{"id":39119,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/employment-agreement-enron-corp-and-kenneth-l-lay11.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"employment-agreement-enron-corp-and-kenneth-l-lay11","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/employment-agreement-enron-corp-and-kenneth-l-lay11.html","title":{"rendered":"Employment Agreement &#8211; Enron Corp. and Kenneth L. Lay"},"content":{"rendered":"<pre>                                                            \n                      EMPLOYMENT AGREEMENT\n\n\n     THIS EMPLOYMENT AGREEMENT ('Agreement') is made by and\nbetween ENRON CORP. ('Company') and KENNETH L. LAY\n('Employee').\n\n                      W I T N E S S E T H:\n\n     WHEREAS, Company presently employs Employee pursuant to\nan Employment Agreement made effective as of September 1,\n1989, as the same has heretofore been amended from time to\ntime (the 'Prior Employment Agreement'); and\n\n     WHEREAS, Company is desirous of continuing to employ\nEmployee in an executive capacity on the terms and\nconditions, and for the consideration, hereinafter set forth\nand Employee is desirous of continuing in the employ of\nCompany on such terms and conditions and for such\nconsideration;\n\n     NOW, THEREFORE, for and in consideration of the mutual\npromises, covenants and obligations contained herein,\nCompany and Employee agree as follows:\n\nARTICLE 1:  EMPLOYMENT AND DUTIES\n\n     1.1  Employment; Effective Date.  Company agrees to\nemploy Employee and Employee agrees to be employed by\nCompany, beginning as of December 9, 1996 (the 'Effective\nDate'), and continuing for the period of time set forth in\nArticle 2 of this Agreement, subject to the terms and\nconditions of this Agreement.\n\n     1.2  Position.  During the term of employment under\nthis Agreement, Company shall employ Employee in the\nposition of Chairman and Chief Executive Officer of Company,\nor in such other executive positions as the parties mutually\nmay agree.\n\n     1.3  Duties and Services.  Employee agrees to serve in\nthe position referred to in paragraph 1.2 and to perform\ndiligently and to the best of his abilities the duties and\nservices appertaining to such office as reasonably directed\nby Company.  Employee's employment shall also be subject to\nthe policies contained in Company's Conduct of Business\nAffairs booklet and other similar documents, all as amended\nfrom time to time.\n\n     1.4  Other Interests.  Employee agrees, during the\nperiod of his employment by Company, to devote his full\nbusiness time, energy and best efforts to the business and\naffairs of Company and its affiliates and not to engage,\ndirectly or indirectly, in any other business, investment,\nor activity that interferes with Employee's performance of\nEmployee's duties hereunder, is contrary to the interests of\nCompany or any of its affiliates, or requires any\nsignificant portion of Employee's business time.\n\n     1.5  Duty of Loyalty.  Employee acknowledges and agrees\nthat Employee owes a fiduciary duty of loyalty, fidelity and\nallegiance to act at all times in the best interests of\nCompany and to do no act which would injure the business,\ninterests, or reputation of Company or any of its\nsubsidiaries or affiliates.  In keeping with these duties,\nEmployee shall make full disclosure to Company of all\nbusiness opportunities pertaining to Company's business and\nshall not appropriate for Employee's own benefit business\nopportunities concerning the subject matter of the fiduciary\nrelationship.\n\n     1.6  Conflicts of Interest.  It is agreed that any\ndirect or indirect interest in, connection with, or benefit\nfrom any outside activities, particularly commercial\nactivities, which interest might in any way adversely affect\nCompany or any of its affiliates, involves a possible\nconflict of interest.  In keeping with Employee's fiduciary\nduties to Company, Employee agrees that Employee shall not\nknowingly become involved in a conflict of interest with\nCompany or any of its affiliates, or upon discovery thereof,\nallow such a conflict to continue.  Moreover, Employee\nagrees that Employee shall disclose to Company's General\nCounsel any facts which might involve such a conflict of\ninterest that has not been approved by Company's Board of\nDirectors (the 'Board of Directors').  Company and Employee\nrecognize that it is impossible to provide an exhaustive\nlist of actions or interests which constitute a 'conflict of\ninterest.'  Moreover, Company and Employee recognize there\nare many borderline situations.  In some instances, full\ndisclosure of facts by Employee to Company's General Counsel\nmay be all that is necessary to enable Company or its\naffiliates to protect its interests.  In others, if no\nimproper motivation appears to exist and the interests of\nCompany or its affiliates have not suffered, prompt\nelimination of the outside interest will suffice.  In still\nothers, it may be necessary for Company to terminate the\nemployment relationship.  Employee agrees that Company's\ndetermination as to whether a conflict of interest exists\nshall be conclusive.  Company reserves the right to take\nsuch action as, in its judgment, will end the conflict.\n\nARTICLE 2:  TERM AND TERMINATION OF EMPLOYMENT\n\n     2.1  Term.  Unless sooner terminated pursuant to other\nprovisions hereof, Company agrees to employ Employee for the\nperiod (the 'Term') beginning on the Effective Date and\nending on December 31, 2001, and thereafter for such period,\nif any, as may be agreed upon in writing by Employee and\nCompany.\n\n     2.2  Company's Right to Terminate.  Notwithstanding the\nprovisions of paragraph 2.1, Company shall have the right to\nterminate Employee's employment under this Agreement at any\ntime prior to the expiration of the Term for any of the\nfollowing reasons:\n\n          (i)  upon Employee's death;\n\n          (ii) upon Employee becoming 'Permanently\n     Disabled,' which, for purposes of this Agreement, shall\n     mean Employee's becoming disabled so as to entitle him\n     to benefits beyond 18 months of disability under\n     Company's Long-Term Disability Plan;\n          \n          (iii)     for 'Cause,' which, for purposes of this\n     Agreement, shall mean termination by action of the\n     Board of Directors because of Employee's (A) conviction\n     of a felony, (B) willful refusal without proper legal\n     cause to perform Employee's duties and responsibilities\n     which remains uncorrected for seven days following\n     written notice to Employee by Company of such breach,\n     (C) willfully engaging in conduct that he knows or\n     should know may be materially injurious to Company or\n     any of its affiliates, (D) involvement in a conflict of\n     interest as referenced in paragraph 1.6 for which\n     Company makes a determination to terminate the\n     employment of Employee which remains uncorrected for 30\n     days following written notice to Employee by Company of\n     such breach, (E) material breach of any material\n     provision of this Agreement or corporate code or policy\n     which remains uncorrected for 30 days following written\n     notice to Employee by Company of such breach, or (F)\n     violation of the Foreign Corrupt Practices Act or other\n     applicable United States law as proscribed by paragraph\n     6.2; or\n\n          (iv) for any other reason whatsoever, in the sole\n     discretion of the Board of Directors.\n\n     2.3  Employee's Right to Terminate.  Notwithstanding\nthe provisions of paragraph 2.1, Employee shall have the\nright to terminate his employment under this Agreement at\nany time prior to the expiration of the Term for any of the\nfollowing reasons:\n\n          (i)  for 'Good Reason,' which for purposes of this\n     Agreement shall mean termination by Employee within 60\n     days of and in connection with or based upon (A) a\n     transfer or assignment from Employee's present position\n     to a position which involves an overall substantial and\n     material reduction in the nature or scope of Employee's\n     duties and responsibilities, (B) a reduction in\n     Employee's annual base salary as established pursuant\n     to paragraph 3.1 (including subsequent increases) or\n     the failure to continue Employee's participation in any\n     incentive compensation or employee benefit plan or\n     program (except a compensation or benefit plan or\n     program that is substantially comparable to an existing\n     compensation or benefit plan or program) in which\n     Employee is participating or is eligible to participate\n     prior to such reduction (other than as a result of the\n     expiration of such plan or program), in each case other\n     than as part of a general program to reduce\n     compensation or employee benefits on a proportional\n     basis relative to other employees of Company, (C) a\n     permanent change and relocation of Employee from the\n     city in which Employee was serving immediately prior to\n     the time of such change to a place which is more than\n     50 miles away from such location, (D) a Change of\n     Control (as such term is defined in paragraph 7.6\n     hereof), or (E) a material breach by Company of any\n     material provision of this Agreement which remains\n     uncorrected for 30 days following written notice of\n     such breach by Employee to Company; or\n\n          (ii) for any other reason whatsoever, in the sole\n     discretion of Employee.\n\n     2.4  Notice of Termination; Delegation to Board of\nDirectors.  