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EXHIBIT 10(bb)(4)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of the
5th day of April, 1999, by and between HOUSTON INDUSTRIES INCORPORATED D/B/A
RELIANT ENERGY, INCORPORATED, a Texas corporation having its principal place of
business in Houston, Harris County, Texas (said corporation, together with all
of its subsidiaries and affiliates thereof, hereinafter referred to as the
"Company"), and ROLLIE G. BOHALL, an individual currently residing in Harris
County, Texas ("Executive").
1. Employment of Executive: In consideration of the mutual
covenants and agreements herein contained, the Company and Executive wish to
establish a three year Employment Agreement retaining Executive's services as
described herein, establishing certain incentive, tenure and performance
criteria related to such employment and otherwise fixing Executive's benefits,
base salary and incentive compensation on a basis comparable to that of other
members of senior management of the Company. A principal objective of this
Agreement is to facilitate the full integration of Executive into the senior
management structure of the Company.
2. Term and Extent of Services: During the Term, as defined
below, Executive shall be employed in an executive position with the Company
and shall have all of the rights, powers and duties associated with those
positions. During the Term, Executive agrees to devote his services full-time
to the business of the Company and to perform to the best of his ability and
with reasonable diligence the duties and responsibilities assigned to him by
the appropriate management of the Company. The term hereof shall commence
January 1, 1999 (the "Effective Date") and shall continue thereafter through,
and expire at the close of business on, December 31, 2001 (the "Term").
3. Compensation and Benefits:
(a) Salary: During the Term, Executive's salary shall be not
less than $195,000 per year, and shall be increased during the Term at the same
time and on the same basis as other executives.
(b) Annual Bonus: During the Term, Executive shall receive
the following annual bonus: (i) an amount paid in cash under the Executive
Incentive Compensation Plan (A) prior to 2000, based upon the short-term
incentive target bonus of 40% of Executive's salary under Section 3(a) and (B)
after 1999, based upon a short-term incentive target bonus adjusted on the same
basis as for all similarly situated executives; and (ii) an amount paid under
the Houston Industries Incorporated Long-Term Incentive Compensation Plan, in
the form provided under such plan as determined by the Company, based upon the
long-term incentive target bonus opportunity of 72% of Executive's salary under
Section 3(a); provided, however, that if Executive's employment is terminated
due to death or disability, or by the Company without Cause or by Executive for
Good Reason, and pursuant to Section 5(a), (b) or (d) Executive continues to be
eligible for an annual bonus under this Section 3(b)(ii), then, in lieu of each
annual award that would otherwise have been payable pursuant to the Long-Term
Incentive Compensation Plan, the Company shall make a cash payment in an amount
equal to 72% of Executive's salary under Section 3(a).
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(c) Benefits: During the Term, in addition to participation
in the annual bonus plans described in Section 3(b), Executive shall be
eligible to participate in all of the Company's other general and executive
compensation and benefit plans on a basis comparable to other similarly
situated members of senior management.
(d) Additional Incentive Compensation: The Company recognizes
Executive's area of responsibility as a strategically critical one for its
future growth. Therefore, as additional incentive for Executive to remain in
the employ of the Company during the Term and to use his best efforts to
enhance the value of the Company during the Term, if Executive is in the employ
of the Company on any December 31 occurring during the Term, then Executive
shall receive as additional compensation a single lump-sum cash payment, as
soon as reasonably practicable following any such December 31, equal to
$385,616.85 following December 31, 1999, $360,738.34 following December 31,
2000, and $335,859.84 following December 31, 2001. Any amounts paid to
Executive under this Section 3(d) shall not be included as "Compensation" for
purposes of the Company's Retirement and Savings Plans.
4. Special Lump-Sum Payment: As an inducement for Executive to
enter into this Agreement, the Company shall pay Executive a one-time special
lump-sum cash payment of $500,000 at the end of the next full pay period
following the execution of this Agreement by the Company and Executive. The
payment to Executive under this Section 4 shall not be included as
"Compensation" for purposes of the Company's Retirement and Savings Plans.
5. Termination of Employment: Should Executive's employment
terminate prior to the end of the Term, the following provisions of this
Section 5 shall govern the rights of Executive under this Agreement:
(a) Termination Due to Death: In the event Executive's
employment terminates during the Term as a result of Executive's death, the
Company agrees (i) to pay all compensation that would have been payable to
Executive under Sections 3(a), 3(b) and 3(d) above during the remainder of the
Term (had Executive's employment continued during the remainder of the Term) to
Executive's estate at the time or times such benefits would have otherwise been
payable and (ii) to continue to provide, during the remainder of the Term, all
welfare benefit coverages that were provided under Section 3(c) above to
Executive's legal spouse and children on the date of his death.
