Executive Employment Agreement - Enron International Inc. and Rodney L. Gray
EXECUTIVE EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), including the
attached Exhibit "A" and Exhibit "B", are entered into
between Enron International Inc., ("Employer"), a Delaware
corporation and subsidiary of Enron Corp. ("Enron"), having
offices at 1400 Smith Street, Houston, Texas 77573, and
Rodney L. Gray, an individual currently residing at 4146
Marquette, Houston, Texas 77005 ("Employee"), to be
effective as of July 1, 1993 (the "Effective Date").
WITNESSETH:
WHEREAS, Employer is desirous of employing Employee
pursuant to the terms and conditions and for the
consideration set forth in this Agreement, and Employee is
desirous of entering the employ of Employer pursuant to such
terms and conditions and for such consideration.
NOW, THEREFORE, for and in consideration of the mutual
promises, covenants, and obligations contained herein,
Employer and Employee agree as follows:
ARTICLE 1: EMPLOYMENT AND DUTIES:
1.1. Employer agrees to employ Employee, and Employee
agrees to be employed by Employer, beginning as of the
Effective Date and continuing until the date set forth on
Exhibit "A" (the "Term"), subject to the terms and
conditions of this Agreement.
1.2. Employee initially shall be employed in the
position set forth on Exhibit "A". Employer may
subsequently assign Employee to a different position or
modify Employee's duties and responsibilities. Moreover,
Employer may assign this Agreement and Employee's employment
to Enron or any affiliates of Enron. Employee agrees to
serve in the assigned position and to perform diligently and
to the best of Employee's abilities the duties and services
appertaining to such position as determined by Employer, as
well as such additional or different duties and services
appropriate to such position which Employee from time to
time may be reasonably directed to perform by Employer.
Employee shall at all times comply with and be subject to
such policies and procedures as Employer may establish from
time to time.
1.3. Employee shall, during the period of Employee's
employment by Employer, devote Employee's full business
time, energy, and best efforts to the business and affairs
of Employer. Employee may not engage, directly or
indirectly, in any other business, investment, or activity
that interferes with Employee's performance of Employee's
duties hereunder, is contrary to the interests of Employer
or Enron, or requires any significant portion of Employee's
business time.
1.4. Employee acknowledges and agrees that Employee
owes a fiduciary duty of loyalty, fidelity and allegiance to
act at all times in the best interests of the Employer and
to do no act which would injure Employer's business, its
interests, or its reputation. It is agreed that any direct
or indirect interest in, connection with, or benefit from
any outside activities, particularly commercial activities,
which interest might in any way adversely affect Employer,
Enron, or any of their affiliates, involves a possible
conflict of interest. In keeping with Employee's fiduciary
duties to Employer, Employee agrees that Employee shall not
knowingly become involved in a conflict of interest with
Employer, Enron, or their affiliates, or upon discovery
thereof, allow such a conflict to continue. Moreover,
Employee agrees that Employee shall disclose to Employer's
General Counsel any facts which might involve such a
conflict of interest that has not been approved by
Employer's President.
1.5. Employer and Employee recognize that it is impos-
sible to provide an exhaustive list of actions or interests
which constitute a "conflict of interest." Moreover,
Employer and Employee recognize there are many borderline
situations. In some instances, full disclosure of facts by
the Employee to Employer's General Counsel may be all that
is necessary to enable Employer, Enron, or their affiliates
to protect its interests. In others, if no improper
motivation appears to exist and the interests of Employer,
Enron, or their affiliates have not suffered, prompt
elimination of the outside interest will suffice. In still
others, it may be necessary for Employer to terminate the
employment relationship. Employer and Employee agree that
Employer's determination as to whether a conflict of
interest exists shall be conclusive. Employer reserves the
right to take such action as, in its judgment, will end the
conflict.
ARTICLE 2: COMPENSATION AND BENEFITS:
2.1. Employee's base salary during the Term shall be
not less than the amount set forth under the heading "Base
Salary" on Exhibit "A", which shall be paid in semimonthly
installments in accordance with Employer's standard payroll
practice.
2.2. While employed by Employer (both during the Term
and thereafter), Employee shall be allowed to participate,
on the same basis generally as other employees of Employer,
in all general employee benefit plans and programs,
including improvements or modifications of the same, which
on the effective date or thereafter are made available by
Employer to all or substantially all of Employer's
employees. Such benefits, plans, and programs may include,
without limitation, medical, health, and dental care, life
insurance, disability protection, and pension plans. Except
that Employee shall not be entitled to any annual bonus,
unless approved by the Compensation Committee of the Board
of Directors of Enron Corp. in its sole discretion. Nothing
in this Agreement is to be construed or interpreted to
provide greater rights, participation, coverage, or benefits
under such benefit plans or programs than provided to
similarly situated employees pursuant to the terms and
conditions of such benefit plans and programs.
2.3. Employer shall not by reason of this Article 2 be
obligated to institute, maintain, or refrain from changing,
amending, or discontinuing, any such incentive compensation
or employee benefit program or plan, so long as such actions
are similarly applicable to covered employees generally.
Moreover, unless specifically provided for in a written plan
document adopted by the Board of Directors of either
Employer or Enron, none of the benefits or arrangements
described in this Article 2 shall be secured or funded in
any way, and each shall instead constitute an unfunded and
unsecured promise to pay money in the future exclusively
from the general assets of Employer.
2.4. Employer may withhold from any compensation,
benefits, or amounts payable under this Agreement all
federal, state, city, or other taxes as may be required
pursuant to any law or governmental regulation or ruling.