If Company or Employee desires to terminate\nEmployee's employment hereunder at any time prior to\nexpiration of the Term pursuant to paragraph 2.2 or 2.3,\nrespectively, it or he shall do so by giving written notice\nto the other party that it or he has elected to terminate\nEmployee's employment hereunder and stating the effective\ndate and reason for such termination; provided that no such\naction shall alter or amend any other provisions hereof or\nrights arising hereunder; and, provided further, that\nCompany shall consult in good faith with Employee and\nprovide a reasonable opportunity for Employee to be heard\nprior to terminating Employee's employment hereunder for\nCause.  It is expressly acknowledged and agreed that the\ndecision as to whether Cause exists for termination of the\nemployment relationship by Company is delegated to the Board\nof Directors for determination. If Employee disagrees with\nthe decision reached by the Board of Directors, then the\ndispute will be limited to whether the Board of Directors\nreached its decision in good faith.\n\nARTICLE 3:  COMPENSATION\n\n     3.1  Base Salary.  During the period beginning on the\nEffective Date and ending on December 31, 1996, Employee\nshall receive an annual base salary equal to $990,000.\nThereafter, during the period of this Agreement, Employee\nshall receive a minimum annual base salary equal to\n$1,200,000.  Employee's base salary shall be reviewed\nannually and may be increased annually and from time to time\nby the Board of Directors (or the Compensation Committee of\nsuch Board) in its sole discretion and, after any such\nchange, Employee's new level of base salary shall be\nEmployee's base salary for purposes of this Agreement until\nthe effective date of any subsequent change.  Employee's\nannual base salary shall be paid in equal installments in\naccordance with Company's standard policy regarding payment\nof compensation to executives; provided, however, that\nEmployee hereby irrevocably elects and agrees that any base\nsalary payable to Employee pursuant to this paragraph 3.1 in\nexcess of $1,000,000 during any taxable year of Company\nshall be deferred under Company's 1994 Deferral Plan.  Any\namounts deferred under Company's 1994 Deferral Plan pursuant\nto this paragraph 3.1 shall be subject to all of the terms\nand conditions of such plan, including, without limitation,\nthe time of payment provisions thereof.\n\n     3.2  Incentive Compensation.  While Employee is\nactively employed under this Agreement, Employee shall be\nentitled to participate in the long term and annual\nincentive plans under Company's Executive Compensation\nProgram, as the same is currently or hereinafter maintained\nby Company for its executives.  As of the Effective Date,\nsuch program includes the award of stock options, awards\nunder Company's Performance Unit Plan, and bonus\nopportunities under Company's Annual Incentive Plan.\n\n     3.3  Other Employee Benefits.  While employed by\nCompany, Employee shall be allowed to participate, on the\nsame basis generally as other employees of Company, in all\ngeneral employee benefit plans and programs, including\nimprovements or modifications of the same, which on the\nEffective Date or thereafter are made available by Company\nto Company's employees of Employee's office.  Such benefits\nplans, and programs may include, without limitation,\nmedical, health, and dental care, life insurance, disability\nprotection, and pension plans.  Nothing in this Agreement is\nto be construed or interpreted to provide greater rights,\nparticipation, coverage, or benefits under such benefit\nplans or programs than provided to similarly situated\nemployees pursuant to the terms and conditions of such\nbenefit plans and programs.\n\n     3.4  Changes Permitted.  Company shall not by reason of\nparagraphs 3.2 and 3.3 be obligated to institute, maintain,\nor refrain from changing, amending, or discontinuing, any of\nsuch benefit plans or programs, so long as such actions are\nsimilarly applicable to covered employees generally.  Unless\nspecifically provided for in a written plan document adopted\nby the Board of Directors, none of the benefits or\narrangements described in this Article shall be secured or\nfunded in any way, and each shall instead constitute an\nunfunded and unsecured promise to pay money in the future\nexclusively from the general assets of Company.\n\n     3.5  Stock Option Grant Agreements.  Contemporaneously\nwith the execution of this Agreement, Company shall issue to\nEmployee a Stock Option Grant Agreement substantially in the\nform attached hereto as Exhibit A pursuant to which Employee\nshall be awarded as of the Effective Date an option under\nCompany's 1991 Stock Plan (the '1991 Stock Plan') to\npurchase 637,500 shares of Company's common stock at a\npurchase price per share equal to the Fair Market Value (as\nsuch term is defined in the 1991 Stock Plan) of a share of\nsuch stock on the Effective Date.  On January 3, 1997,\nCompany shall issue to Employee a Stock Option Grant\nAgreement substantially in the form attached hereto as\nExhibit A pursuant to which Employee shall be awarded on\nsuch date an option under the 1991 Stock Plan to purchase\n637,500 shares of Company's common stock at a purchase price\nper share equal to the Fair Market Value (as such term is\ndefined in the 1991 Stock Plan) of a share of such stock on\nsuch date.\n\n     3.6  Split Dollar Agreement.  Contemporaneously with\nthe execution of this Agreement, Company, Employee, and the\nKLL &amp; LPL Family Partnership, Ltd. shall execute and enter\ninto the Split Dollar Agreement attached to this Agreement\nas Exhibit B.\n\nARTICLE 4:  PROTECTION OF INFORMATION\n\n     4.1  Disclosure to Employee.  Company shall disclose to\nEmployee, or place Employee in a position to have access to\nor develop, trade secrets or confidential information of\nCompany or its affiliates; and\/or shall entrust Employee\nwith business opportunities of Company or its affiliates;\nand\/or shall place Employee in a position to develop\nbusiness good will on behalf of Company or its affiliates.\n\n     4.2  Disclosure to and Property of Company.  All\ninformation, ideas, concepts, improvements, discoveries, and\ninventions, whether patentable or not, which are conceived,\nmade, developed, or acquired by Employee, individually or in\nconjunction with others, during Employee's employment by\nCompany (whether during business hours or otherwise and\nwhether on Company's premises or otherwise) which relate to\nCompany's business, products, or services (including,\nwithout limitation, all such information relating to\ncorporate opportunities, research, financial and sales data,\npricing terms, evaluations, opinions, interpretations,\nacquisition prospects, the identity of customers or their\nrequirements, the identity of key contacts within the\ncustomer's organizations or within the organization of\nacquisition prospects, or marketing and merchandising\ntechniques, prospective names, and marks) shall be disclosed\nto Company and are and shall be the sole and exclusive\nproperty of Company.  Moreover, all documents drawings,\nmemoranda, notes, records, files, correspondence, manuals,\nmodels, specifications, computer programs, E-mail, voice\nmail, electronic databases, maps and all other writings or\nmaterials of any type embodying any of such information,\nideas, concepts, improvements, discoveries, and inventions\nare and shall be the sole and exclusive property of Company.\nUpon termination of Employee's employment by Company, for\nany reason, Employee promptly shall deliver the same, and\nall copies thereof, to Company.\n     \n     4.3  No Unauthorized Use or Disclosure.  Employee will\nnot, at any time during or after Employee's employment by\nCompany, make any unauthorized disclosure of any\nconfidential business information or trade secrets of\nCompany or its affiliates, or make any use thereof, except\nin the carrying out of Employee's employment\nresponsibilities hereunder.  Affiliates of the Company shall\nbe third party beneficiaries of Employee's obligations under\nthis paragraph.  As a result of Employee's employment by\nCompany, Employee may also from time to time have access to,\nor knowledge of, confidential business information or trade\nsecrets of third parties, such as customers, suppliers,\npartners, joint venturers, and the like, of Company and its\naffiliates.  Employee also agrees to preserve and protect\nthe confidentiality of such third party confidential\ninformation and trade secrets to the same extent, and on the\nsame basis, as Company's confidential business information\nand trade secrets.\n\n     4.4  Ownership by Company.  If, during Employee's\nemployment by Company, Employee creates any work of\nauthorship fixed in any tangible medium of expression which\nis the subject matter of copyright (such as videotapes,\nwritten presentations, or acquisitions, computer programs, E-\nmail, voice mail, electronic databases, drawings, maps,\narchitectural renditions, models, manuals, brochures, or the\nlike) relating to Company's business, products, or services,\nwhether such work is created solely by Employee or jointly\nwith others (whether during business hours or otherwise and\nwhether on Company's premises or otherwise), Company shall\nbe deemed the author of such work if the work is prepared by\nEmployee in the scope of Employee's employment; or, if the\nwork is not prepared by Employee within the scope of\nEmployee's employment but is specially ordered by Company as\na contribution to a collective work, as a part of a motion\npicture or other audiovisual work, as a translation, as a\nsupplementary work, as a compilation, or as an instructional\ntext, then the work shall be considered to be work made for\nhire and Company shall be the author of the work.  