(b) Termination Due to Disability: In the event Executive's
employment is terminated during the Term due to his disability within the
meaning of any long-term disability plan maintained by the Company and covering
Executive as of the date of Executive's disability, the Company agrees (i) to
pay Executive all compensation that would have been payable to Executive under
Sections 3(a), 3(b) and 3(d) above during the remainder of the Term (had
Executive's employment continued during the remainder of the Term) at the time
or times such benefits would have otherwise been payable and (ii) to continue
to provide, during the remainder of the Term, all welfare benefit coverages
that were provided under Section 3(c) above to or in respect of Executive on
the date of his disability, in addition to the benefits payable under the
long-term disability plan; provided, however, that any base salary due under
Section 3(a) shall be reduced by the amount of any long-term disability benefit
actually paid to Executive during the Term. It is the intention of this Section
5(b) that the total of disability payments and base salary paid to Executive
during the Term
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shall equal, but not exceed, Executive's base salary payable under Section 3(a)
during the Term, but that payments under Section 3(b) and 3(d) shall not be
reduced by disability payments during the Term.
(c) Termination by the Company for Cause: Any termination of
Executive's employment by the Company for Cause shall be authorized by an
appropriate officer of the Company and effected by written notice to Executive
within 12 months of such officer having actual knowledge of the event or
circumstances providing a basis for such termination. In the event the Company
terminates Executive's employment during the Term for Cause, he shall be
entitled to:
(i) his salary under Section 3(a) through the date of the
termination of his employment for Cause;
(ii) any other full year amounts earned, accrued or owing as
of the date of termination of employment but not yet paid as
compensation by the Company under Section 3(b) or 3(d) above; and
(iii) other benefits for which he is eligible in accordance
with applicable plans or programs of the Company.
"CAUSE" means Executive's (i) Gross Negligence in the
performance of his duties, (ii) intentional and continued failure to perform
his duties, (iii) intentional engagement in conduct which is materially
injurious to the Company or its affiliates (monetarily or otherwise) or (iv)
conviction of a felony or a misdemeanor involving moral turpitude. For this
purpose, an act or failure to act on the part of Executive will be deemed
"intentional" only if done or omitted to be done by Executive not in good faith
and without reasonable belief that his/her action or omission was in the best
interest of the Company, and no act or failure to act on the part of Executive
will be deemed "intentional" if it was due primarily to an error in judgment or
ordinary negligence.
"GROSS NEGLIGENCE" as used herein carries the meaning used in
Texas law as of the Effective Date, which requires a specific intent by
Executive to cause substantial damage to the Company or an act or omission
which, when viewed objectively from the standpoint of Executive at the time in
question, involves an extreme degree of risk, considering the probability and
magnitude of the potential harm to the Company; and of which Executive has
actual, subjective awareness of the risk involved, but nevertheless proceeds
with conscious indifference to the rights or welfare of the Company.
(d) Termination Without Cause or Voluntarily with Good
Reason: In the event that, during the Term, the Company terminates Executive's
employment without Cause (other than due to disability or death) or Executive
voluntarily terminates employment for Good Reason, the Company agrees to pay
Executive all amounts that would have been payable under Sections 3(a), 3(b)
and 3(d), at the time or times as such amounts would otherwise have been
payable if Executive had remained employed by the Company, and to continue to
provide all benefit coverages provided under Section 3(c) to the end of the
Term. The failure of Executive to terminate employment upon the occurrence of
Good Reason as to any one event constituting Good Reason shall not affect his
entitlement to terminate his employment as to any other such event.
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"GOOD REASON" means:
(i) any failure by the Company to comply with any of the
provisions of Section 3(a), 3(b), 3(c) or 3(d) above, other than any
failure not occurring in bad faith that is remedied by the Company
within 30 days after receipt of notice thereof from Executive;
(ii) relocation, without Executive's consent, of Executive's
principal office to any office or location more than 50 miles from the
principal office of Executive on the Effective Date;
(iii) requirement by the Company that Executive spend more
than 50% of Executive's business time, measured over a six-month
period, in a location other than Houston, Texas, unless consented to
by Executive;
(iv) any failure by the Company to comply with and satisfy
Section 11, provided that the successor described in Section 11 has
received at least 10 days' prior written notice from the Company or
Executive of the requirements of Section 11; or
(v) the assignment of Executive to a job or duty with the
Company that is not considered to be an executive level position.