2.5. Employee has received a grant of an Option (which
does not constitute an Incentive Stock Option), under and
pursuant to the terms and provisions of the Enron Corp. 1991
Stock Plan, as made by such Plan's Committee at its meeting
on June 21, 1993, to purchase Sixty-Four Thousand (64,000)
shares of common stock of Company. Such grant was approved
and made in the form of a Non-Qualified Stock Option
Agreement which is attached hereto as Exhibit "B".
2.6. On the condition that Employee is in the position
set forth on Exhibit "A" hereto on the last day of the
calendar year for which a grant, as provided in the granting
schedule in paragraph A below, is scheduled to be made the
following February, Employee shall be entitled to receive
under and pursuant to the terms and provisions of the 1991
Enron Corp. Stock Plan, a grant of shares of Restricted
Stock in amounts designated in paragraph A below if, and
only if, Enron International Inc. meets the earnings target
set for it by the Board of Directors of Enron Corp., in its
sole discretion, for such year (the "Earnings Target"). The
Restricted Stock will be granted as follows:
A. Granting Schedule. Restricted Stock will be
granted pursuant to written grant agreements on
the condition that Enron International Inc. meets
the Earnings Target for the previous calendar year
according to the following granting schedule:
February, 1994 - 4,700 shares, if 1993 Earnings Target met.
February, 1995 - 9,400 shares, if 1994 Earnings Target met.
February, 1996 - 9,400 shares, if 1995 Earnings Target met.
December 30, 1996 - 9,400 shares, if 1996 Earnings Target met.
The number of shares of Restricted Stock granted
according to this granting schedule shall be
adjusted for splits or consolidations occurring
after July 1, 1993.
B. Carry Back of Earnings Target Overages. In the
event that a grant is not made because Enron
International Inc. failed to meet the previous
year's Earnings Target, the grant will be made in
a following February if the Earnings Target for
that year is exceeded by at least the amount of
the underage from the previous year. Earnings
must be applied to the current year's Earnings
Target first, before being carried back to meet a
previous year's Earnings Target. For example, if
the Earnings Target for 1994 is $100 million and
actual earnings for 1994 are $80 million (under by
$20 million), no grant will be made in February,
1995. However, if the Earnings Target for 1995 is
$120 million and actual earnings for 1995 are $140
million (Earnings Target for 1995 exceeded by $20
million) then a grant for 18,800 shares (9,400 for
1995 earnings and 9,400 carried forward from 1994)
will be made in February, 1996. Multiple future
years' actual earnings in excess of Earnings
Targets may be used to make up for a previous
year's missed Earnings Target. However, actual
earnings in excess of an Earnings Target cannot be
banked for potential future missed Earnings
Targets.
C. Vesting. All shares granted pursuant to the
granting schedule will vest on December 31, 1996.
D. Value of Stock at Vesting. If on the vesting
date of December 31, 1996, the value of the shares
of Restricted Stock, including accrued dividends,
granted to Employee under this Section 2.6 is less
than $3,000,000, then the difference between the
actual value of the shares of Restricted Stock
including accrued dividends and Three Million
Dollars ($3,000,000.00) will be paid by Company
(the "Payment"), provided, however, if for any
reason Employee has not been granted a total
32,900 shares, as adjusted for stock splits or
consolidations, of Restricted Stock pursuant to
the granting schedule, then the amount of the
Payment will be decreased to reflect the
percentage (rounded to 3 decimal points) of 32,900
shares, as adjusted for stock splits or
consolidations, which the actual number of shares
of Restricted Stock granted to Employee
represents. For example, if Employee is granted a
total of 14,100 shares of Restricted Stock, and on
the vesting date said shares and accrued dividends
are worth One Million Dollars ($1,000,000) then
Employee would receive a Payment in the amount of
Two Hundred Eighty Seven Thousand and No/100
Dollars ($287,000.00). [Example Calculation:
($3,000,000.00 x 14,100/32,900) - $1,000,000.00 =
$287,000.00]. Payment will be made either in cash
or Enron common stock ("Enron Stock"; such stock
will be issued pursuant to the terms described in
Section 2.7), at Company's option.
2.7. Stock issued as the Payment referenced at Section
2.6D above, if any, will be issued according to the
following terms and conditions:
A. Employee Representations. With respect to
Employee's agreement to accept and receive shares of
Enron Stock as provided for in Section 2.6D above,
Employee represents and warrants that:
(i) Employee is an "accredited investor" within
the meaning of Rule 501 of the General Rules and
Regulations under the Securities Act of 1933, as
amended;
(ii) Employee has sufficient knowledge and
experience in financial and investment matters so
that Employee is able to evaluate the risks and
merits of Employee's investment in Enron Stock and
is able financially to bear the economic risks
thereof;
(iii) Employee will acquire the shares of Enron
Stock for Employee's own account and not with a
view to or for sale in connection with any
distribution thereof in violation of any
securities laws, and Employee has no present or
future intention of selling or distributing any of
such securities in violation of any securities
laws; and
(iv) Employee is familiar with the business and
financial condition, properties and operations and
prospects of Enron, has received copies of Enron's
1992 Annual Report to Stockholders, Annual Report
on Form 10-K for the year ended December 31, 1992
and Proxy Statement with respect to the 1993
Annual Meeting of Stockholders, and has read
carefully and understands the information
contained in such documents, and has been afforded
the opportunity to ask questions and receive
answers from Enron's officers and directors
concerning the business and financial condition,
properties, operations and prospects of Enron, and
has asked such questions as Employee desires to
ask and all such questions have been answered to
Employee's full satisfaction.
