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EXHIBIT 10.O
EMPLOYMENT AGREEMENT
Amended and Restated Effective as of February 1, 2001
THIS AGREEMENT, was made and entered into the 31st day of July, 1992
(the "Effective Date"), and is amended and restated effective as of this 1st day
of February, 2001 (the "Restatement Date"), by and between EL PASO ENERGY
CORPORATION (to be known as El Paso Corporation), a Delaware corporation (the
"Company") and XXXXXXX X. XXXX of Houston, Texas (the "Executive").
WHEREAS, the Company currently employs the Executive as Chairman,
President and Chief Executive Officer, in connection with which the Executive
also serves as a member of the Board of Directors; and
WHEREAS, the Executive agreed to forego his right to receive payment of
his base salary effective as of February 1, 1996, as provided for in the
Amendment to Employment Agreement dated January 29, 1996, and the Executive's
base salary was reinstated effective as of October 1, 1999; and
WHEREAS, during the period from February 1, 1996 through September 30,
1999, the Executive's employment agreement was amended to establish an
illustrative base salary for determination of the Executive's benefits under
applicable Company plans and this Agreement; and
WHEREAS, both the Company and the Executive (the "Parties") now desire
to set forth certain conditions of such employment during the "Term" as defined
below:
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and for other consideration mutually acknowledged, the Parties
agree as follows:
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1. Term.
As of the Restatement Date, the Term of this Amended and Restated
Agreement (the "Amendment and Restatement") continues through January 31, 2004,
and effective the first day of each calendar month thereafter, the Term shall
automatically be extended for one additional month (so as to establish a three
(3) year remaining Term), unless prior thereto either Party shall have given
written notice that the Term shall not be so extended.
2. Position.
During the Term, the Executive shall serve as Chairman, President and
Chief Executive Officer, and subject to reelection by Company stockholders,
Chairman of the Board of Directors of the Company.
3. Compensation and Benefits.
(a) Except as provided in Sections 3(b), 3(c) and 3(d), below, the
Executive's rights to compensation and benefits shall be as determined under
applicable plans, programs or arrangements of the Company in effect from time to
time, provided that no material reduction to any compensation (including base
salary) or benefits as in effect on the Restatement Date shall occur without the
Executive's written consent.
(b) (i) The Executive's pension benefit under the Company's
Supplemental Benefits Plan as in effect on the Restatement Date (the "SBP"),
shall be determined by taking into account under Section 5.1 of the SBP, the
following special adjustment: for each "Plan Year," as defined in the El Paso
Energy Corporation Pension Plan as in effect on the Effective Date, the
Executive shall be deemed credited with two (2) years of age and "Credited
Service," as defined in the Pension Plan, subject to Section
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4(d), below. No additional years of age or service shall be deemed credited once
the Executive has been deemed credited with 30 years of service.
(ii) To the extent the SBP benefit determined pursuant to the
adjustment described in Clause (i) above exceeds the Executive's benefit as
otherwise determined under the SBP (the "Basic SBP Benefit"), such excess (the
"SBP Excess Amount") shall be paid in a single lump-sum on the later of (A) the
earlier of the Executive's death or his attainment of age 56 (the "Payment
Date"), or as soon thereafter as any offset as provided below is determined, or
(B) the time for commencement of payment of the Basic SBP Benefit. Interest
shall accrue on the SBP Excess Amount from the date of termination of the
Executive's employment to the date of payment of the SBP Excess Amount, if
later, at the rate applicable to deferred compensation under the terms of the
Company's Deferred Compensation Plan, as currently in effect. Such interest
shall be paid at the time the SBP Excess Amount is paid. The SBP Excess Amount
shall be offset by the present value of any benefit accrued by the Executive
through the Payment Date, under any defined benefit pension plan of any
subsequent employer, such offset to be independently determined as provided in
Section 8, below. Notwithstanding the above, if a Change in Control occurs at
any time, the SBP Excess Amount shall not be subject to offset under this Clause
(ii), and shall be paid on the later of (A) the date of the Change in Control,
or (B) the date for payment of the Executive's Basic SBP Benefit.