(e) Voluntary Termination: Upon 30 days' prior written notice
to the Company, Executive may voluntarily terminate his employment with the
Company. A voluntary termination pursuant to this Section 5(e) shall not
include termination under Section 5(a), 5(b) or 5(d) above, and shall not be
deemed a breach of this Agreement by Executive. In the event Executive
voluntarily terminates his employment, he shall be entitled to:
(i) his base salary through the date of the termination of
his employment;
(ii) any other amounts earned, accrued or owing as of the
date of termination of employment but not yet paid as compensation by
the Company under Sections 3(b), 3(c) and 3(d) above, including
proration of incentive payments under Sections 3(b) and 3(d) based on
the portion of the calendar year or relevant performance period that
has elapsed prior to termination; and
(iii) other benefits for which he is eligible in accordance
with applicable plans or programs of the Company.
(f) Certain Benefit Calculations: Upon termination of
employment pursuant to Section 5(b) or 5(d) above, for purposes of any
eligibility and benefit determinations under all benefit plans maintained by
the Company and applicable to Executive or his beneficiaries upon such
termination, and for purposes of eligibility for retiree medical coverage, (i)
Executive will be credited with service for the period remaining in the Term
(the "Remaining Term") and
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(ii) Executive's age on the last day of the Term shall be deemed to have been
his age at the date of actual termination of employment.
(g) No Mitigation; No Offset: In the event of any termination
of employment under this Section 5, Executive shall be under no obligation to
seek other employment, and there shall be no offset against amounts due
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that he may obtain.
(h) Nature of Payments: Any amounts due under this Section 5
are in the nature of severance payments, liquidated damages, or both, and shall
compensate Executive, and the dependents, beneficiaries and estate of Executive
for any and all direct damages and consequential damages that they may suffer
as a result of the termination of Executive's employment, and are not in the
nature of a penalty.
(i) Miscellaneous: For purposes of determining the amount of
any payment under Sections 5(a), (b) and (d) based upon the achievement of a
certain performance level under Section 3(b), such amount shall be determined
as if the actual level of performance reached was "Target."
6. Confidentiality, Return of Property, and Covenant Not to
Compete:
(a) Confidentiality: Executive agrees that in return for
consideration provided in Section 6(c) he will not disclose or make available
to any other person or entity, or use for his own personal gain, any
Confidential Information, except for such disclosures as required in the
performance of his duties hereunder. For purposes of this Agreement,
"Confidential Information" shall mean any and all information, data and
knowledge that has been created, discovered, developed or otherwise become
known to the Company or any of its affiliates or ventures or in which property
rights have been assigned or otherwise conveyed to the Company or any of its
affiliates or ventures, which information, data or knowledge has commercial
value in the business in which the Company is engaged, except such information,
data or knowledge as is or becomes known to the public without violation of the
terms of this Agreement. By way of illustration, but not limitation,
Confidential Information includes trade secrets, processes, formulas, know-how,
improvements, discoveries, developments, designs, inventions, techniques,
marketing plans, manuals, records of research, reports, memoranda, computer
software, strategies, forecasts, new products, unpublished financial statements
or parts thereof, budgets or other financial information, projections,
licenses, prices, costs, and employee, customer and supplier lists or parts
thereof.
(b) Return of Property: Executive agrees that at the time of
leaving the Company's employ, he will deliver to the Company (and will not keep
in his possession, recreate or deliver to anyone else) all Confidential
Information, as well as all other devices, records, data, notes, reports,
proposals, lists, correspondence, specifications, drawings, blueprints,
sketches, materials, equipment, customer or client lists or information, or any
other documents or property (including all reproductions of the aforementioned
items) belonging to the Company or any of its affiliates or ventures,
regardless of whether such items were prepared by Executive.
