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Exhibit 2(c)
AGREEMENT
WHEREAS, NorAm Energy Corp. ("NorAm"), Houston Industries
Incorporated ("HI"), Houston Lighting & Power Company and HI Merger Inc.
(together, the "Parties") have entered into that certain Agreement and Plan of
Merger dated as of August 11, 1996 (the "Merger Agreement"); and
WHEREAS, NorAm and HI have subsequently discussed continuing
the participation of NorAm employees in certain annual variable pay plans
through December 31, 1997, rather than making pro-rated payments to
participants under such plans as provided in Section 5.10(e) of the Merger
Agreement.
NOW, THEREFORE, the Parties hereby agree as follows:
1. Section 5.10(e) of the Merger Agreement is hereby amended to read as
follows:
"For the calendar year ending December 31, 1996, NorAm will pay to
each employee of NorAm and the NorAm Affiliates who is a participant
in a NorAm annual incentive compensation plan or a variable pay
program the amount of annual incentive compensation or variable pay
awarded to such employee for 1996 based on the level of performance
goals actually attained by NorAm. The amount of such incentive
compensation or variable pay will be determined in accordance with
normal practice and will be paid on or before March 15, 1997.
For the calendar year ending December 31, 1997, annual incentive
compensation and annual variable pay awarded to employees of NorAm and
the NorAm Affiliates under any plan or program including, without
limitation, Section 9 of the 1994 Incentive Equity Plan (also known as
the Annual Incentive Award Plan), the All Employee Incentive Plan
(also known as the All Employee Incentive Opportunity Plan) and the
Gas Marketing Incentive Plan (the "Plans") will be paid to such
employees in accordance with the terms and conditions on which the
awards were originally based, subject to the following modifications:
(1) In no event shall any individual who is an employee
of NorAm or any affiliate of NorAm at the close of business on
August 5, 1997 be paid less than an amount equal to 218/365
multiplied by the amount of the award that would have been
payable to the employee had the applicable performance goals
been achieved at the target level of performance. Any
individual whose employment with NorAm and its affiliates
terminates on or after the Effective Time and prior to
December 31, 1997, shall be paid the award contemplated hereby
as soon as practicable following termination of employment,
but in no event later than 10 days following termination of
employment.
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(2) Performance with respect to any goals based on (i)
earnings per share, or (ii) cash flow (where applicable),
shall be measured utilizing the following assumptions:
(A) The number of shares and the level of
convertible securities outstanding at any applicable
time shall be deemed to be the same as the number of
shares and level of convertible securities
outstanding immediately prior to the Effective Time.
(B) Interest expense and distributions on
convertible securities will be calculated from August
6, 1997 through December 31, 1997 as if the balances
outstanding on August 6, 1997 remained outstanding
through December 31, 1997.
(C) Corporate overhead expenses will be
determined from August 6, 1997 through December 31,
1997 in accordance with NorAm's 1997 budget.
(D) No costs directly related to the Merger, and
no costs related to amortization of new goodwill will
be taken into account.
(3) Performance with respect to any goals based on (i)
return on capital employed or (ii) cash flow shall be measured
assuming continuation of dividend payments with the frequency
that such payments were made from August 1, 1996 through
August 1, 1997, at the level most recently paid prior to
August 6, 1997.
(4) Any other goals that cannot be accurately measured
following the Merger without utilization of assumptions
similar to those set forth above shall be measured utilizing
such assumptions as the appropriate officers of HL&P deem fair
and equitable in their sole discretion."
2. NorAm hereby represents that Exhibit A hereto is a true and
correct representation of all of the performance goals originally
applicable under the Plans for 1997 annual awards.
3. This Agreement may be executed in two or more counterparts,
all of which shall be considered one and the same agreement, it being
understood that all parties need not sign the same counterpart.
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IN WITNESS WHEREOF, each Party has caused this Agreement to be signed
by its duly authorized officer this 5th day of August, 1997.
NORAM ENERGY CORP.
By: /s/ T. Milton Honea
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Name: T. Milton Honea
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Title: Chairman of the Board, President
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and Chief Executive Officer
HOUSTON INDUSTRIES INCORPORATED
By: /s/ Hugh Rice Kelly
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Name: Hugh Rice Kelly
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Title: Executive Vice President, General
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Counsel and Corporate Secretary
HOUSTON LIGHTING & POWER COMPANY
By: /s/ Hugh Rice Kelly
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Name: Hugh Rice Kelly
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Title: Senior Vice President, General
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Counsel and Corporate Secretary
HI MERGER, INC.
By: /s/ Stephen W. Naeve
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Name: Stephen W. Naeve
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Title: President
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