If such\nwork is neither prepared by Employee within the scope of\nEmployee's employment nor a work specially ordered that is\ndeemed to be a work made for hire, then Employee hereby\nagrees to assign, and by these presents does assign, to\nCompany all of Employee's worldwide right, title, and\ninterest in and to such work and all rights of copyright\ntherein.\n\n     4.5  Assistance by Employee.  Both during the period of\nEmployee's employment by Company and thereafter, Employee\nshall assist Company and its nominee, at any time, in the\nprotection of Company's worldwide right, title, and interest\nin and to information, ideas, concepts, improvements,\ndiscoveries, and inventions, and its copyrighted works,\nincluding without limitation, the execution of all formal\nassignment documents requested by Company or its nominee and\nthe execution of all lawful oaths and applications for\napplications for patents and registration of copyright in\nthe United States and foreign countries.\n\n     4.6  Remedies.  Employee acknowledges that money\ndamages would not be sufficient remedy for any breach of\nthis Article by Employee, and Company shall be entitled to\nenforce the provisions of this Article by specific\nperformance and injunctive relief as remedies for such\nbreach or any threatened breach.  Such remedies shall not be\ndeemed the exclusive remedies for a breach of this Article,\nbut shall be in addition to all remedies available at law or\nin equity to Company, including the recovery of damages from\nEmployee and his agents involved in such breach and remedies\navailable to Company pursuant to other agreements with\nEmployee.\n\nARTICLE 5:  NON-COMPETITION OBLIGATIONS\n\n     5.1  In General.  As part of the consideration for the\ncompensation and benefits to be paid to Employee hereunder;\nto protect the trade secrets and confidential information of\nCompany and its affiliates that have been and will in the\nfuture be disclosed or entrusted to Employee, the business\ngood will of Company and its affiliates that has been and\nwill in the future be developed in Employee, or the business\nopportunities that have been and will in the future be\ndisclosed or entrusted to Employee by Company and its\naffiliates; and as an additional incentive for Company to\nenter into this Agreement, Company and Employee agree to the\nnon-competition obligations hereunder:  Employee will not,\ndirectly or indirectly for Employee or for others, in any\ngeographic area or market where Company or any of its\naffiliates are conducting any business as of the date of\ntermination of the employment relationship or have during\nthe previous 12 months conducted such business:\n\n          (i)  engage in any business similar or related to\n     or competitive with the business conducted by Company\n     or any of its affiliates as described under Company's\n     'Business Unit Highlights' on page one of the Enron\n     Corp. 1995 Annual Report to Shareholders and Customers\n     (the 'Core Business of Company');\n\n          (ii) render advice or services to, or otherwise\n     assist, any other person, association, or entity who is\n     engaged, directly or indirectly, in any business\n     similar or related to or competitive with the Core\n     Business of Company;\n\n          (iii) transact any business in any manner\n     pertaining to suppliers or customers of Company or any\n     of its affiliates which, in any manner, would have, or\n     is likely to have, an adverse effect upon Company or\n     any of its affiliates; or\n\n          (iv) induce any employee of Company or any of its\n     affiliates to terminate his or her employment with\n     Company or any of its affiliates, or hire or assist in\n     the hiring of any such employee by any person,\n     association, or entity not affiliated with Company.\n\nThese non-competition obligations shall extend until (A) the\nexpiration of the Term if termination of the employment\nrelationship is by Employee for Good Reason or by Company\nfor any reason whatsoever other than death, Cause or\nEmployee's becoming Permanently Disabled  or (B) two years\nafter termination of the employment relationship if such\nrelationship is terminated for any reason not encompassed by\nclause (A) of this sentence.  If Company abandons a\nparticular aspect of the Core Business of Company, that is,\nceases such aspect of its business with the intention to\npermanently refrain from such aspect of its business, then\nthis post-employment non-competition covenant shall not\napply to such former aspect of Company's business.\n\n     5.2  Enforcement and Remedies.  Employee understands\nthat the restrictions set forth in paragraph 5.1 may limit\nEmployee's ability to engage in certain businesses anywhere\nin the world during the period provided for above, but\nacknowledges that Employee will receive sufficiently high\nremuneration and other benefits under this Agreement to\njustify such restriction.  Employee acknowledges that money\ndamages would not be sufficient remedy for any breach of\nthis Article by Employee, and Company shall be entitled to\nenforce the provisions of this Article by terminating any\npayments then owing to Employee under this Agreement and\/or\nto specific performance and injunctive relief as remedies\nfor such breach or any threatened breach.  Such remedies\nshall not be deemed the exclusive remedies for a breach of\nthis Article, but shall be in addition to all remedies\navailable at law or in equity to Company, including, without\nlimitation, the recovery of damages from Employee and\nEmployee's agents involved in such breach and remedies\navailable to Company pursuant to other agreements with\nEmployee.\n\n     5.3  Reformation.  It is expressly understood and\nagreed that Company and Employee consider the restrictions\ncontained in this Article to be reasonable and necessary to\nprotect the proprietary information of Company.\nNevertheless, if any of the aforesaid restrictions are found\nby a court having jurisdiction to be unreasonable, or overly\nbroad as to geographic area or time, or otherwise\nunenforceable, the parties intend for the restrictions\ntherein set forth to be modified by such courts so as to be\nreasonable and enforceable and, as so modified by the court,\nto be fully enforced.\n\nARTICLE 6:    STATEMENTS CONCERNING COMPANY; UNITED STATES\n               FOREIGN CORRUPT PRACTICES ACT AND OTHER LAWS\n\n     6.1  Statements Concerning Company.  Employee shall\nrefrain, both during the employment relationship and after\nthe employment relationship terminates, from publishing any\noral or written statements about Company, any of its\naffiliates, or any of such entities' officers, employees,\nagents or representatives that are slanderous, libelous, or\ndefamatory; or that disclose private or confidential\ninformation about Company, any of its affiliates, or any of\nsuch entities' business affairs, officers, employees,\nagents, or representatives; or that constitute an intrusion\ninto the seclusion or private lives of Company, any of its\naffiliates, or any of such entities' officers, employees,\nagents, or representatives; or that give rise to\nunreasonable publicity about the private lives of Company,\nany of its affiliates, or any of such entities' officers,\nemployees, agents, or representatives; or that place\nCompany, any of  its affiliates, or any of such entities'\nofficers, employees, agents, or representatives in a false\nlight before the public; or that constitute a\nmisappropriation of the name or likeness of Company, any of\nits affiliates, or any of such entities' officers,\nemployees, agents, or representatives.  A violation or\nthreatened violation of this prohibition may be enjoined by\nthe courts.  The rights afforded the Company and its\naffiliates under this provision are in addition to any and\nall rights and remedies otherwise afforded by law.\n\n     6.2  United States Foreign Corrupt Practices Act and\nOther Laws.  Employee shall at all times comply with United\nStates laws applicable to Employee's actions on behalf of\nCompany, including specifically, without limitation, the\nUnited States Foreign Corrupt Practices Act, generally\ncodified in 15 U.S.C. 78 (the 'FCPA'), as the FCPA may\nhereafter be amended, and\/or its successor statutes.  If\nEmployee pleads guilty to or nolo contendere or admits civil\nor criminal liability under the FCPA or other applicable\nUnited States law, or if a court finds that Employee has\npersonal civil or criminal liability under the FCPA or other\napplicable United States law, or if a court finds that\nEmployee committed an action resulting in Company or any of\nits affiliates having civil or criminal liability or\nresponsibility under the FCPA or other applicable United\nStates law with knowledge of the activities giving rise to\nsuch liability or knowledge of facts from which Employee\nshould have reasonably inferred the activities giving rise\nto liability had occurred or were likely to occur, such\naction or finding shall constitute 'Cause' for termination\nunder this Agreement unless the Board of Directors\ndetermines that the actions found to be in violation of the\nFCPA or other applicable United States law were taken in\ngood faith and in compliance with all applicable policies of\nCompany.\n\nARTICLE 7:  EFFECT OF TERMINATION ON COMPENSATION\n\n     7.1  In General.  