B. Enron Representations. Enron hereby represents to
Employee that:
(i) the shares of Enron Stock which may be issued
to Employee hereunder, if and when issued, will be
validly authorized and duly issued shares of Enron
and will be fully paid and nonassessable and upon
issuance will be free and clear of any pledge,
lien, charge, encumbrance or other adverse claim;
and
(ii) Enron has the requisite power and authority
to execute this Agreement and to enter into the
transactions contemplated hereby.
C. Stock Certificate Legend. Enron may, at its
option, cause to conspicuously appear on all stock
certificates representing Enron Stock which are issued
and delivered to Employee pursuant to the provisions of
this Section 2.7, the legend set forth below, the
provisions of which are agreed to by Employee:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
(I) SUCH OFFERING AND SALE OR OTHER TRANSFER HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT, OR (II) THE HOLDER
HEREOF PROVIDES THE CORPORATION WITH (A) A WRITTEN
OPINION OF LEGAL COUNSEL, WHICH COUNSEL AND OPINION (IN
FORM AND SUBSTANCE) SHALL BE REASONABLY SATISFACTORY TO
THE CORPORATION, TO THE EFFECT THAT THE PROPOSED
TRANSFER OF SUCH SECURITY MAY BE EFFECTED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT, OR (B) SUCH
OTHER EVIDENCE AS MAY BE REASONABLY SATISFACTORY TO THE
CORPORATION THAT THE PROPOSED TRANSFER OF THIS SECURITY
MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT.
D. Employee's Put Rights. Employee shall have the
following put rights ("Put Rights") for the shares of
Enron Stock (the "Shares") which are issued to Employee
under this Agreement unless otherwise provided in the
following paragraph E, or unless there is an effective
registration statement covering such Shares, or unless
Employee is entitled to sell such Shares pursuant to
Rule 144 under the Securities Act of 1933, as amended.
At any time after June 30, 1997, and from time to time
when Employee has Put Rights, at Employee's sole
option, Enron agrees, upon receipt of a written request
of Employee, together with duly endorsed stock
certificates representing the Shares to be repurchased
by Enron, for the account of and charge to Employer, to
repurchase any or all of the Shares (provided that
Employee must tender and make such a request for at
least the lesser of (i) 3,000 of the Shares or (ii) all
of the Shares then held by Employee) at a purchase
price per share equal to the closing sales price on the
New York Stock Exchange for Enron Stock on the date
such written request and such stock certificates are
received by Enron. Enron shall pay the purchase price
for such Shares to Employee within five (5) business
days after the date Enron receives the written request
and the duly endorsed stock certificates representing
the Shares to be repurchased by Enron.
E. Registration of Enron Stock. Enron may, at its
option, file and cause to become effective with the
Securities and Exchange Commission one or more
registration statements under the Securities Act of
1933 relating to the offering and sale of the Shares by
Employee from time to time on the New York Stock
Exchange at prevailing market prices. In the event
Enron elects to effect such registration, Employee,
with respect to Employee's Shares covered by the
registration statement or statements, shall have no Put
Rights following the effectiveness of such registration
statement or statements if (a) Enron has filed with the
New York Stock Exchange the number of copies of the
final prospectus or final prospectuses included therein
required by the New York Stock Exchange rules to permit
such offering and sale to occur and (b) such prospectus
or prospectuses contain such information as shall
permit such offering and sale to occur. Employee shall
have no Put Rights with respect to Shares that Employee
elects not to be offered or sold pursuant to such
registration statement. In the event the information
in any such registration statement or prospectus is
required to be revised or updated in order to permit
such offering and sale to occur, Employee shall have no
Put Rights during the thirty day period following the
first day on which such registration statement or
prospectus is required to be revised or updated in
order to permit such offering and sale to occur.
Employee agrees that, at the time of any sale pursuant
to any such registration statement, Employee will
obtain from Enron confirmation that the prospectus or
prospectuses on file with the New York Stock Exchange
contain such information as shall permit such offering
and sale to occur. Enron will bear all expenses
incurred by it in connection with the filing of the
registration statements pursuant to this paragraph E
(other than underwriting discounts and commissions and
brokerage commissions and fees and expenses, if any,
payable with respect to Shares sold by Employee and
fees and expenses of counsel for Employee).
ARTICLE 3: TERMINATION PRIOR TO
EXPIRATION OF TERM AND EFFECTS
OF SUCH TERMINATION:
3.1. Notwithstanding any other provisions of this
Agreement, Employer shall have the right to terminate
Employee's employment under this Agreement at any time prior
to the expiration of the Term for any of the following
reasons:
(i) For "cause" upon the good faith
determination by the Employer's
management committee (or, if there is no
management committee, the highest
applicable level of management) of
Employer that "cause" exists for the
termination of the employment
relationship. As used in this Section
3.1(i), the term "cause" shall mean
[a] Employee's gross negligence or
willful misconduct in the performance of
the duties and services required of
Employee pursuant to this Agreement; or
[b] Employee's final conviction of a
felony or of a misdemeanor involving
moral turpitude; [c] Employee's
involvement in a conflict of interest as
referenced in Sections 1.5-1.6 for which
Employer makes a determination to
terminate the employment of Employee; or
[d] Employee's material breach of any
material provision of this Agreement
which remains uncorrected for thirty
(30) days following written notice to
Employee by Employer of such breach. It
is expressly acknowledged and agreed
that the decision as to whether "cause"
exists for termination of the employment
relationship by Employer is delegated to
the management committee (or, if there
is no management committee, the highest
applicable level of management) of
Employer for determination. If Employee
disagrees with the decision reached by
Employer, the dispute will be limited to
whether the management committee (or, if
there is no management committee, the
highest applicable level of management)
of Employer reached its decision in good
faith;
(ii) for any other reason whatsoever, with or
without cause, in the sole discretion of
the management committee (or, if there
is no management committee, the highest
applicable level of management) of
Employer;
(iii) upon Employee's death; or
(iv) upon Employee's becoming incapacitated
by accident, sickness, or other circum-
stance which renders him or her mentally
or physically incapable of performing
the duties and services required of
Employee.
