in the SERP) shall be deemed to be the
result obtained by dividing the sum of (a) and (b) by 12, where
(a) is Executive's salary received from the Company for the 12
months ended August 31, 1995 and where (b) is the EICP bonus
that would have been paid to the Executive with respect to the
year in which Executive reached age 64 had the performance
objectives thereunder been achieved at a target level for such
year. If the benefit so calculated is greater than the benefit
payable to the Executive under the terms of the SERP, the
Company shall pay to the Executive the amount of the difference
(a "Supplemental Retirement Benefit"). The Supplemental
Retirement Benefit shall be paid at the same time and in the
same manner as the Executive's benefit under the SERP.
(iv) SUPPLEMENTAL BENEFIT UPON DEATH OR
DISABILITY: If the Executive's employment is terminated by
reason of the Executive's death or Disability during the
Extended Employment Term or if the Executive dies following
completion of the Extended Employment Term, any death or
disability benefit that is payable to the Executive or his
Beneficiary under the Company's Executive Benefits Plan and
that is calculated with reference to the Executive's salary at
termination of employment shall be calculated hereunder based
on the Executive's salary in effect immediately prior to
attainment of age 65. If a death or disability benefit is
greater when calculated under this Section B than the benefit
payable pursuant to the Executive Benefits Plan
(the "Underlying Benefit"), the Company shall pay to the
Executive or his Beneficiary the amount of the difference
(a "Supplemental Benefit"). Any Supplemental Benefit shall be
paid at the same time and in the same manner as the Underlying
Benefit.
(v) GROUP LIFE INSURANCE: Upon a termination of
employment (a) during the Extended Employment Term for any
reason other than voluntarily, by death or for Cause or (b) at
the end of the Extended Employment Term, the Executive may
elect to retain the group life insurance coverage provided to
Executive and other employees of the Company under the Group
Life Insurance Plan of the Company, and, if the election is
made, 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
Executive on the date hereof. Such right to maintain group
coverage shall be in an amount not to exceed three times Annual
Base Salary of Executive in effect prior to Executive reaching
age 65 and shall continue for the life of 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.
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6. OBLIGATIONS OF THE COMPANY UPON TERMINATION:
A. VOLUNTARILY, FOR CAUSE OR BY DEATH OR DISABILITY: If the
Executive's employment shall be terminated for Cause during the Extended
Employment Term or if the Executive voluntarily terminates employment
during the Extended Employment Term, including a termination by reason of
death or Disability, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to
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, and the timely provision of Other
Benefits; provided that in the case of a death or Disability, the
Company shall also pay or provide any benefit for which Executive or his
Beneficiary is eligible pursuant to Section 5(B)(iii)-(v) hereof. 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.
B. TERMINATION OTHER THAN VOLUNTARILY, FOR CAUSE OR BY DEATH
OR DISABILITY: If, during the Extended Employment Term, the Company
shall terminate the Executive's employment other than for Cause or
Disability, 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 LICP), within 30 days after the Date of
Termination, the aggregate of (1) the Executive's Annual Base
Salary and any annual bonus remaining owing to the Executive
for the Extended Employment Term as if there had been no
termination determined without any reduction for the present
value of such lump-sum payment and (2) any accrued vacation
pay, in each case to the extent not theretofore paid (the sum
of the amounts described in clauses (1) and (2) above shall be
hereinafter referred to as the "Accrued Obligations");
(ii) for the remainder of the Extended Employment
Term, 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
plans, programs, practices and policies described in
Section 5(B)(ii)(b) of this Part B if the Executive's
employment had not been terminated; and
(iii) 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.
7. 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
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Executive and held under the Deferred Compensation Plan with instructions
from Executive to pay in 15 annual installments shall be paid in said 15
installments, shall remain in said Plan earning interest at the rate
prescribed therein until installment distributions commence, shall
commence as provided under the terms of the Deferred Compensation Plan
but 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 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 JOHN T. CATER
John T. Cater, Chairman of Personnel
Committee of the Board of Directors
EXECUTIVE
DON D. SYKORA
Don D. Sykora
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