If Employee's employment hereunder\nshall terminate upon expiration of the Term or if such\nemployment shall be terminated by Employee or by Company\nprior to the expiration of the Term for any reason\nwhatsoever, then, upon such termination, regardless of the\nreason therefor, all compensation and all benefits to\nEmployee hereunder shall terminate contemporaneously with\nthe termination of such employment, except that if\nEmployee's employment is Involuntarily Terminated (as such\nterm is defined in paragraph 7.6 hereof) prior to the\nexpiration of the Term, then Employee shall be entitled to\nreceive the following benefits although Employee's active\nemployment shall cease:\n\n          (i)  All payments of the annual base salary under\n     paragraph 3.1 (in the amount in effect on the date\n     Employee's employment is Involuntarily Terminated) and\n     bonus payments under Company's Annual Incentive Plan\n     (based upon Employee's most recent bonus payment amount\n     received prior to the date Employee's employment is\n     Involuntarily Terminated) at such time and in such\n     manner as if Employee's employment had continued\n     through the Term;\n\n          (ii) Employee may participate in the incentive\n     compensation programs provided for in paragraph 3.2\n     (excluding Company's Annual Incentive Plan, which is\n     covered in clause (i) above) as if Employee's\n     employment had continued through the Term;\n\n          (iii) Employee shall be provided coverage for\n     the remainder of the Term essentially equivalent to\n     that under Company's Contributory and Non-Contributory\n     Life Insurance, Health and long-term disability plans\n     for active employees (using Employee's annual base\n     salary pursuant to paragraph 3.1 as the compensation\n     base where relevant); and\n\n          (iv) Employee or Employee's surviving spouse shall\n     be provided additional pension payments in the amount\n     that Employee or his surviving spouse would have\n     received under Company's Retirement Plan, Supplemental\n     Retirement Plan, and Pension Plan for Deferral Plan\n     Participants had Employee's employment continued\n     through the Term.\n\nCompany reserves the right to provide the benefits and\npayments referred to in paragraphs 7.1(ii), 7.1(iii), and\n7.1(iv) by making substantially equivalent payments to or\npurchasing substantially equivalent benefits for Employee\nunder arrangements other than the plans referred to in said\nparagraphs if, in Company's sole discretion, the tax or\ncompliance status of such plans may otherwise be\njeopardized.  Such equivalent payments shall be a liability\nof Company, shall be paid exclusively from the general\nassets of Company, and shall be an unfunded and unsecured\npromise to pay money in the future, unless Company elects to\notherwise fund or secure such payments.\n\n     7.2  Certain Additional Payments by Company.\nNotwithstanding anything to the contrary in this Agreement,\nin the event that any payment or distribution by Company to\nor for the benefit of Employee, whether paid or payable or\ndistributed or distributable pursuant to the terms of this\nAgreement or otherwise (a 'Payment'), would be subject to\nthe excise tax imposed by Section 4999 of the Internal\nRevenue Code of 1986, as amended, or any interest or\npenalties with respect to such excise tax (such excise tax,\ntogether with any such interest or penalties, are\nhereinafter collectively referred to as the 'Excise Tax'),\nCompany shall pay to Employee an additional payment (a\n'Gross-up Payment') in an amount such that after payment by\nEmployee of all taxes (including any interest or penalties\nimposed with respect to such taxes), including any Excise\nTax imposed on any Gross-up Payment, Employee retains an\namount of the Gross-up Payment equal to the Excise Tax\nimposed upon the Payments.  Company and Employee shall make\nan initial determination as to whether a Gross-up Payment is\nrequired and the amount of any such Gross-up Payment.\nEmployee shall notify Company immediately in writing of any\nclaim by the Internal Revenue Service which, if successful,\nwould require Company to make a Gross-up Payment (or a Gross-\nup Payment in excess of that, if any, initially determined\nby Company and Employee) within five days of the receipt of\nsuch claim.  Company shall notify Employee in writing at\nleast five days prior to the due date of any response\nrequired with respect to such claim if it plans to contest\nthe claim.  If Company decides to contest such claim,\nEmployee shall cooperate fully with Company in such action;\nprovided, however, Company shall bear and pay directly or\nindirectly all costs and expenses (including additional\ninterest and penalties) incurred in connection with such\naction and shall indemnify and hold Employee harmless, on an\nafter-tax basis, for any Excise Tax or income tax, including\ninterest and penalties with respect thereto, imposed as a\nresult of Company's action.  If, as a result of Company's\naction with respect to a claim, Employee receives a refund\nof any amount paid by Company with respect to such claim,\nEmployee shall promptly pay such refund to Company.  If\nCompany fails to timely notify Employee whether it will\ncontest such claim or Company determines not to contest such\nclaim, then Company shall immediately pay to Employee the\nportion of such claim, if any, which it has not previously\npaid to Employee.\n\n     7.3  Offset of Severance Benefits.  Any amount payable\nto Employee pursuant to this Article shall be offset against\nany amounts to which Employee may otherwise be entitled\nunder any and all severance plans and policies of Company or\nits affiliates presently in effect or which may be hereafter\nadopted or amended.\n\n     7.4   No Duty to Mitigate Losses.  Employee shall have\nno duty to find new employment following the termination of\nhis employment under circumstances which require Company to\npay any amount to Employee pursuant to this Article.  Any\nsalary or remuneration received by Employee from a third\nparty for the providing of personal services (whether by\nemployment or by functioning as an independent contractor)\nfollowing the termination of his employment under\ncircumstances pursuant to which paragraphs 7.1 or 7.2 apply\nshall not reduce Company's obligation to make a payment to\nEmployee (or the amount of such payment) pursuant to the\nterms of any such paragraph.\n\n     7.5  Incentive and Deferred Compensation.  This\nAgreement governs the rights and obligations of Employee and\nCompany with respect to Employee's base salary and certain\nperquisites of employment.  Employee's rights and\nobligations both during the term of his employment and\nthereafter with respect to stock options, restricted stock,\nperformance units, life insurance policies insuring the life\nof Employee, and other benefits under the plans maintained\nby Company shall be governed by the separate agreements,\nplans and other documents and instruments governing such\nmatters; provided, however, that upon Employee's termination\nof employment hereunder for any reason whatsoever, the\nbenefits payable to Employee under Company's 1988 Deferral\nPlan and the HNG Deferral Plan shall be paid, when\ndistributable to Employee in accordance with the provisions\nof said plans, as if Employee had retired from Company.\n\n     7.6  Certain Defined Terms.  For purposes of this\nAgreement, the following terms shall have the meanings\nascribed to them below:\n\n          (i)  'Beneficial Owner' shall be defined by\n     reference to Rule 13(d)-3 under the Securities Exchange\n     Act of 1934, as in effect on September 1, 1989;\n     provided, however, and without limitation, any\n     individual, corporation, partnership, group,\n     association or other person or entity which has the\n     right to acquire any Voting Stock at any time in the\n     future, whether such right is contingent or absolute,\n     pursuant to any agreement, arrangement or understanding\n     or upon exercise of conversion rights, warrants or\n     options, or otherwise, shall be the Beneficial Owner of\n     such Voting Stock.\n\n          (ii) 'Change of Control' shall mean (A) Company\n     merges or consolidates with any other corporation\n     (other than one of Company's wholly owned subsidiaries)\n     and is not the surviving corporation (or survives only\n     as the subsidiary of another corporation), (B) Company\n     sells all or substantially all of its assets to any\n     other person or entity, (C) Company  is dissolved, (D)\n     any third person or entity (other than the trustee or\n     committee of any qualified employee benefit plan of\n     Company) together with its affiliates and associates\n     shall become, directly or indirectly, the Beneficial\n     Owner of at least 30% of the Voting Stock of Company,\n     or (E) the individuals who constitute the members of\n     the Board of Directors (the 'Incumbent Board') cease\n     for any reason to constitute at least a majority\n     thereof, provided that any person becoming a director\n     whose election or nomination for election by Company\n     stockholders was approved by a vote of at least 80% of\n     the directors comprising the Incumbent Board (either by\n     a specific vote or by approval of the proxy statement\n     of Company in which such person is named as a nominee\n     for director, without objection to such nomination)\n     shall be, for purposes of this clause (E), considered\n     as though such person were a member of the Incumbent\n     Board.\n\n          (iii) 'Involuntarily Terminated' shall mean\n     termination of Employee's employment with Company (A)\n     by Company for any reason whatsoever except for Cause\n     or upon Employee's death or becoming Permanently\n     Disabled or (B) by Employee for Good Reason.