The termination of Employee's employment by Employer prior
to the expiration of the Term shall constitute a
"Termination for Cause" if made pursuant to Section 3.1(i);
the effect of such termination is specified in Section 3.4.
The termination of Employee's employment by Employer prior
to the expiration of the Term shall constitute an "Involun-
tary Termination" if made pursuant to Section 3.1(ii); the
effect of such termination is specified in Section 3.5. The
effect of the employment relationship being terminated
pursuant to Section 3.1(iii) as a result of Employee's death
is specified in Section 3.6. The effect of the employment
relationship being terminated pursuant to Section 3.1(iv) as
a result of the Employee becoming incapacitated is specified
in Section 3.7.
3.2. Notwithstanding any other provisions of this
Agreement except Section 7.5, Employee shall have the right
to terminate the employment relationship under this
Agreement at any time prior to the expiration of the Term of
employment for any of the following reasons:
(i) a material breach by Employer of any material
provision of this Agreement which remains
uncorrected for 30 days following written
notice of such breach by Employee to
Employer; or
(ii) for any other reason whatsoever, in the sole
discretion of Employee.
The termination of Employee's employment by Employee prior
to the expiration of the Term shall constitute an
"Involuntary Termination" if made pursuant to Section
3.2(i); the effect of such termination is specified in
Section 3.5. The termination of Employee's employment by
Employee prior to the expiration of the Term shall
constitute a "Voluntary Termination" if made pursuant to
Section 3.2(ii); the effect of such termination is specified
in Section 3.3.
3.3. Upon a "Voluntary Termination" of the employment
relationship by Employee prior to expiration of the Term,
all future compensation to which Employee is entitled and
all future benefits for which Employee is eligible shall
cease and terminate as of the date of termination. Employee
shall be entitled to pro rata salary through the date of
such termination, but Employee shall not be entitled to any
individual bonuses or individual incentive compensation not
yet paid at the date of such termination.
3.4. If Employee's employment hereunder shall be
terminated by Employer for Cause prior to expiration of the
Term, all future compensation to which Employee is entitled
and all future benefits for which Employee is eligible shall
cease and terminate as of the date of termination. Employee
shall be entitled to pro rata salary through the date of
such termination, but Employee shall not be entitled to any
individual bonuses or individual incentive compensation not
yet paid at the date of such termination.
3.5. Upon an Involuntary Termination of the employment
relationship by either Employer or Employee prior to
expiration of the Term, Employee shall be entitled, in
consideration of Employee's continuing obligations hereunder
after such termination (including, without limitation,
Employee's non-competition obligations), to receive the
compensation specified in Section 2.1 and an amount equal to
twenty-five percent (25%) of the amount specified in Section
2.1 as if Employee's employment (which shall cease on the
date of such Involuntary Termination) had continued for the
full Term of this Agreement. Employee shall not be under
any duty or obligation to seek or accept other employment
following Involuntary Termination and the amounts due
Employee hereunder shall not be reduced or suspended if
Employee accepts subsequent employment. Employee's rights
under this Section 3.5 are Employee's sole and exclusive
rights against Employer, Enron, or their affiliates, and
Employer's sole and exclusive liability to Employee under
this Agreement, in contract, tort, or otherwise, for any
Involuntary Termination of the employment relationship.
Employee covenants not to sue or lodge any claim, demand or
cause of action against Employer for any sums for Involun-
tary Termination other than those sums specified in this
Section 3.5. If Employee breaches this covenant, Employer
shall be entitled to recover from Employee all sums expended
by Employer (including costs and attorneys fees) in
connection with such suit, claim, demand or cause of action.
3.6. Upon termination of the employment relationship as
a result of Employee's death, Employee's heirs,
administrators, or legatees shall be entitled to Employee's
pro rata salary through the date of such termination, but
Employee's heirs, administrators, or legatees shall not be
entitled to any individual bonuses or individual incentive
compensation not yet paid to Employee at the date of such
termination.
3.7. Upon termination of the employment relationship as
a result of Employee's incapacity, Employee shall be
entitled to his or her pro rata salary through the date of
such termination, but Employee shall not be entitled to any
individual bonuses or individual incentive compensation not
yet paid to Employee at the date of such termination.
3.8. In all cases, the compensation and benefits
payable to Employee under this Agreement upon termination of
the employment relationship shall be offset against any
amounts to which Employee may otherwise be entitled under
any and all severance plans, and policies of Employer,
Enron, or its affiliates.
3.9. Termination of the employment relationship does
not terminate those obligations imposed by this Agreement
which are continuing obligations, including, without
limitation, Employee's obligations under Articles 5 and 6.