(iii) The Executive's entire SBP benefit, including the Basic SBP
Benefit and the SBP Excess Amount (collectively, the "SBP Benefit"), shall be
subject to the provisions of the Company's Benefits Protection Trust, or such
other plan or arrangement as the Parties may agree to, as a benefit payable
under the SBP.
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(iv) For purposes of calculating the Executive's compensation and
benefits under any and all plans or programs of the Company (including without
limitation his benefits as described in this Section 3(b)), the following shall
apply for determining the Executive's salary and annual salary level with
respect to the period from February 1, 1996 through October 1, 1999: in applying
Section 5.1 of the SBP, the Pension Plan benefit formula shall be applied as if
the Executive had actually been paid, on a timely basis, any amounts of
illustrative base salary covered by his election to forego base salary from
February 1, 1996 through October 1, 1999, and such amounts had been includable
in the calculation of Final Average Monthly Earnings, it being intended that the
Executive's pension benefits as otherwise determined under this Agreement shall
be the same as if the election to forego his base salary had not been made.
(c) No amendment of the SBP shall reduce the Executive's SBP Benefit
entitlements under Section 3(b).
(d) (i) In the event the Executive remains with the Company until his
sixtieth (60th) birthday (on July 10, 2005), the Executive shall be provided
with a one-fourth (1/4) fractional interest (equal to two hundred (200) hours
per year) in a mid-size corporate jet, with initial capital expenditures in the
range of three million dollars ($3,000,000) to six million dollars ($6,000,000),
and with annual maintenance costs not to exceed two million dollars
($2,000,000), for a period commencing on the Executive's termination as Chairman
of the Board of Directors for any reason other than Cause and ending on the
fifth anniversary of such termination, or earlier in the event of the
Executive's death (the "Aircraft Usage Term"). However, in the event the EPG
Stock Price (as defined below) equals or exceeds ninety-five dollars ($95) per
share for five (5)
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consecutive trading days, between the Restatement Date and the Executive's
termination as Chairman of the Board of Directors, the Aircraft Usage Term shall
continue until the tenth anniversary of such termination for any reason other
than Cause, or earlier in the event of the Executive's death.
(ii) For purposes of this Agreement, the EPG Stock Price is the average
of the high and low quoted selling prices at which the common stock of the
Company was sold on such date as reported in the New York Stock Exchange
Composite Transactions by The Wall Street Journal. The EPG Stock Price shall be
adjusted in the event of a recapitalization, stock split, stock dividend,
exchange of stock, merger, reorganization, change in corporate structure or
stock of the Company, or similar event.
(iii) In the event a Change in Control occurs and benefits under the
Company's Key Executive Severance Protection Plan, as in effect on the
Restatement Date (the "SPP"), become payable to the Executive, the Executive
shall be entitled to usage of the aircraft, as provided for under this Section
3(d), and the Aircraft Usage Term shall continue until the tenth anniversary of
such termination for any reason other than Cause, or earlier in the event of the
Executive's death, after the date of such Change in Control.
(iv) Initial capital costs and annual maintenance costs of the aircraft
shall be adjusted annually (indexed to the corporate jet fractional share market
prices) from the Restatement Date through the expiration of such Aircraft Usage
Term.
(v) Any residual value in the aircraft, after the expiration of such
Aircraft Usage Term, shall belong to the Company.
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(vi) The Company shall reimburse the Executive for any net Federal,
state and/or local income, sales, use, excise or similar taxes ("Taxes")
incurred (the "Travel Gross-up") in respect of the Executive's receipt of usage
of the aircraft during the Aircraft Usage Term, as provided for under this
Section 3(d). The Company shall make such reimbursement on or before the due
date of any applicable Taxes, subject to receipt from the Executive of
reasonable documentation concerning the Tax liability. Any such Travel Gross-up
shall be in an amount such that, after payment of any Taxes with respect to such
Gross-up, the Executive shall be in the same position as if no such Taxes were
incurred.
