EXHIBIT 10(w)
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is made and effective
as of the _____ day of December, 1994, by and between HOUSTON INDUSTRIES
INCORPORATED, a Texas corporation having its principal place of business in
Houston, Harris County, Texas (the "Company"), and _____________, an individual
currently residing in Houston, Texas ("Employee"). All terms defined in
paragraph 2 shall throughout this Agreement have the meanings given therein.
1. PAYMENT OF SEVERANCE AMOUNT: If Employee's employment by the Company
or any subsidiary thereof or successor thereto shall be subject to an
Involuntary Termination within the applicable Covered Period, then the Company
shall pay Employee an amount equal to the applicable Severance Amount, payable
within 15 days after the date of Employee's termination of employment
("Termination Date").
2. DEFINITIONS:
A. An "AFFILIATE" shall mean any company controlled by,
controlling or under common control with the Company within the meaning of
Section 414 of the Internal Revenue Code of 1986, as amended (the "Code").
B. "AVERAGE ANNUAL COMPENSATION" shall mean Employee's average
annual compensation which is payable by the Company or any Affiliate and is
includable in the gross income of Employee for the most recent five taxable
years of Employee ending before the date on which the Change of Control occurs,
or such portion of such period during which Employee performed personal services
for the Company or its Affiliates. Average Annual Compensation shall be
determined by reference to Section 280G(d) of the Code.
C. "CHANGE IN EMPLOYMENT" shall mean any one or more of the
following:
(i) a significant change in the nature or scope of Employee's
authority or duties from those applicable to him immediately prior to
the date on which a Change of Control occurs;
(ii) a reduction in Employee's base annual compensation from
that provided to him immediately prior to the date on which a Change of
Control occurs;
(iii) Employee's opportunity to participate in bonus, stock
option and other compensation plans which provide opportunities to
receive compensation following the Change of Control are less than the
greater of:
(x) the opportunities provided by the Company (including
its subsidiaries) for executives with comparable duties; or
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(y) the opportunities under any such plans under which he
was participating immediately prior to the date on which a
Change of Control occurs;
(iv) employee benefits (including but not limited to medical,
dental, life insurance and long-term disability) and perquisites
applicable to Employee following the Change of Control are less than
the greater of:
(x) the employee benefits and perquisites provided by the
Company (including its subsidiaries) to executives with
comparable duties; or
(y) the employee benefits and perquisites to which he was
entitled immediately prior to the date on which a Change of
Control occurs;
(v) a change in the location of Employee's principal place of
employment by the Company (including its subsidiaries) by more than 200
miles from the location where he was principally employed immediately
prior to the date on which a Change of Control occurs; or
(vi) a reasonable determination by the Board of Directors of
the Company that, as a result of a Change of Control and a change in
circumstances thereafter significantly affecting Employee's position,
he is unable to exercise the authorities, powers, functions or duties
attached to his position immediately prior to the date on which a
Change of Control occurs.
D. A "CHANGE OF CONTROL" shall be deemed to have occurred if:
(i) 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;
(ii) 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;
(iii) 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;
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(iv) 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
(v) 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 (i)
- - (v) 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
(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.
E. "COVERED PERIOD" for Employee shall mean a period of time
following the occurrence of a Change of Control equal to the lesser of (i)
Employee's period of employment with the Company, any subsidiary or any
predecessor of either thereof prior to that Change of Control, or (ii) three
years.
F. "INVOLUNTARY TERMINATION" shall mean any termination which:
(i) does not result from a resignation by Employee (other than
a resignation pursuant to clause (ii) of this subparagraph (F)); or
(ii) results from a resignation following any Change in
Employment;
provided, however, the term "Involuntary Termination" shall not include:
(x) a Termination for Cause; or
(y) any termination as a result of death, disability or
early or normal retirement pursuant to a retirement plan to
which Employee was subject prior to any Change of Control.
G. "SEVERANCE AMOUNT" is an amount equal to 2.99 times
Employee's Average Annual Compensation.
H. "TERMINATION FOR CAUSE" shall mean only a termination as a
result of fraud, material misappropriation of or intentional material damage to
the property of the Company (including its subsidiaries), or commission of a
felony by Employee related to his employment with the Company.
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I. "VOTING SECURITIES" shall mean any securities which
ordinarily possess the power to vote in the election of directors without the
happening of any pre-condition or contingency.