ARTICLE 4: CONTINUATION OF EMPLOYMENT
BEYOND TERM; TERMINATION AND
EFFECTS OF TERMINATION:
4.1. Should Employee remain employed by Employer beyond
the expiration of the Term specified on Exhibit "A," such
employment shall convert to a month-to-month relationship
terminable at any time by either Employer or Employee for
any reason whatsoever, with or without cause. Upon such
termination of the employment relationship by either
Employer or Employee for any reason whatsoever, all future
compensation to which Employee is entitled and all future
benefits for which Employee is eligible shall cease and
terminate. Employee shall be entitled to pro rata salary
through the date of such termination, but Employee shall not
be entitled to any individual bonuses or individual
incentive compensation not yet paid at the date of such
termination.
ARTICLE 5: OWNERSHIP AND PROTECTION OF INFORMATION;
COPYRIGHTS:
5.1. All information, ideas, concepts, improvements,
discoveries, and inventions, whether patentable or not,
which are conceived, made, developed or acquired by Employ-
ee, individually or in conjunction with others, during
Employee's employment by Employer (whether during business
hours or otherwise and whether on Employer's premises or
otherwise) which relate to Employer's business, products or
services (including, without limitation, all such
information relating to corporate opportunities, research,
financial and sales data, pricing and trading terms, evalua-
tions, opinions, interpretations, acquisition prospects, the
identity of customers or their requirements, the identity of
key contacts within the customer's organizations or within
the organization of acquisition prospects, or marketing and
merchandising techniques, prospective names, and marks)
shall be disclosed to Employer and are and shall be the sole
and exclusive property of Employer. Moreover, all drawings,
memoranda, notes, records, files, correspondence, drawings,
manuals, models, specifications, computer programs, maps and
all other writings or materials of any type embodying any of
such information, ideas, concepts, improvements,
discoveries, and inventions are and shall be the sole and
exclusive property of Employer.
5.2. Employee acknowledges that the business of
Employer, Enron, and their affiliates is highly competitive
and that their strategies, methods, books, records, and
documents, their technical information concerning their
products, equipment, services, and processes, procurement
procedures and pricing techniques, the names of and other
information (such as credit and financial data) concerning
their customers and business affiliates, all comprise
confidential business information and trade secrets which
are valuable, special, and unique assets which Employer,
Enron, or their affiliates use in their business to obtain a
competitive advantage over their competitors. Employee
further acknowledges that protection of such confidential
business information and trade secrets against unauthorized
disclosure and use is of critical importance to Employer,
Enron, and their affiliates in maintaining their competitive
position. Employee hereby agrees that Employee will not, at
any time during or after his or her employment by Employer,
make any unauthorized disclosure of any confidential
business information or trade secrets of Employer, Enron, or
their affiliates, or make any use thereof, except in the
carrying out of his or her employment responsibilities
hereunder. Enron and its affiliates shall be third party
beneficiaries of Employee's obligations under this Section.
As a result of Employee's employment by Employer, Employee
may also from time to time have access to, or knowledge of,
confidential business information or trade secrets of third
parties, such as customers, suppliers, partners, joint
venturers, and the like, of Employer, Enron, and their
affiliates. Employee also agrees to preserve and protect
the confidentiality of such third party confidential
information and trade secrets to the same extent, and on the
same basis, as Employer's confidential business information
and trade secrets. Employee acknowledges that money damages
would not be sufficient remedy for any breach of this
Article 6 by Employee, and Employer shall be entitled to
enforce the provisions of this Article 6 by terminating any
payments then owing to Employee under this Agreement and/or
to specific performance and injunctive relief as remedies
for such breach or any threatened breach. Such remedies
shall not be deemed the exclusive remedies for a breach of
this Article 5, but shall be in addition to all remedies
available at law or in equity to Employer, including the
recovery of damages from Employee and his or her agents
involved in such breach.
5.3. All written materials, records, and other
documents made by, or coming into the possession of,
Employee during the period of Employee's employment by
Employer which contain or disclose confidential business
information or trade secrets of Employer, Enron, or their
affiliates shall be and remain the property of Employer,
Enron, or their affiliates, as the case may be. Upon
termination of Employee's employment by Employer, for any
reason, Employee promptly shall deliver the same, and all
copies thereof, to Employer.
5.4. If, during Employee's employment by Employer,
Employee creates any original work of authorship fixed in
any tangible medium of expression which is the subject
matter of copyright (such as videotapes, written
presentations on acquisitions, computer programs, drawings,
maps, architectural renditions, models, manuals, brochures,
or the like) relating to Employer's business, products, or
services, whether such work is created solely by Employee or
jointly with others (whether during business hours or
otherwise and whether on Employer's premises or otherwise),
Employee shall disclose such work to Employer. Employer
shall be deemed the author of such work if the work is
prepared by Employee in the scope of his or her employment;
or, if the work is not prepared by Employee within the scope
of his or her employment but is specially ordered by
Employer as a contribution to a collective work, as a part
of a motion picture or other audiovisual work, as a trans-
lation, as a supplementary work, as a compilation, or as an
instructional text, then the work shall be considered to be
work made for hire and Employer shall be the author of the
work. If such work is neither prepared by the Employee
within the scope of his or her employment nor a work spec-
ially ordered and is deemed to be a work made for hire, then
Employee hereby agrees to assign, and by these presents does
assign, to Employer all of Employee's worldwide right,
title, and interest in and to such work and all rights of
copyright therein.
5.5. Both during the period of Employee's employment by
Employer and thereafter, Employee shall assist Employer and
its nominee, at any time, in the protection of Employer's
worldwide right, title, and interest in and to information,
ideas, concepts, improvements, discoveries, and inventions,
and its copyrighted works, including without limitation, the
execution of all formal assignment documents requested by
Employer or its nominee and the execution of all lawful
oaths and applications for applications for patents and
registration of copyright in the United States and foreign
countries.