4. Termination of Employment.
(a) As used herein, the terms "Cause," "Change in Control" and "Good
Reason" shall have the meanings provided in the SPP, except that "Good Reason"
shall also include (i) involuntary loss of the Executive's position as a
Director (or, if the Executive has become Chairman of the Board of Directors,
the subsequent involuntary loss of his position as Chairman (except for the
period of time between October 25, 1999 through December 31, 2000, when the
Executive waived his position as Chairman of the Board of Directors and Xx.
Xxxxxx X. Xxxxx, Xx. served as Chairman of the Board)) except as a result of
termination of the Executive's employment for any of the reasons described in
Section 4(d), below, or (ii) any breach or attempted breach of this Agreement by
the Company.
(b) (i) The Company may terminate the Executive's employment at any time,
provided that if, during the Term, the Executive's employment is terminated
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by the Company other than for Cause, or is terminated by the Executive for Good
Reason, the Executive shall receive the following through the end of the Term:
(A) Salary, at the rate in effect on the
date of termination of employment.
(B) Bonus, equal to fifty percent (50%) of
the maximum bonus opportunity (as determined without
consideration of any risk premium restricted stock) as in
effect on termination of employment, but not less than fifty
percent (50%) of annual salary, such amount to be paid as
otherwise provided in the Company's annual bonus program as in
effect on termination of employment.
(C) Continued age and deemed Credited
Service toward his pension benefit as provided in Section
3(b), above provided that, if the Term ends on other than the
last day of a Plan Year, then, in applying the benefit formula
under the Pension Plan for purposes of determining such
benefit:
(x) in addition to receiving deemed
Credited Service under Section 3(b) for all completed
Plan Years during the Term, the Executive shall be
deemed credited with up to two Years of Credited
Service under Section 1.12(c) of the Pension Plan
with respect to the partial Plan Year in which the
Term ends (the "Part Year"), the amount of such
Service Credit to be determined by multiplying all
whole or partial calendar months of the Term
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falling within the Part Year by 380, and dividing the
number of Hours of Service thus determined by 2,280,
and
(y) the Executive shall be deemed
credited with an additional year of age for each
three (3) full calendar months of the Term occurring
during such Part Year.
(D) All other benefits as in effect on
termination of employment.
In addition, the Company shall, if so requested, purchase the
Executive's residence under the terms of the Company's Domestic Relocation
Program (the "DRP") as in effect on the Effective Date, for a price equal to the
greater of "appraised value," as defined in the DRP, or the amount of the
investment by the Executive (and his spouse) therein (including the original
equity investment and the amount invested in eligible capital improvements). To
the extent the Executive is subject to Tax on any excess of the purchase price
described above over the appraised value (the "Excess"), the Company shall pay
the Executive an additional amount (the "Gross-up") such that, after payment of
all Taxes in respect of the Excess and the Gross-up, the Executive is in the
same position as if no Taxes were incurred on the Excess.
In addition, the Company shall offer to the Executive the opportunity
to acquire by assignment (or other appropriate conveyance) his Company-owned
automobile, if any, without cost to the Executive, provided that the Company
shall not be required to reimburse the Executive for any taxes, including
Federal income taxes, he must pay on account of, or because of such assignment.
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(ii) The Executive shall have no obligation to seek or accept
subsequent employment. However, except as provided in Section 4(c), below, the
amounts provided in Clauses (A), (B) or (D), of Section 4(b)(i), above shall be
reduced, but not below zero, by any corresponding amounts (i.e., salary, bonus
or benefits, not including defined benefit pension plan benefits), received in
connection with any full-time employment with any other employer during the
Term. For this purpose, periodic payments for full-time services as an
independent contractor shall be considered salary, any disproportionate lump sum
payments in connection with full-time services shall be treated as bonus,
amounts voluntarily deferred shall be taken into account as if paid currently,
and the value of any benefit which is not readily determinable shall be
independently determined as provided in Section 8, below. The Executive shall
have an affirmative duty to report any subsequent employment, and any amounts
earned in connection therewith.