\n\n          (iv) 'Voting Stock' shall mean all outstanding\n     shares of capital stock of Company entitled to vote\n     generally in elections for directors, considered as one\n     class; provided, however, that if Company has shares of\n     Voting Stock entitled to more or less than one vote for\n     any such share, such reference to a proportion of\n     shares of Voting Stock shall be deemed to refer to such\n     proportion of the votes entitled to be cast by such\n     shares.\n          \n     7.7  Liquidated Damages.  In light of the difficulties\nin estimating the damages for an early termination of this\nAgreement, Company and Employee hereby agree that the\npayments, if any, to be received by Employee pursuant to\nparagraph 7.1 or paragraph 7.2 shall be received by Employee\nas liquidated damages.\n\n\nARTICLE 8:  MISCELLANEOUS\n\n     8.1  Notices.  For purposes of this Agreement, notices\nand all other communications provided for herein shall be in\nwriting and shall be deemed to have been duly given when\npersonally delivered or when mailed by United States\nregistered or certified mail, return receipt requested,\npostage prepaid, addressed as follows:\n\n     If to Company to: Enron Corp.\n                       1400 Smith Street\n                       Houston, Texas  77002\n                       Attention:  Corporate Secretary\n\n     If to Employee to: Mr. Kenneth L. Lay\n                        2121 Kirby Drive, #137\n                        Houston, Texas  77019\n\nor to such other address as either party may furnish to the\nother in writing in accordance herewith, except that notices\nof changes of address shall be effective only upon receipt.\n\n     8.2  Applicable Law.  This Agreement is entered into\nunder, and shall be governed for all purposes by, the laws\nof the State of Texas, excluding any conflict-of-law rule or\nprinciple that might refer the construction of this\nAgreement to the laws of another State or country.  The\nparties agree that this Agreement is to be at least\npartially performed in Houston, Harris County, Texas.\n\n     8.3  No Waiver.  No failure by either party hereto at\nany time to give notice of any breach by the other party of,\nor to require compliance with, any condition or provision of\nthis Agreement shall be deemed a waiver of similar or\ndissimilar provisions or conditions at the same or at any\nprior or subsequent time.\n\n     8.4  Severability.  It is a desire and intent of the\nparties that the terms, provisions, covenants and remedies\ncontained in this Agreement shall be enforceable to the\nfullest extent permitted by law.  If any such term,\nprovision, covenant, or remedy of this Agreement or the\napplication thereof to any person, association, or entity or\ncircumstances shall, to any extent, be construed to be\ninvalid or unenforceable in whole or in part, then such\nterm, provision, covenant, or remedy shall be construed in a\nmanner so as to permit its enforceability under the\napplicable law to the fullest extent permitted by law.  In\nany case, the remaining provisions of this Agreement or the\napplication thereof to any person, association, or entity or\ncircumstances other than those to which they have been held\ninvalid or unenforceable, shall remain in full force and\neffect.\n\n     8.5  Counterparts.  This Agreement may be executed in\none or more counterparts, each of which shall be deemed to\nbe an original, but all of which together will constitute\none and the same Agreement.\n\n     8.6  Withholding of Taxes and Other Employee\nDeductions.  Company may withhold from any benefits and\npayments made pursuant to this Agreement all federal, state,\ncity and other taxes as may be required pursuant to any law\nor governmental regulation or ruling and all other normal\nemployee deductions made with respect to Company's employees\ngenerally.\n\n     8.7  Headings.  The paragraph headings have been\ninserted for purposes of convenience and shall not be used\nfor interpretive purposes.\n\n     8.8  Gender and Plurals.  Wherever the context so\nrequires, the masculine gender includes the feminine or\nneuter, and the singular number includes the plural and\nconversely.\n\n     8.9  Affiliate.  As used in this Agreement, the term\n'affiliate' shall mean any entity which owns or controls, is\nowned or controlled by, or is under common ownership or\ncontrol with, Company.\n\n     8.10 Cooperation by Employee.  Employee shall cooperate\nwith Company by furnishing any and all information requested\nby Company, taking such physical examinations as Company may\ndeem necessary, and taking such other relevant action as may\nbe requested by Company in order to facilitate the\nacquisition and maintenance of the life insurance policy on\nthe life of Employee that is subject to the Split Dollar\nAgreement referenced in paragraph 3.6.\n\n     8.11 Assignment.  This Agreement shall be binding upon\nand inure to the benefit of Company and any successor of\nCompany, by merger or otherwise.  Except as provided in the\npreceding sentence, this Agreement, and the rights and\nobligations of the parties hereunder, are personal and\nneither this Agreement, nor any right, benefit, or\nobligation of either party hereto, shall be subject to\nvoluntary or involuntary assignment, alienation or transfer,\nwhether by operation of law or otherwise, without the prior\nwritten consent of the other party.\n\n     8.12 Term.  This Agreement has a term co-extensive with\nthe Term as provided in paragraph 2.1.  Termination shall\nnot affect any right or obligation of any party which is\naccrued or vested prior to such termination.  Without\nlimiting the scope of the preceding sentence, the provisions\nof Articles 4, 5, and 6 shall survive any termination of the\nemployment relationship and\/or of this Agreement.\n\n     8.13 Entire Agreement.  Except as provided in (i)\nwritten company policies promulgated by Company dealing with\nissues such as securities trading, business ethics,\ngovernmental affairs and political contributions, consulting\nfees, commissions or other payments, compliance with law,\ninvestments and outside business interests as officers and\nemployees, reporting responsibilities, administrative\ncompliance, and the like, (ii) the written benefits, plans,\nand programs referenced in paragraphs 3.2 and 3.3, and\n(iii) any signed written agreements contemporaneously or\nhereafter executed by Company and Employee (including, but\nnot limited to, the Split Dollar Agreement and the Stock\nOption Grant Agreements referenced in Article 3), this\nAgreement constitutes the entire agreement of the parties\nwith regard to such subject matters, and contains all of the\ncovenants, promises, representations, warranties, and\nagreements between the parties with respect to Employee's\nemployment relationship with Employer and the term and\ntermination of such relationship, and replaces and merges\nprevious agreements and discussions pertaining to the\nemployment relationship between Employer and Employee.\nSpecifically, but not by way of limitation, the Prior\nEmployment Agreement is hereby canceled and Employee hereby\nirrevocably waives and renounces all of Employee's rights\nand claims under the Prior Employment Agreement.\nNotwithstanding the preceding provisions of this paragraph\n8.13, except as provided in paragraph 8.14, the execution of\nthis Agreement shall not affect the rights of the parties\npursuant to (A) the stock options and restricted stock\npreviously awarded to Employee and currently outstanding\nunder any and all stock plans maintained by Company, (B) the\nprevious awards to Employee that are currently outstanding\nunder Company's Performance Unit Plan, (C) that certain\nSplit Dollar Life Insurance Agreement and related Collateral\nAgreement between Company and the KLL &amp; LPL Family\nPartnership, Ltd. dated as of April 22, 1994, (D) that\ncertain Loan Commitment Agreement between Company and\nEmployee made effective as of September 1, 1989, as amended\nfrom time to time by amendments to the Prior Employment\nAgreement (the 'Loan Commitment Agreement'), and (E) Section\n2 of the Houston Natural Gas Corporation and Subsidiaries\nExecutive Supplemental Benefit Agreement between Employee\nand Houston Natural Gas Corporation dated November 12, 1984\n(the 'HNG ESBA'.  Further, the execution of this Agreement\nshall not affect Employee's previous waiver, renouncement,\nand forfeiture of any and all of his rights to benefits\nunder the Enron Executive Supplemental Survivor Benefits\nPlan, the Houston Natural Gas Corporation and Subsidiaries\nExecutive Post-Retirement Salary Continuation Agreement\nbetween Employee and Houston Natural Gas Corporation dated\nJuly 1, 1985, and the HNG ESBA (excluding all rights as\ndescribed under the terms and provisions of Section 2 of the\nHNG ESBA).  Each party to this Agreement acknowledges that\nno representation, inducement, promise or agreement, oral or\nwritten, has been made by either party, or by anyone acting\non behalf of either party, which is not embodied herein, and\nthat no agreement, statement, or promise relating to the\nemployment of Employee by Company, which is not contained in\nthis Agreement, shall be valid or binding.  Any modification\nof this Agreement will be effective only if it is in writing\nand signed by the party to be charged.\n\n     8.14 Amendment to Loan Commitment Agreement.  Effective\nas of the Effective Date, the Loan Commitment Agreement\nshall be and is hereby amended as follows:  (i) the date\n'December 31, 2001' shall be substituted for the date\n'August 31, 1994' in each place such latter date appears in\nSections 1.01 and 2.04 of the Loan Commitment Agreement;\n(ii) the date 'January 1, 2001' shall be substituted for the\ndates 'February 8, 1999,' and  'January 1, 1994' in each\nplace such latter dates appear in Sections 2.01 and 2.03 of\nthe Loan Commitment Agreement; and (iii) all references to\nthe Prior Employment Agreement in the Loan Commitment\nAgreement shall be deleted and references to this Agreement\nshall be substituted therefor.