ARTICLE 6: POST-EMPLOYMENT NON-COMPETITION OBLIGATIONS:
6.1. As part of the consideration for the compensation
and benefits to be paid to Employee hereunder, and as an
additional incentive for Employer to enter into this
Agreement, Employer and Employee agree to the non-
competition provisions of this Article 6. Employee agrees
that during the period of Employee's non-competition
obligations hereunder, Employee will not, directly or
indirectly for Employee or for others, in any geographic
area or market where Employer or Enron or any of their
affiliated companies are conducting any business as of the
date of termination of the employment relationship or have
during the previous twelve months conducted any business:
(i) engage in any business competitive with
the business conducted by Employer;
(ii) render advice or services to, or
otherwise assist, any other person,
association, or entity who is engaged,
directly or indirectly, in any business
competitive with the business conducted
by Employer;
(iii) induce any employee of Employer or
Enron or any of their affiliates to
terminate his or her employment with
Employer, Enron, or their affiliates,
or hire or assist in the hiring of any
such employee by person, association,
or entity not affiliated with Enron.
These non-competition obligations shall extend until the
latter of [a] the expiration of the Term or [b] one year
after termination of the employment relationship.
6.2. Employee understands that the foregoing
restrictions may limit his or her ability to engage in
certain businesses anywhere in the world during the period
provided for above, but acknowledges that Employee will
receive sufficiently high remuneration and other benefits
(e.g., the right to receive compensation under Section 3.5
for the remainder of the Term upon Involuntary Termination)
under this Agreement to justify such restriction. Employee
acknowledges that money damages would not be sufficient
remedy for any breach of this Article 6 by Employee, and
Employer shall be entitled to enforce the provisions of this
Article 6 by terminating any payments then owing to Employee
under this Agreement and/or to specific performance and
injunctive relief as remedies for such breach or any
threatened breach. Such remedies shall not be deemed the
exclusive remedies for a breach of this Article 6, but shall
be in addition to all remedies available at law or in equity
to Employer, including, without limitation, the recovery of
damages from Employee and his or her agents involved in such
breach.
6.3. It is expressly understood and agreed that
Employer and Employee consider the restrictions contained in
this Article 6 to be reasonable and necessary to protect the
proprietary information of Employer. Nevertheless, if any
of the aforesaid restrictions are found by a court having
jurisdiction to be unreasonable, or overly broad as to
geographic area or time, or otherwise unenforceable, the
parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and
enforceable and, as so modified by the court, to be fully
enforced.
ARTICLE 7: MISCELLANEOUS:
7.1. For purposes of this Agreement the terms
"affiliates" or "affiliated" means an entity who directly,
or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with Enron or
Employer.
7.2. 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 Employer, to:
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Corporate Secretary
If to Employee, to the address shown on the first page
hereof.
Either Employer or Employee may furnish a change of address
to the other in writing in accordance herewith, except that
notices of changes of address shall be effective only upon
receipt.
7.3. This Agreement shall be governed in all respects
by the laws of the State of Texas, excluding any conflict-
of-law rule or principle that might refer the construction
of the Agreement to the laws of another State or country.
7.4. No failure by either party hereto at any time to
give notice of any breach by the other party of, or to
require compliance with, any condition or provision of this
Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time.
7.5. If a dispute arises out of or related to this
Agreement, other than a dispute regarding Employee's
obligations under Sections 5.2, Article 5, or Section 6.1,
and if the dispute cannot be settled through direct
discussions, then Employer and Employee agree to first
endeavor to settle the dispute in an amicable manner by
mediation, before having recourse to any other proceeding or
forum. Thereafter, if either party to this Agreement brings
legal action to enforce the terms of this Agreement, the
party who prevails in such legal action, whether plaintiff
or defendant, in addition to the remedy or relief obtained
in such legal action shall be entitled to recover its, his,
or her expenses incurred in connection with such legal
action, including, without limitation, costs of Court and
attorneys fees.
7.6. It is a desire and intent of the parties that the
terms, provisions, covenants, and remedies contained in this
Agreement shall be enforceable to the fullest extent
permitted by law. If any such term, provision, covenant, or
remedy of this Agreement or the application thereof to any
person, association, or entity or circumstances shall, to
any extent, be construed to be invalid or unenforceable in
whole or in part, then such term, provision, covenant, or
remedy shall be construed in a manner so as to permit its
enforceability under the applicable law to the fullest
extent permitted by law. In any case, the remaining
provisions of this Agreement or the application thereof to
any person, association, or entity or circumstances other
than those to which they have been held invalid or
unenforceable, shall remain in full force and effect.
7.7. This Agreement shall be binding upon and inure to
the benefit of Employer and any other person, association,
or entity which may hereafter acquire or succeed to all or
substantially all of the business or assets of Employer by
any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise. Employee's rights and
obligations under Agreement hereof are personal and such
rights, benefits, and obligations of Employee shall not be
voluntarily or involuntarily assigned, alienated, or
transferred, whether by operation of law or otherwise,
without the prior written consent of Employer.
7.8. There exist other agreements between Employer and
Employee relating to the employment relationship between
them, e.g., the agreement with respect to company policies
contained in Employer's Conduct of Business Affairs booklet
and agreements with respect to benefit plans. This
Agreement replaces and merges previous agreements and
discussions pertaining to the following subject matters
covered herein: the nature of Employee's employment
relationship with Employer and the term and termination of
such relationship. This Agreement constitutes the entire
agreement of the parties with regard to such subject
matters, and contains all of the covenants, promises, repre-
sentations, warranties, and agreements between the parties
with respect such subject matters. Each party to this
Agreement acknowledges that no representation, inducement,
promise, or agreement, oral or written, has been made by
either party with respect to such subject matters, which is
not embodied herein, and that no agreement, statement, or
promise relating to the employment of Employee by Employer
that is not contained in this Agreement shall be valid or
binding. Any modification of this Agreement will be
effective only if it is in writing and signed by each party
whose rights hereunder are affected thereby, provided that
any such modification must be authorized or approved by the
Board of Directors of Employer.