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(c) Covenant Not to Compete: Executive acknowledges that the
Company's business is by its nature a worldwide business (the "Business Area"),
and that the Company's business, research and products do not require that it
maintain a physical location close to its customers. Executive further
acknowledges that the skills, processes and information developed at the
Company could be utilized directly and to the Company's detriment (or the
detriment of any of the Company's affiliates or ventures) with any other
business in the Business Area involved in the utilities business (a
"Competitive Product"). Executive also acknowledges that the nature of his
position at the Company will bring him into close contact with much of the
Company's Confidential Information. Accordingly, for separate and additional
consideration of $100,000 payable to Executive by the Company in a lump-sum
cash payment at the end of the next full pay period following the execution and
delivery to the Company by Executive of this Agreement, Executive agrees to be
bound by the following restrictive covenants:
(i) During the Term, and for a period of 12 months after the
termination of the Term for any reason other than the death or
disability of Executive, Executive shall not, acting alone or in
conjunction with others, directly or indirectly, invest or engage,
directly or indirectly, in any business in the Business Area involved
in researching, developing, or marketing a Competitive Product or
accept employment with or render services to such a business as a
director, officer, agent, employee, independent contractor or
consultant, or take any action inconsistent with the fiduciary
relationship of an employee to his employer; provided, however, that
the beneficial ownership by Executive of up to 5% of the voting stock
of any corporation subject to the periodic reporting requirements of
the Securities and Securities Exchange Act of 1934 shall not violate
this Section 6.
(ii) Executive further agrees that during the Term, and for a
period of 24 months after the termination of the Term for any reason
other than the death or disability of Executive, he shall not at any
time, directly or indirectly, (1) induce, entice or solicit (or
attempt to induce, entice or solicit) any employee of the Company or
any of its affiliates or ventures to leave the employment of the
Company or any of its affiliates or ventures or (2) solicit or attempt
to solicit the business of any customer or acquisition prospect of the
Company or any of its affiliates or ventures with whom Executive had
any actual contact while employed at the Company.
(iii) Executive acknowledges that these restrictive covenants
under Section 6, for which he received consideration from the Company
as provided in this Section 6, are ancillary to otherwise enforceable
provisions of this Agreement and that these restrictive covenants
contain limitations as to time, geographical area, and scope of
activity to be restrained that are reasonable and do not impose a
greater restraint than is necessary to protect the good will or other
business interests of the Company, such as the Company's need to
protect its confidential and proprietary information. Executive
acknowledges that in the event of a breach by Executive of these
restrictive covenants, the covenants may be enforced by temporary
restraining order, preliminary or temporary injunction, and permanent
injunction. In that connection, Executive acknowledges that in the
event of a breach, the Company will suffer irreparable injury for
which there is no adequate legal remedy, in part because
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damages caused by the breach may be difficult to prove with any
reasonable degree of certainty. Notwithstanding the above provisions
of this Section 6 to the contrary, in the event Executive's employment
is terminated during the Term for Cause (as defined herein), the 12-
and 24-month periods referenced in paragraphs (c)(i) and (ii) above
shall commence as of the date of the Executive's termination of
employment with the Company.
7. 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 the Company: Houston Industries Incorporated
d/b/a Reliant Energy, Incorporated
P.O. Box 4567
Houston, Texas 77210
ATTENTION: Chairman of the Board
If to Executive: Rollie G. Bohall
3226 Canadian
Katy, Texas 77493
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.
8. Applicable Law: The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of Texas, including the Texas statute of
limitations, but without giving effect to the principles of conflict of laws of
such State.
9. 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.
10. Withholding of Taxes: The 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.
11. No Assignment; Successors: Executive'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 Section 11 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
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enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributes, devises and legatees.
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 or
substantially all of its assets unless either (a) 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 (b) 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 Executive hereunder.
12. Payment Obligations Absolute: Subject to the terms of this
Agreement, the Company's obligation to pay (or cause one of its affiliates to
pay) Executive the amounts and to make the arrangements provided herein shall
be absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counter-claim, recoupment, defense
or other right which the Company (including its affiliates) may have against
him or anyone else. All amounts payable by the Company (including its
affiliates hereunder) shall be paid without notice or demand. Executive shall
not be obligated to seek other employment in mitigation of the amounts payable
or arrangements made under any provision of this Agreement, and the obtaining
of any other employment shall in no event effect any reduction of the Company's
obligations to make (or cause to be made) the payments and arrangements
required to be made under this Agreement.
13. Effect of Prior Agreements: This Agreement contains the entire
understanding between the parties hereto and supersedes any prior employment
agreement or severance agreement between the Company or any predecessor of the
Company and the Executive, except that this Agreement shall not effect or
operate to reduce any benefit or compensation enuring to the 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 Severance Agreement between the parties,
dated July 16, 1996.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered the _____ day of _______________, 1999, but effective
as of the Effective Date.
HOUSTON INDUSTRIES INCORPORATED
d/b/a RELIANT ENERGY, INCORPORATED
By /s/ LEE W.HOGAN
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Lee W. Hogan,
Executive Vice President
EXECUTIVE
/s/ ROLLIE G. BOHALL
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Rollie G. Bohall
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