\n\n     IN WITNESS WHEREOF, the parties hereto have executed\nthis Agreement on the 18th day of December, 1996, to be\neffective as of the Effective Date.\n\n                              ENRON CORP.\n\n\n                              By:    CHARLES A. LeMAISTRE\n                              Name:  Charles A. LeMaistre\n                              Title: Chairman, Compensation\n                                     Committee of Board of\n                                     Directors\n                                            'COMPANY'\n\n\n                              KENNETH L. LAY\n                              KENNETH L. LAY\n                                             'EMPLOYEE'\n\n\n\n                           EXHIBIT A\n\n                          ENRON CORP.\n                  STOCK OPTION GRANT AGREEMENT\n\n\nGRANTEE:  Kenneth L. Lay\n          2121 Kirby Drive, #137\n          Houston, Texas  77019\n\nI.   AWARD\n\nCongratulations!  You have been granted an Option ('Option')\nto purchase shares of $.10 par value common stock ('Stock')\nof Enron Corp. (the 'Company') as follows:\n\n     Employee I.D.:                          [redacted]\n     Non-Qualified Stock Option Grant No.:   ________________\n     Stock Plan:                             Enron Corp. 1991 Stock Plan\n     Date of Grant:                          ________________\n     Purchase Price per Share Subject to Option:  $_______________\n     Total Number of Shares Subject to Option:     637,500\n\nII.  DEFINITIONS\n\nFor purposes of this Stock Option Grant Agreement (this\n'Agreement'), the following terms shall have the following\nmeanings:\n\n     'Adjusted Average S&amp;P 500 Return' means, with respect\n     to a specified period, 120% of the Average S&amp;P 500\n     Return for such period.\n\n     'Average S&amp;P 500 Return' means, with respect to a\n     specified period, the average of the Total Shareholder\n     Returns during such period for the common stocks\n     comprising the Standard &amp; Poor's 500 Composite Stock\n     Price Index.\n\n     'Cause' shall have the meaning assigned to such term in\n     the Employment Agreement.\n\n     'Employee' shall mean Kenneth L. Lay.\n\n     'Employment Agreement' shall mean that certain\n     Employment Agreement between Employee and the Company\n     made effective as of December 9, 1996.\n\n     'Involuntarily Terminated' shall have the meaning\n     assigned to such term in the Employment Agreement.\n\n     'Measurement Period' shall mean the period beginning on\n     January 1, 1997, and ending on the last day of any\n     subsequent Year.\n     \n     'Nonvested Shares' shall mean 80% of the aggregate\n     number of shares of Stock offered by this Option.\n\n     'Plan' shall mean the Enron Corp. 1991 Stock Plan, as\n     amended from time to time.\n\n     'Retirement' shall mean the termination of Employee's\n     employment with the Company  on or after December 31,\n     2001, provided that Employee has remained continuously\n     employed by the Company from the date of grant hereof\n     through such termination date pursuant to the terms of\n     the Employment Agreement.\n\n     'Total Enron Shareholder Return' means, with respect to\n     a specified period, the Total Shareholder Return during\n     such period for a share of Stock.\n\n     'Total Shareholder Return' means, with respect to a\n     specified period, the sum during such period of the\n     appreciation or depreciation in the price of a share of\n     a company's common stock and the dividends paid,\n     expressed on a percentage basis, as calculated by the\n     Committee in a manner consistent with that used to\n     calculate 'Total Shareholder Return' under the\n     Company's Performance Unit Plan as of the date of grant\n     of this Option.\n\n     'Year' shall mean the 12-month period beginning on\n     January 1 and ending on December 31.\n\nCapitalized terms used in this Agreement but not defined\nherein are defined in the Plan and are used herein with the\nmeanings ascribed to them in the Plan.\n\nIII. EXERCISE OF OPTION\n\nSubject to the earlier expiration of this Option as herein\nprovided and subject to the provisions of the Plan providing\nfor the disposition of this Option upon the occurrence of\ncertain transactions, this Option may be exercised, by\nwritten notice to the Company at its principal executive\noffice addressed to the attention of such officer as is then\nresponsible for administering agreements of this nature, at\nany time and from time to time after the date of grant\nhereof, but, except as otherwise provided below, this Option\nshall not be exercisable for more than a percentage of the\naggregate number of shares offered by this Option determined\nin accordance with the following schedule:\n          \n          \n          \n          \n          \n                                         Percentage of Shares\n          Exercise Date                  That May Be Purchased\n\n          Prior to November 1, 2003               20%\n          On or After November 1, 2003           100%\n     \nNotwithstanding the foregoing, this Option shall become\nexercisable with respect to 100% of the  shares offered by\nthis Option if Employee's employment with the Company is\nInvoluntarily Terminated or if such employment is terminated\nby reason of Employee's death, Disability, or Retirement.\nFurther,  this Option shall become exercisable with respect\nto the Nonvested Shares prior to the occurrence of the dates\nor events set forth above as follows:\n\n          (1)  As soon as practicable (but in no event more\n     than 60 days) after the last day of December of each\n     Year (beginning with December 31, 1997), the Committee\n     shall determine whether the Total Enron Shareholder\n     Return for such Year equaled or exceeded the Adjusted\n     Average S&amp;P 500 Return for such Year.\n\n          (2)  If the Total Enron Shareholder Return for\n     such Year equaled or exceeded the Adjusted Average S&amp;P\n     500 Return for such Year, then this Option shall become\n     exercisable as of the last day of December of such Year\n     with respect to one-third of the Nonvested Shares.  If\n     the Total Enron Shareholder Return for such Year was\n     less than the Adjusted Average S&amp;P 500 Return for such\n     Year, then the one-third of the Nonvested Shares that\n     did not become exercisable for such Year pursuant to\n     the preceding sentence shall become exercisable as of\n     the last day of such Year or any subsequent Year so\n     long as the cumulative Total Enron Shareholder Return\n     for the applicable Measurement Period equaled or\n     exceeded the cumulative Adjusted Average S&amp;P 500 Return\n     for such Measurement Period.  The Committee shall\n     determine the cumulative  Total Enron Shareholder\n     Return and the cumulative Adjusted Average S&amp;P 500\n     Return for any applicable Measurement Period.\n\nThis Option is not transferable by Employee otherwise than\npursuant to Section 5.4(iii) of the Plan.  This Option may\nbe exercised only while Employee remains an employee of the\nCompany, except that if Employee's employment with the\nCompany is terminated for any reason whatsoever other than\nby the Company for Cause, then this Option may be exercised\nfollowing such termination, but only as to the number of\nshares Employee was entitled to purchase hereunder as of the\ndate Employee's employment so terminates (which shall be\ndetermined after giving effect to the provisions of the\npreceding paragraph that provide that this Option shall be\nexercisable with respect to 100% of the shares offered\nhereunder in the event Employee's employment is\nInvoluntarily Terminated or such termination is by reason of\nEmployee's death, Disability, or Retirement).\n\nNotwithstanding any provision herein to the contrary, (a)\nthis Option shall not be exercisable in any event after\nDecember 31, 2003, and (b) this Option shall not become\nexercisable with respect to any additional shares offered by\nthis Option after the termination of Employee's employment\nwith the Company.\n\nIV.      MISCELLANEOUS\n\nThis Option is governed by the terms and conditions of the\nPlan,  which is attached hereto and made a part of this\nAgreement.  This Option shall not constitute an incentive\nstock option within the meaning of Section 422 of the\nInternal Revenue Code of 1986.\n               \n                                   Administrative Committee\n                                   Enron Corp. 1991 Stock\nPlan\n\n\n                           EXHIBIT B\n\n                     SPLIT DOLLAR AGREEMENT\n\n\n     THIS SPLIT DOLLAR AGREEMENT (this 'Agreement') is made\nand entered into effective as of December 13, 1996, by and\namong ENRON CORP., a Delaware corporation, with principal\noffices and place of business in Houston, Texas (hereinafter\nreferred to as the 'Company'), KENNETH L. LAY, an individual\nresiding in Houston, Texas (hereinafter referred to as the\n'Employee'),  and KLL &amp; LPL FAMILY PARTNERSHIP, LTD., a\nTexas limited partnership with principal offices and place\nof business in Houston, Texas (hereinafter referred to as\nthe 'Partnership'),\n\n     WITNESSETH THAT:\n\n     WHEREAS, the Employee is currently employed by the\nCompany; and\n\n     WHEREAS, the Partnership is the owner of a policy of\nlife insurance insuring the life of the Employee in the\nevent of the Employee's death (hereinafter referred to as\nthe 'Policy'), which is described in Exhibit A attached\nhereto and by this reference made a part hereof, and which\nwas issued by Transamerica Occidental Life Insurance Company\n(hereinafter referred to as the 'Insurer'); and\n\n     WHEREAS, the Policy was obtained on October  14, 1996,\nby the Partnership upon conversion of another life insurance\npolicy on the life of the Employee that was owned by the\nPartnership and in which the Partnership had an economic\ninterest valued at $200,112;\n\n     WHEREAS, the Company is willing to pay a portion of the\npremiums due on the Policy as an additional employment\nbenefit for the Employee, on the terms and conditions\nhereinafter set forth; and\n\n     WHEREAS, the Partnership is the owner of the Policy\nand, as such, possesses all incidents of ownership in and to\nthe Policy; and\n\n     WHEREAS, the Company wishes to have the Policy\ncollaterally assigned to it by the Partnership, in order to\nsecure the repayment of the amounts which it will pay toward\nthe premiums on the Policy and certain other amounts;\n\n     NOW, THEREFORE, in consideration of the premises and of\nthe mutual promises contained herein, the parties hereto\nagree as follows:\n\n     1.    