IN WITNESS WHEREOF, Employer and Employee have duly
executed this Agreement in multiple originals to be
effective on the date first stated above.
ENRON INTERNATIONAL INC.
By: RICHARD D. KINDER
Name: Richard D. Kinder
Title:
This 1st day of July, 1993
EMPLOYEE
RODNEY L. GRAY
Name: Rodney L. Gray
This 1st day of July, 1993
<PAGE>
EXHIBIT "A"
Employee: Rodney L. Gray
Term: July 1, 1993 through December 31, 1996
Title: Chairman and Chief Executive Officer of Enron
International Inc.
*Base Salary: Twenty-Nine Thousand One Hundred Sixty-Six
and 67/100 Dollars ($29,166.67) per month
* When applicable, Base Salary shall be adjusted
to reflect annual merit increases as earned by
Employee.
ENRON INTERNATIONAL INC.
By: RICHARD D. KINDER
Name: Richard D. Kinder
Title:
This 1st day of July, 1993
EMPLOYEE
RODNEY L. GRAY
Name: Rodney L. Gray
This 1st day of July, 1993
<PAGE>
EXHIBIT "B"
ENRON CORP.
NOTICE OF GRANT OF STOCK OPTION
AND GRANT AGREEMENT
RODNEY L. GRAY
4146 MARQUETTE
HOUSTON TX 77005
Dear 1993 Stock Option Grantee:
A. NOTICE OF GRANT OF STOCK OPTION
Congratulations! You have been granted an Option to
purchase shares of $10.00 par value common stock of Enron
Corp. ("Stock") as follows:
Employee ID - -
Non-Qualified Stock Option Grant No. 004453
Date of Grant 06/21/93
Enron Corp. 1991 Stock Plan
Price per Share $60.2500
Total Number of Shares Granted 64,000
Total Price of Shares Granted $3,856,000.00
The Option will become vested according to the percentages
of Total Shares in the vesting schedule below and will be
exercisable after vesting until canceled according to the
provisions of this Grant Agreement on the conditions that;
(1) you are in the position of Chairman and Chief Executive
Officer of Enron International Inc. on a vesting date, and
(2) Enron International Inc. meets the earnings target set
for it by the Board of Directors of Enron Corp. for each
year described in the vesting schedule ("Earnings Target"):
Vesting Date Percentage of Total Shares Becoming Vested
========= ===========================
February 1, 1994 14.29% of Total Shares, if 1993 Earnings
Target met
February 1, 1995 28.57% of Total Shares, if 1994 Earnings
Target met
February 1, 1996 28.57% of Total Shares, if 1995 Earnings
Target met
December 31, 1996 28.57% of Total Shares, if 1996 Earnings
Target met
In the event that shares under the Option are not vested because
Enron International Inc. failed to meet the previous year's
Earnings Target, the shares will become vested on a following
February 1, if the Earnings Target for that year is exceeded by at
least the amount of the underage from the previous year. Earnings
must be applied to the current year's Earnings Target first, before
being carried back to meet a previous year's Earnings Target. For
example, if the Earnings Target for 1994 is $100 million and actual
earnings for 1994 are $80 million (under by $20 million), no shares
under the Option will become vested in February, 1995. However, if
the Earnings Target for 1995 is $120 million and actual earnings
for 1995 are $140 million (Earnings Target for 1995 exceeded by $20
million) then 57.14% of the Total Shares (28.57% for 1995 earnings,
and 28.57% of the Total Shares carried forward from 1994), will
become vested in February, 1996. Multiple future years' actual
earnings in excess of Earnings Targets may be used to make up for
a previous year's missed Earnings Target. However, actual earnings
in excess of an Earnings Target cannot be banked for potential
future missed Earnings Targets.
B. STOCK OPTION GRANT AGREEMENT
To carry out the purposes of the Enron Corp. 1991 Stock Plan
(the "Plan"), and in consideration of the mutual agreements and
other terms and provisions set forth herein, in the Notice and in
the Plan, the Company and Employee hereby agree as follows to the
stipulations in this Agreement and in the Notice:
1. GRANT OF OPTION. The Company hereby irrevocably grants
to Employee the right and option ("Option") to purchase all or any
part of an aggregate of the number of Shares of Company common
stock ("Stock") listed in the Notice, on the terms and conditions
set forth herein, in the Notice and in the Plan, the terms of which
are incorporated as though fully stated herein. This Option shall
not constitute an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
2. EXERCISE OF OPTION. Subject to the earlier expiration
of this Option as herein provided and subject to the provisions of
the Plan providing for the disposition of the Options upon the
occurrence of certain transactions, any unexercised vested Shares
under this Option may be exercised, by written notice to the
Company, at any time and from time to time after the date of grant
given on the Notice.