(c) If a Change in Control occurs, and the Executive's employment is
thereafter terminated during the Term as described in Section 4(b), above, his
rights shall be as set forth in such Section 4(b) provided that, any provisions
of Section 4(b) to the contrary notwithstanding, (i) the Executive shall be
entitled to no less than the full value of any benefits available to the
Executive under the SPP, (ii) his pension rights as provided in Section 3(b),
above shall not be reduced with respect to benefits under plans of subsequent
employers, and (iii) his rights under Clause (A), (B) and (D) of Section 4(b)(i)
shall not be reduced with respect to amounts received from subsequent
employment.
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(d) If the Executive's employment is terminated during the Term on
account of death, involuntary termination for Cause or voluntary termination
other than for Good Reason, his right to salary shall terminate on the date of
termination of employment and his other rights shall be as determined under the
Company's applicable plans and programs, provided that he shall in all events
receive a pension benefit under the SBP as provided in Section 3(b), above, but
only as determined through the end of the full Plan Year immediately preceding
his last day of employment.
(e) In the event the Company, at any time, gives written notice that
the Term is not to be extended, as provided in Section 1, above, then, in
addition to any other rights hereunder, the Executive may, during the period
commencing twelve (12) months prior to the end of the Term and ending twelve
(12) months following the end of the Term, request that the Company purchase his
residence. In such case, the Company shall purchase the Executive's residence
under the terms described above in Section 4(b)(i), above.
5. Non-Competition
During the Term, whether or not the Executive is then employed by the
Company, the Executive shall not, directly or indirectly, acquire (other than
less than ten percent (10%) of the publicly traded shares or other publicly
traded interests of any corporation, partnership, trust or other business
organization), manage, control, participate in, consult with, render services
to, or in any manner engage in any business with any person, corporation,
partnership, trust or other business organization which is
(a) a competitor of the Company (including any of its subsidiaries or
affiliates) in any business activity conducted in the "Business Region," as
defined below,
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that represented more than three percent (3%) of the Company's consolidated
operating income as determined in the Company's then most recently completed
fiscal year, or
(b) a customer or customers whose business transactions with
the Company in the Business Region gave rise, in the aggregate, to more than
three percent (3%) of the Company's consolidated gross revenues during its then
most recently completed fiscal year.
For this purpose, the "Business Region" means any State in the United
States of America in which the Company, or any subsidiary or affiliate, was
materially engaged in business at any time during the period of the Executive's
employment by the Company during the Term.
The Executive acknowledges that monetary damages would not constitute
an adequate remedy for the Company in the event of a breach of this Section 5,
and he therefore agrees that the Company shall be entitled to injunctive or
other equitable relief for the enforcement hereof. This Section 5 shall not,
however, apply subsequent to (i) a Change in Control, or (ii) the Executive's
voluntary termination of employment other than for Good Reason, if he shall have
provided the Company with at least six (6) months prior written notice of such
termination.
6. Relationship with SPP.
Notwithstanding the provisions of Section 9.2 of the SPP all rights
of the Executive under the SPP are hereby incorporated herein by reference, and
made contractual rights of the Executive and obligations of the Company
hereunder, (including, without limitation, the provisions of Section 4 of the
SPP, which shall apply to all of the Executive's compensation and benefits
provided hereunder) and, accordingly, no
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amendment or termination thereof shall reduce or adversely effect the
Executive's rights and benefits thereunder as incorporated herein. Any amounts
received by the Executive under the SPP shall offset amounts of the same nature
due hereunder. If the amount of any such offset is disputed, it shall be
independently determined pursuant to Section 8, below. Any lump sum amounts paid
as cash compensation will offset any periodic payments of the same nature in
reverse chronological order. For this purpose, amounts shall be treated as being
of the same nature strictly as follows.
(a) The amount described in Section 4.2(a) of the SPP shall be treated
as of the same nature as both salary and bonus.
(b) Each of the specific benefits described in Section 4.2(b) of the
SPP shall be treated as of the same nature as, and shall be a credit toward,
only the specifically correlative benefit, e.g., "Basic Life Insurance" shall
only offset life insurance coverage, etc.
(c) Any amounts received under Section 4.2(c) of the SPP shall be
treated as of the same nature as the pension provided in Section 3(b) hereof.
