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 Empl
Executive Employment Agreement - Enron International Inc., Enron Corp. and Rodney L. Gray
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