This option is not transferable by Employee otherwise than by
will or the laws of descent and distribution, and may be exercised
only by Employee during Employee's lifetime and while Employee
remains an employee of the Company, except that if Employee's
employment with the Company terminates because of death,
Disability, Retirement or Involuntary Termination, Employee,
Employee's estate or the person who acquires this Option by bequest
or inheritance by reason of the death of Employee, may exercise
this Option at any time during the period of twelve months
following the date of Employee's death, Disability, Retirement or
Involuntary Termination, up to the number of unexercised vested
Shares of Stock Employee was entitled to in the Notice as of the
date of such event resulting in Employee's termination. Except as
provided herein and in the Notice, this Option shall expire and no
longer be exercisable upon Employee ceasing to be employed by the
Company or an Affiliate.
This Option shall not be exercisable in any event after the
expiration of the number of years stated in the Notice from the
date of the grant given in the Notice. This Option may be
exercised in whole or in part from time to time by written request
to the Company, attention of such officer as is then responsible
for administering agreements of this nature. Payment in full,
including applicable tax withholding amounts, shall be made at the
time of each exercise or, if Employee so elects and the Committee
hereinafter referred so permits, payment of the exercise price and
any applicable tax withholding amounts may be made, in whole or in
part, by delivery of a number of Shares of Stock, other awards,
other property or any combination thereof having a fair market
value equal to such amount or part thereof provided that the fair
market value of Stock so delivered shall be equal to the closing
price of the Stock as reported in the "NYSE -- Composite
Transactions" section of the Midwest Edition of the Wall Street
Journal on the date of actual receipt by the Company of the written
notice exercising this Option or, if no prices are so reported on
such day, on the last preceding day on which such prices of Stock
are so reported.
If the Committee permits, this Option may be exercised by
written request to the Company, through a broker financed exercise
pursuant to the provisions of Regulation T of the Federal Reserve
Board. If the Company receives payment of the purchase price for
the exercise of the Option before the end of the next business day
following the broker's execution of the sale of Stock for the
financed exercise, the exercise shall be effective at the time of
such sale. Otherwise, the exercise shall be effective when the
Company receives payment of the purchase price.
No fraction of a Share of Stock shall be issued by the Company
upon exercise of an Option or accepted by the Company in payment of
the exercise price thereof; rather, Employee shall provide a
cashier's check for such cash amount as is necessary to effect the
issuance and acceptance of only whole Shares of Stock. Unless and
until a certificate or certificates representing such Shares shall
have been issued by the Company to Employee, Employee (or the
person permitted to exercise this Option in the event of Employee's
death or incapacity) shall not be or have any of the rights or
privileges of a Stockholder of the Company with respect to the
Shares acquirable upon an exercise of this Option.
3. LIMITATION OF EXERCISE. Notwithstanding anything to the
contrary herein, if Employee is then a person subject to Section 16
of the Securities Exchange Act of 1934, as amended, with respect to
securities of the Company, the Option may not be exercised prior to
the expiration of six months from the date of grant hereof.
4. STATUS OF STOCK. The Company intends to register for
issue under the Securities Act of 1933, as amended ("The Act"), the
Shares of Stock acquirable pursuant to the Notice, and to keep such
registration effective throughout the period the Notice is in
effect. In the absence of such effective registration or an
available exemption from registration under the Act, delivery of
Shares of Stock acquirable pursuant to the Notice shall be delayed
until registration of such Shares is effective or an exemption from
registration under the Act is available. The Company intends to
use its best efforts to ensure that no such delay will occur. In
the event exemption from registration under the Act is available,
Employee (or Employee's estate or personal representative in the
event of the Employee's death or incapacity), if requested by the
Company to do so, will execute and deliver to the Company in
writing an agreement containing such provisions as the Company may
require to assure compliance with applicable securities laws.
No sale or disposition of Shares of Stock acquired pursuant to
the Notice by Employee who is an Affiliate shall be made in the
absence of an effective registration statement with respect to such
Shares under the Act unless an opinion of counsel satisfactory to
the Company that such sale or disposition will not constitute a
violation of the Act or any other applicable securities laws is
first obtained. In the event that Employee proposes to sell or
otherwise dispose of Shares of Stock in such a manner that an
exemption from the registration requirements of the Act is
unavailable for such sale or disposition, and upon request to the
Company by Employee, the Company, at its sole cost and expense,
shall cause a registration statement to be prepared and filed with
respect to such sale or disposition by Employee and shall use its
best efforts to have such registration statement declared
effective, and, in connection therewith, shall execute and deliver
such documents as shall be necessary, including without limitation,
agreements providing for the indemnification of underwriters for
any loss or damage incurred in connection with such sale or
disposition.
The certificates representing Shares of Stock acquired under
the Notice may bear such legend as the Company deems appropriate,
referring to the provisions of this part 4.
5. EMPLOYMENT RELATIONSHIP. Employee shall be
considered to be in the employment of the Company or an Affiliate
of Company as long as Employee remains an active employee of either
the Company or an Affiliate of the Company. Any question as to
whether and when there has been a termination or cessation of such
employment, and the cause thereof, shall be determined by the
Committee in its sole discretion, and its determination shall be
final.
6. BINDING EFFECT. This agreement shall be binding upon
and inure to the benefit of any successors of the Company and all
persons lawfully claiming under Employee. By signing below, you
and Enron Corp. agree that this Option is granted under and
governed by the terms and conditions of the Enron Corp. 1991 Stock
Plan, as amended, which is attached hereto and made a part of this
document. To make this grant effective, you must sign both copies
of this Notice of Grant of Stock Option and Grant Agreement, and
return the copy marked "Original Contract File" to Elaine Overturf
EB4839D.
By: CHARLES A. LeMAISTRE
Chairman, Compensation Committee
Date: July 1, 1993
RODNEY L. GRAY
RODNEY L. GRAY
Date: July 1, 1993