(d) The transfer of automobile ownership described in Section 4.2(d) of
the SPP and the other amounts described in Section 4 shall not offset any
amounts payable hereunder.
No provision of this Agreement shall limit any of the Executive's rights,
or reduce the value of any of the benefits due to the Executive, under the SPP.
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7. Independent Determinations.
Any independent determinations of the comparative value of benefits, as
required in this Agreement, shall be made at the Company's expense by an
independent actuarial consulting firm of national reputation reasonably
acceptable to both Parties.
8. Arbitration and Enforcement.
The Parties agree that any controversy or claim arising out of or
relating to this Agreement, or the breach of any provision hereof, or the terms
or conditions of employment, including whether such controversy or claim is
arbitrable, will be settled by arbitration in Houston, in accordance with the
rules for commercial arbitration of the American Arbitration Association as in
effect at the time a demand for arbitration under the rules is made, and
judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The decision of the arbitrators, including
determination of the amount of any damages suffered, will be conclusive, final
and binding on both parties, their heirs, executors, administrators, successors
and assigns. The cost of arbitration and any other costs incurred by the
Executive in enforcing his rights hereunder (including without limitation
reasonable attorney's fees whether or not the Executive ultimately receives a
favorable award or judgment in such arbitration or other proceeding) shall be
borne by the Company. The Executive shall be entitled to submit written proof
reasonably satisfactory to the Company of the incurrence of such costs on a
monthly basis, and to receive reimbursement therefore within 30 days of such
submission. Verified copies of any statements submitted to the Executive shall
constitute satisfactory written proof for this purpose.
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9. Assignability; Binding Nature.
This Agreement is binding upon, and will inure to the benefit of, the
Parties hereto and their respective successors, heirs, administrators, executors
and assigns. No rights or obligations of the Executive under this Agreement may
be assigned or transferred by the Executive except that his rights to
compensation and benefits hereunder, which rights will remain subject to the
limitations of this Agreement, may be transferred by will or operation of law.
No rights or obligations of the Company under this Agreement may be assigned or
transferred except that such rights or obligations may be assigned or
transferred by operation of law in the event of a merger or consolidation in
which the Company is not the continuing entity, or the sale or liquidation of
all or substantially all of the assets of the Company, provided that the
assignee or transferee is the successor to all or substantially all of the
assets of the Company and such assignee or transferee assumes the liabilities,
obligations and duties of the Company, as contained in this Agreement, either
contractually or as a matter of law.
10. Amendment and Waiver.
This Agreement may not be modified or amended except by a writing
signed by both Parties.
11. Notices.
Any notice given hereunder will be in writing and will be deemed given
when delivered personally or by courier, or five (5) days after being mailed,
certified or registered mail, duly addressed to the Party concerned at the
address indicated below or at such other address as such Party may subsequently
provide, in accordance with the notice and delivery provisions of this Section
11, such notice and delivery:
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To the Company:
Executive Vice President
Human Resources and Administration
El Paso Corporation
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
With a copy to:
General Counsel
El Paso Corporation
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
To the Executive:
Xxxxxxx X. Xxxx
Chairman, President and Chief Executive Officer
El Paso Corporation
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
12. References.
In the event of the Executive's death or a judicial determination of
his incompetence, reference in this Agreement to the Executive will be deemed,
where appropriate, to refer to his legal representative or, where appropriate,
to his beneficiary or beneficiaries.
13. Invalid Provisions.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future law, this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof and the remaining portions hereof shall remain in full
force and effect.
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14. Governing Law.
This Agreement will be governed and construed and interpreted in
accordance with the laws of the State of Texas without reference to the
principles of conflicts of law thereof.
15. Counterparts.
This Agreement may be executed in counterparts.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
amended and restated effective on the date first written above.
EL PASO ENERGY CORPORATION
/s/ Xxxxx Xxxxxxxxxx
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Xxxxx Xxxxxxxxxx
Chairman, Compensation Committee
/s/ Xxxx Xxxxxxxx III
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Xxxx Xxxxxxxx III
Executive Vice President
Human Resources and Administration
XXXXXXX X. XXXX
/s/ Xxxxxxx X. Xxxx
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