Acquisition of Policy.  The Partnership has\nacquired the Policy from the Insurer in the total face\namount of $11,887,900.  The parties hereto have taken all\nnecessary action to cause the Insurer to issue the Policy,\nand shall take any further action which may be necessary to\ncause the Policy to conform to the provisions of this\nAgreement.  The parties hereto agree that the Policy shall\nbe subject to the terms and conditions of this Agreement and\nof the collateral assignment filed with the Insurer relating\nto the Policy.\n\n     2.   Ownership of Policy.  The Partnership shall be the\nsole and absolute owner of the Policy, and may exercise all\nownership rights granted to the owner thereof by the terms\nof the Policy, except as may otherwise be provided herein.\n\n     3.   Payment of Premiums; Provision of Information.\n\n          a.   Except to the extent required for the\nPartnership to satisfy its obligations pursuant to section 5\nbelow, the Partnership shall not be required to make any\npremium payments with respect to the Policy.\n\n          b.   On or before the due date of each annual\nPolicy premium, or within the grace period provided therein,\nthe Company shall pay $250,000 to the Insurer, and shall,\nupon request, promptly furnish the Partnership evidence of\ntimely payment of such premium.  Except with the consent of\nthe Partnership, the Company shall not pay less than the\namount provided in the preceding sentence, but it may, in\nits discretion, at any time and from time to time, subject\nto acceptance of such amount by the Insurer, pay more than\nsuch amount or make other premium payments on the Policy.\nNotwithstanding any provision herein to the contrary, the\nCompany shall have no obligation (1) to make more than five\nannual premium payments in the amount specified in the\npreceding provisions of this paragraph or (2) to make any\npremium payments on or after the date the Employee's\nemployment with the Company terminates for any reason\nwhatsoever.\n\n          c.   The Company shall annually furnish to the\nEmployee a statement of the amount of income reportable by\nthe Employee for federal and state income tax purposes as a\nresult of the insurance protection provided the\nPartnership's Policy beneficiary.  The Partnership and the\nEmployee shall promptly furnish the Company with (1) copies\nof any information or notices provided by the Insurer from\ntime to time with respect to the Policy and (2) any other\nmaterial or information relating to the Policy and\nreasonably requested by the Company from time to time.\n\n     4.   Collateral Assignment.  To secure the repayment to\nthe Company of the amount of the premiums on the Policy paid\nby it hereunder and the other amounts due to the Company\nhereunder, the Partnership has, contemporaneously herewith,\nassigned the Policy to the Company as collateral under a\nseparate assignment instrument.  The collateral assignment\nof the Policy to the Company shall not be terminated,\naltered or amended by the Partnership, without the express\nwritten consent of the Company.  The parties hereto agree to\ntake all action necessary to cause such collateral\nassignment to conform to the provisions of this Agreement\nand to be accepted by the Insurer.  Without limiting the\nscope of the preceding provisions of this section, the\nparties hereto agree that the Company shall have an interest\nin the cash surrender value of the Policy to secure the\namounts due to the Company hereunder, which interest shall\nin no event be less than the aggregate premium payments made\nwith respect to the Policy by the Company pursuant to\nsection 3(b) above.\n\n     5.   Limitations on Partnership's Rights in Policy.\nThe Partnership shall not sell, assign, transfer, borrow\nagainst or withdraw from the cash surrender value of the\nPolicy, surrender, or cancel the Policy without, in any such\ncase, the express written consent of the Company.  Further,\nthe Partnership shall not change the beneficiary designation\nprovision of the Policy, change the elected death benefit\noption provisions thereof, decrease or increase the face\namount of insurance, fail to make premium payments, take any\nother action, or fail to take any action if, as a result of\nany such action or inaction, (a) the aggregate death\nbenefits payable under the Policy at any given time would be\nless than the portion of the death benefits payable to the\nCompany pursuant to the first sentence of section 6(b) below\nif the Employee's death was to occur at such time or (b) the\nprojected cash surrender value of the Policy upon Employee's\nattainment of 100 years of age (determined based upon the\nInsurer's assumptions prevailing at the time of any such\naction or inaction) would be less than $250,000.\n\n     6.   Collection of Death Proceeds.\n\n          a.   Upon the death of the Employee prior to the\ntermination of this Agreement during the Employee's\nlifetime, the Company and the Partnership shall cooperate\nwith the beneficiary or beneficiaries designated by the\nPartnership to take whatever action is necessary to collect\nthe death benefit provided under the Policy.  When such\nbenefit has been collected and paid as provided herein, this\nAgreement shall thereupon terminate.\n\n          b.   Upon the death of the Employee prior to the\ntermination of this Agreement during the Employee's\nlifetime, the Company shall have the unqualified right to\nreceive $1,250,000 of such death benefit in a single lump\nsum cash payment; provided, however, that if the Employee's\nemployment with the Company has terminated for any reason\nwhatsoever (other than death) prior to the date upon which\nthe Company has paid all five of the annual premium payments\nprovided for in section 3(b) above, then the amount of the\ndeath benefit payable to the Company shall be reduced to an\namount equal to the aggregate premium payments made by the\nCompany pursuant to section 3(b) above on or before the date\nof such termination.  The balance of the death benefit\nprovided under the Policy, if any, shall be paid directly to\nthe beneficiary or beneficiaries designated by the\nPartnership, in the manner and in the amount or amounts\nprovided in the beneficiary designation provision of the\nPolicy.  In no event shall the amount payable to the Company\nhereunder exceed the insurance benefits payable at the death\nof the Employee. No amount shall be paid from such insurance\nbenefits to the beneficiary or beneficiaries designated by\nthe Partnership until the full amount due the Company\nhereunder has been paid.  The parties hereto agree that the\nbeneficiary designation provision of the Policy shall\nconform to the provisions hereof.\n\n          c.   Notwithstanding any provision hereof to the\ncontrary, in the event that, for any reason whatsoever, no\ndeath benefit is payable under the Policy upon the death of\nthe Employee prior to the termination of this Agreement\nduring the Employee's lifetime and in lieu thereof the\nInsurer refunds all or any part of the premiums paid for the\nPolicy, the Company and the Partnership's designated\nbeneficiary or beneficiaries shall have the unqualified\nright to share such premiums based on the respective\ncumulative contributions by the Company and the Partnership\nthereto.  For purposes of the preceding sentence, the\nPartnership shall be deemed to have made a premium payment\nwith respect to the Policy on the effective date of this\nAgreement in an amount equal to $200,112.\n\n     7.   Termination of the Agreement During the Employee's\nLifetime.\n\n          a.   This Agreement may be terminated by the\nPartnership at any time during the Employee's lifetime upon\nwritten notice to the Company and payment to the Company by\nthe Partnership at the time of such notice of a single lump\nsum cash payment in the amount of $1,250,000; provided,\nhowever, that if the Employee's employment with the Company\nhas terminated for any reason whatsoever (other than death)\nprior to the date upon which the Company has paid all five\nof the annual premium payments provided for in section 3(b)\nabove, then the amount of such required payment to the\nCompany by the Partnership shall be reduced to an amount\nequal to the aggregate premium payments made by the Company\npursuant to section 3(b) above on or before the date of such\ntermination.  Upon receipt of such amount, the Company shall\nrelease the collateral assignment of the Policy by the\nexecution and delivery of an appropriate instrument of\nrelease.\n\n          b.   