3. PARACHUTE PAYMENT LIMITATION: Notwithstanding any provision of this
Agreement to the contrary, the aggregate present value of all parachute payments
payable to or for the benefit of Employee, whether payable pursuant to this
Agreement or otherwise, shall be limited to three times Employee's base amount
less $1 and, to the extent necessary, benefits under this Agreement shall be
reduced by the Company in order that this limitation not be exceeded. For
purposes of this Section 3, the terms "parachute payment," "base amount" and
"present value" shall have the meanings assigned thereto under Section 280G of
the Code. It is the intention of this Section 3 to avoid excise taxes on
Employee under Section 4999 of the Code or the disallowance of a deduction to
the Company pursuant to Section 280G of the Code.
4. MEDICAL AND DENTAL BENEFITS: If Employee's employment by the Company
or any subsidiary thereof or successor thereto shall be subject to an
Involuntary Termination within the Covered Period, then to the extent that
Employee or any of Employee's dependents may be covered under the terms of any
medical or dental plans of the Company (or any subsidiary) for active employees
immediately prior to such termination, the Company will provide Employee and
those dependents with equivalent coverages for a period not to exceed 30 months
from such termination; provided, however, that if Employee retires and is
eligible for retiree medical coverage for life under the Company group medical
plan, he will instead receive such retiree medical coverage. Such coverages may
be procured directly by the Company (or any subsidiary thereof, if appropriate)
apart from, and outside of the terms of the plans themselves; provided that
Employee and Employee's dependents comply with all of the conditions of the
aforementioned plans. In consideration for these benefits, Employee must make
contributions equal to those required from time to time from active or retired
employees (as applicable) for equivalent coverages under the aforementioned
plans.
5. NOTICES: For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Company: Houston Industries Incorporated
5 Post Oak Park
P.O. Box 4567
Houston, Texas 77210
ATTENTION: Chairman of the Board
If to the Employee:
__________________________________
__________________________________
or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
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6. APPLICABLE LAW: This Agreement is entered into under, and shall be
governed for all purposes by, the laws of the State of Texas.
7. SEVERABILITY: If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the invalidity
or unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement and all other provisions
shall remain in full force and effect.
8. WITHHOLDING OF TAXES: Company may withhold from any benefits payable
under this Agreement all federal, state, city or other taxes as may be required
pursuant to any law or governmental regulation or ruling.
9. NO EMPLOYMENT AGREEMENT: Nothing in this Agreement shall give
Employee any rights to (or impose any obligations for) continued employment by
the Company or any subsidiary thereof or successor thereto, nor shall it give
the Company any rights (or impose any obligations) with respect to continued
performance of duties by Employee for the Company or any subsidiary thereof or
successor thereto.
10. NO ASSIGNMENT; SUCCESSORS:
A. Employee's right to receive payments or benefits hereunder
shall not be assignable or transferable, whether by pledge, creation or a
security interest or otherwise, whether voluntary, involuntary, by operation of
law or otherwise, other than a transfer by will or by the laws of descent or
distribution, and in the event of any attempted assignment or transfer contrary
to this paragraph 10 the Company shall have no liability to pay any amount so
attempted to be assigned or transferred. This Agreement shall inure to the
benefit of and be enforceable by Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
B. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or other
disposition of all of substantially all of its assets unless either (i) the
person or entity acquiring such assets or a substantial portion thereof shall
expressly assume by an instrument in writing all duties and obligations of the
Company hereunder or (ii) the Company shall provide, through the establishment
of a separate reserve therefor, for the payment in full of all amounts which are
or may reasonably be expected to become payable to Employee hereunder.
11. TERM: This Agreement shall be effective as of the date first above
written and shall remain in effect for a period of two years thereafter;
provided, however, that in the event of a Change of Control during the term
hereof, this Agreement shall remain in effect for the Covered Period, as defined
in paragraph 2 hereof.
12. EXTENSION: The Board of Directors or Executive Committee of the
Company may, at any time prior to the expiration hereof, extend the term hereof
for a period of up to two years from
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the date on which such extension is approved, without any further action on the
part of Employee or the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered as of the day and year first above written.
HOUSTON INDUSTRIES INCORPORATED
By________________________________
EMPLOYEE
__________________________________
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