Employment Agreement [Amendment No. 5] - Enron Corp. and Kenneth L. Lay
FIFTH AMENDMENT TO EMPLOYMENT AGREEMENT
This Agreement, made and entered into on this 28th day of
February, 1994, ("Execution Date") and made effective as of
February 8, 1994, by and between Enron Corp. ("Company"), a
Delaware corporation having its headquarters at 1400 Smith
Street, Houston, Texas 77002, and Kenneth L. Lay ("Employee"),
an individual residing in Houston, Texas, is an amendment to
that certain Employment Agreement between the parties
effective September 1, 1989 (the "Employment Agreement").
WHEREAS, the Employment Agreement incorporates the terms
and provisions of a Loan Commitment Agreement attached to the
Employment Agreement as Exhibit D, as though recited therein
in their entirety; and
WHEREAS, the parties desire to amend and clarify certain
provisions of the Employment Agreement and the Loan Commitment
Agreement;
NOW, THEREFORE, in consideration thereof and of the
mutual covenants contained herein, the parties agree as
follows:
1. Article 2: Term of Employment of the Employment Agreement
is deleted in its entirety and the following is substituted in
its place:
"Unless sooner terminated pursuant to other provisions
hereof, Employee's period of employment under this
Agreement shall be for a period of five (5) years
beginning on the effective date of this Amendment
("Term"), and thereafter for such period, if any, as may
be agreed upon in writing by Employee and Company. At
the expiration of three years during the Term hereunder,
Employee may terminate this Employment Agreement without
penalty and as if this Employment Agreement were
fulfilled. Employee shall have the option to continue
employment with the Company for the full term under this
Amendment."
2. Article 3: Compensation and Benefits of the Employment
Agreement is deleted in its entirety and the following is
substituted in its place:
"3.1 Base Salary. During the period beginning February
8, 1994 and ending February 7, 1997, Employee's annual
base salary shall be equal to and not more than Nine
Hundred Ninety Thousand and No/100 Dollars ($990,000.00),
which shall be earned and paid in equal semimonthly
installments in accordance with Company's standard
payroll practice. Any raises after the three year period
described above, shall be at the discretion of the
Compensation Committee of the Board of Directors of the
Company."
3. (a) The following shall be added to the end of paragraph
3.8 of the Employment Agreement:
"Notwithstanding any provision to the contrary in this
Agreement or the Exhibits and attachments hereto (including,
without limitation, the Stock Finance Agreement attached to
this Agreement as Exhibit C and the attachments thereto (the
'Stock Finance Documents') and the Loan Commitment Agreement
attached to this Agreement as Exhibit D and the attachments
thereto (the 'Loan Commitment Documents')), within thirty (30)
days of the Execution Date of this Amendment, the sum total of
any and all Advances outstanding, in the amount of Seven and
a half Million Dollars ($7,500,000.00), including principal
and interest, under the Stock Finance Documents and the Loan
Commitment Documents together, shall be repaid by Employee.
(b) The following shall be added to the end of Article
II, Section 2.01, of the Loan Commitment Agreement:
Notwithstanding any provision to the contrary in this
Agreement or the Exhibits and attachments hereto, the Lender
agrees, conditioned on future performance of substantial
employment services by Borrower, and on the terms and
conditions hereinafter set forth, to make Advances to the
Borrower (a "Borrowing") from time to time on any Business Day
during the period from the Effective Date of this Amendment
until February 8, 1999, in an aggregate amount not to exceed,
at any time, the amount of Four Million Dollars
($4,000,000.00). Employee shall repay any amounts outstanding
in excess of Four Million Dollars within thirty (30) days of
the Execution Date of this Amendment.
4. The following shall be added to the end of Article V,
Section 5.01, of the Stock Finance Agreement:
(c) "Notwithstanding any provision to the contrary in
this Agreement or the Exhibits and attachments thereto,
Employee has received a grant of Option (which does not
constitute an Incentive Stock Option), under and pursuant to
the terms and provisions of Company's Enron Corp. 1991 Stock
Plan, as made by such Plan's Committee at its meeting of
February 7, 1994, to purchase One Million Two Hundred Thousand
(1,200,000.00) shares of common stock of the Company. Such
grant shall be made in the form of a Non-Qualified Stock
Option Agreement as reflected in Exhibit A to this Fourth
Amendment to the Employment Agreement between Company and
Employee for a term of seven (7) years beginning February 8,
1994 and ending February 7, 2001. The grant price of such
Option shall be Thirty-Four and No/100 Dollars ($34.00), the
closing price of the common stock of the Company on February
8, 1994. Such Option shall vest 20% immediately upon the date
of grant with the remainder to vest six (6) years and ten (10)
months from date of issue (February 8, 1994), accordingly:
(A) Upon Grant % Vested Exercisable
240,000 20% Six (6) months after
date of grant
(2-8-94)
Six Years 10 Months % Vested Exercisable
960,000 80% 12-8-00 unless
previously vested
and exercised
(B) Notwithstanding the above, provided the performance
criteria of 15% annual earnings per share (EPS) growth is
achieved in calendar years 1994, 1995, and 1996, as set forth
below, vesting shall occur at the rate of 33% each year of
the remaining shares to be vested as follows:
1994 1995 1996
320,000 320,000 320,000
Earnings per share target*:
1994 $1.783
1995 $2.050
1996 $2.357
* 1993 adjusted earnings per share - $1.55
For purposes of vesting, 15% compounded growth in
earnings per share will be cumulative so that any short fall
in 1994, 1995, and/or 1996 can be made up in subsequent years
(including years after 1996) so long as the average growth in
earnings per share for all previous years beginning in 1994 is
at least 15% per year.
No additional vesting of the Option will occur if, and
after Employee leaves the Company, however all vested Options
at the date of Employee's termination of employment with
Company can be exercised up until the end of February 7, 2001.
(d) Notwithstanding any other provision in said Stock
Plan or in the grant of said Option reflected in said Exhibit
A, the vesting provision described in paragraphs (A) and (B)
above shall be the sole and exclusive method of vesting."
5. This Agreement is the Fourth Amendment to the Employment
Agreement, and the parties agree that all other terms,
conditions and stipulations contained in the Employment
Agreement shall remain
in full force and effect and without any change or
modification, except as provided herein.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
ENRON CORP.
By: CHARLES A LeMAISTRE
Charles A. LeMaistre
Title: Chairman, Compensation
Committee of Board of
Directors
ENRON CORP.
By: JOHN H. DUNCAN
Name: John H. Duncan
Title: Chairman, Executive
Committee of Board of
Directors
KENNETH L. LAY
KENNETH L. LAY
Employee