This Agreement shall automatically terminate,\nduring the Employee's lifetime, without notice, upon the\noccurrence of any of the following events: (1) total\ncessation of the Company's business; (2) bankruptcy,\nreceivership or dissolution of the Company; or (3) mutual\nwritten consent of the parties.  If this Agreement\nterminates for a reason described in the preceding sentence,\nthen for sixty (60) days after the date of the termination\nof this Agreement, the Partnership shall have the option of\nobtaining the release of the collateral assignment of the\nPolicy to the Company.  To obtain such release, the\nPartnership shall repay to the Company the total amount of\nthe premium payments made by the Company hereunder, less any\nindebtedness secured by the Policy which was incurred by the\nCompany and remains outstanding as of the date of such\ntermination, including any interest due on such\nindebtedness.  Upon receipt of such amount, the Company\nshall release the collateral assignment of the Policy by the\nexecution and delivery of an appropriate instrument of\nrelease.  If the Partnership fails to exercise such option\nwithin such sixty (60) day period, then, at the request of\nthe Company, the Partnership shall execute any document or\ndocuments required by the Insurer to transfer the interest\nof the Partnership in the Policy to the Company.\nAlternatively, the Company may enforce its right to be\nrepaid the amount of the premiums on the Policy paid by it\nfrom the cash surrender value of the Policy under the\ncollateral assignment of the Policy; provided that in the\nevent the cash surrender value of the Policy exceeds the\namount due the Company, such excess shall be paid to the\nPartnership.  Thereafter, neither the Partnership nor any\nperson claiming under the Partnership shall have any further\ninterest in and to the Policy, either under the terms\nthereof or under this Agreement.\n\n     8.   Insurer Not a Party.  The Insurer shall be fully\ndischarged from its obligations under the Policy by payment\nof the Policy death benefit to the beneficiary or\nbeneficiaries named in the Policy, subject to the terms and\nconditions of the Policy.  In no event shall the Insurer be\nconsidered a party to this Agreement, or any modification or\namendment hereof.  No provision of this Agreement, nor of\nany modification or amendment hereof, shall in any way be\nconstrued as enlarging, changing, varying, or in any other\nway affecting the obligations of the Insurer as expressly\nprovided in the Policy, except insofar as the provisions\nhereof are made a part of the Policy by the collateral\nassignment executed by the Partnership and filed with the\nInsurer in connection herewith.\n\n     9.   Named Fiduciary. Determination of Benefits, Claims\nProcedure and Administration.\n\n          a.   The Company is hereby designated as the named\nfiduciary under this Agreement.  The named fiduciary shall\nhave authority to control and manage the operation and\nadministration of this Agreement, and it shall be\nresponsible for establishing and carrying out a funding\npolicy and method consistent with the objectives of this\nAgreement.\n          b.   (1)  Claim.  A person who believes that he or\nshe is being denied a benefit to which he or she is entitled\nunder this Agreement (hereinafter referred to as a\n'Claimant') may file a written request for such benefit with\nthe Company, setting forth his or her claim.  The request\nmust be addressed to the Company at its then principal place\nof business.\n\n               (2)  Claim Decision.  Upon receipt of a\nclaim, the Company shall advise the Claimant that a reply\nwill be forthcoming within ninety (90) days and shall, in\nfact, deliver such reply within such period.  The Company\nmay, however, extend the reply period for an additional\nninety (90) days for reasonable cause.\n\n                    If the claim is denied in whole or in\npart, the Company shall adopt a written opinion, using\nlanguage calculated to be understood by the Claimant,\nsetting forth: (i) the specific reason or reasons for such\ndenial; (ii) the specific reference to pertinent provisions\nof this Agreement on which such denial is based; (iii) a\ndescription of any additional material or information\nnecessary for the Claimant to perfect his or her claim and\nan explanation why such material or such information is\nnecessary; (iv) appropriate information as to the steps to\nbe taken if the Claimant wishes to submit the claim for\nreview; and (v) the time limits for requesting a review\nunder subsection (3) and for review under subsection (4)\nhereof.\n\n               (3)  Request for Review.  With sixty (60)\ndays after the receipt by the Claimant of the written\nopinion described above, the Claimant may request in writing\nthat the Company review its determination.  Such request\nmust be addressed to the Company, at its then principal\nplace of business.  The Claimant or his or her duly\nauthorized representative may, but need not, review the\npertinent documents and submit issues and comments in\nwriting for consideration by the Company.  If the Claimant\ndoes not request a review of the Company's determination\nwithin such sixty (60) day period, he or she shall be barred\nand estopped from challenging the Company's determination.\n\n               (4)  Review of Decision.  Within sixty (60)\ndays after the Company's receipt of a request for review, it\nwill review the determination. After considering all\nmaterials presented by the Claimant, the Company will render\na written opinion, written in a manner calculated to be\nunderstood by the Claimant, setting forth the specific\nreasons for the decision and containing specific references\nto the pertinent provisions of this Agreement on which the\ndecision is based.  If special circumstances require that\nthe sixty (60) day time period be extended, the Company will\nso notify the Claimant and will render the decision as soon\nas possible, but no later than one hundred twenty (120) days\nafter receipt of the request for review.\n\n     10.  Amendment.  This Agreement may not be amended,\naltered or modified, except by a written instrument signed\nby the parties hereto, or their respective successors or\nassigns, and may not be otherwise terminated except as\nprovided herein.\n\n     11.  Binding Effect.  This Agreement shall be binding\nupon and inure to the benefit of the Company and its\nsuccessors and assigns, and the Employee, the Partnership,\nand their respective  successors,  assigns, heirs,\nexecutors, administrators, and beneficiaries.\n\n     12.  Notice.   Any notice, consent or demand required\nor permitted to be given under the provisions of this\nAgreement shall be in writing, and shall be signed by the\nparty giving or making the same.  If such notice, consent or\ndemand is mailed to a party hereto, it shall be sent by\nUnited States certified mail, postage prepaid, addressed to\nsuch party's last known address as shown on the records of\nthe Company.  The date of such mailing shall be deemed the\ndate of notice, consent or demand.\n\n     13.  Taxes.  The Company makes no guarantees and\nassumes no obligations or responsibilities with respect to\nthe Employee's or the Partnership's federal, state, or local\nincome, estate, inheritance, and gift tax obligations, if\nany, under this Agreement, the Policy, or the collateral\nassignment of the Policy to the Company.\n\n     13.  Governing Law.  This Agreement, and the rights of\nthe parties hereunder, shall be governed by and construed in\naccordance with the laws of the State of Texas.\n\n     IN WITNESS WHEREOF, the parties hereto have executed\nthis Agreement in triplicate on this the 18th day of\nDecember, 1996, effective as of December 13, 1996.\n\n                     ENRON CORP.\n                     \n                     \n                     By:CHARLES A. LeMAISTRE\n                     Name: Charles A. LeMaistre\n                     Title: Chairman, Compensation Committee\n                     of Board of Directors\n                                                 'COMPANY'\n                        \n                        \n                        \n                     KENNETH L. LAY\n                     Kenneth L. Lay\n                                                 'EMPLOYEE'\n                        \n                        \n                        \n                     KLL &amp; LPL FAMILY PARTNERSHIP, LTD.\n                        \n                        \n                     By:KENNETH L. LAY\n                     Name:   Kenneth L. Lay\n                     Title:  Managing Partner\n                        \n                                    'PARTNERSHIP'\n\n                           EXHIBIT A\n\n\n     The following life insurance policy is subject to the\nattached Split Dollar Agreement:\n\n\nInsurer:            Transamerica Occidental Life Insurance Company\n\nInsured:            Kenneth L. Lay\n\nPolicy Number:      92539069\n\nFace Amount:        $11,887,900\n\nEffective Date of Policy:  October 14, 1996\n\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7454],"corporate_contracts_industries":[9535],"corporate_contracts_types":[9539,9544],"class_list":["post-39119","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-enron-corp","corporate_contracts_industries-utilities__gas","corporate_contracts_types-compensation","corporate_contracts_types-compensation__employment"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/39119","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=39119"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=39119"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=39119"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=39119"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}