1
EXECUTION COPY
EXHIBIT 10.10
January 18, 2000
Xx. Xxxxxxx X. Xxxxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxx 00000
Dear Xxxxx:
Set forth below are the terms of your employment (the "Agreement") with
Dynegy Inc. (hereinafter referred to as "Dynegy" or the "Company").
1. TITLE AND DUTIES
Your title shall be President and Chief Operating Officer of the
Company. You will be responsible for the duties typical to such position and
shall have such other duties as may be delegated from time to time by your
immediate supervisor. You will be employed at Dynegy's headquarters in Houston,
Texas. You shall devote your full time, energy and skill to the performance of
your duties for Dynegy, and will exercise due diligence and reasonable care in
the performance of such duties. During the Term (as defined below) of this
Agreement, you shall report to the Company's Chief Executive Officer or Chairman
of the Board and shall remain a member of the Company's Board of Directors.
2. TERM
(a) Unless earlier terminated as provided for herein, the term of
this Agreement will be for four (4) years, commencing on the Effective Date (as
defined below) and ending on the fourth anniversary of the Effective Date (such
period, as extended pursuant to the next succeeding sentence, if applicable, the
"Term"). The Term shall automatically be extended for additional one (1) year
periods unless either the Company or you provides written notice at least sixty
(60) days prior to the date on which this Agreement would otherwise be
automatically extended that such party is electing not to so extend the Term.
The term "Effective Date" means the date of the closing of the proposed merger
of Dynegy Inc. and Illinova Corporation pursuant to that certain merger
agreement dated as of June 14, 1999, as amended.
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(b) If your employment with Dynegy is terminated due to your
voluntary resignation or by the Company for "cause", this Agreement shall
terminate immediately (except for the confidentiality, non-competition and
non-solicitation provisions of Paragraph 4 and the provisions of Paragraphs 5
and 6), and the Company shall have no further obligation to you except for the
payment of amounts due through the date of such termination and except that you
will be fully vested with regard to all stock options (irrespective of the date
of the grant of such options and irrespective of the vesting schedule otherwise
applicable to such options) granted to you hereunder as a signing bonus, as
provided in Paragraph 3(d) below, and you shall be permitted to retain such
options for future exercise or sell such stock received on exercise as though
you had remained in the employment of the Company until the end of the Term. The
Company shall take such actions as permitted by applicable law to cause such
vesting and option retention. However, nothing in this Paragraph 2(b) shall
require accelerated vesting or accelerated exercisability of any other stock
options that may have been or may be granted to you unless otherwise expressly
provided for herein. You further agree that the benefits which you have received
from the execution of this Agreement through the date of such termination
constitute sufficient consideration for your obligations pursuant to Paragraph
4, notwithstanding the fact that the Company has no further obligation to you
except for the payment of amounts due before the date of such termination and
except for you being fully vested with regard to all stock options (irrespective
of the date of the grant of such options and irrespective of the vesting
schedule otherwise applicable to such options) granted to you hereunder as a
signing bonus, as provided in Paragraph 3(d) below, and you shall be permitted
to retain such options for future exercise or sell such stock received on
exercise as though you had remained in the employment of the Company until the
end of the Term, and the Company shall take such actions as permitted by
applicable law to cause such vesting and option retention. For purposes of this
Agreement, you may be terminated for "cause" as a result of (i) your refusal to
implement or adhere to lawful policies or lawful directives of the Board of
Directors of Dynegy (the "Board of Directors") or your immediate supervisor that
is not cured within ten (10) days after written notice of such refusal is
delivered to you from the Company; (ii) serious misconduct, dishonesty or
disloyalty, directly related to the performance of your duties for the Company
or gross negligence in the performance of your duties for the Company that is
not cured within ten (10) days after written notice of such misconduct,
dishonesty or disloyalty or gross negligence is delivered to you from the
Company; (iii) your being convicted (or entering into a plea bargain admitting
or not contesting criminal guilt) in any criminal felony proceeding; (iv) drug
or alcohol abuse; (v) continued failure to perform your duties under this
Agreement, which is not cured within ten (10) days after written notice of such
failure is provided to you by Dynegy; or (vi) any other material breach of this
Agreement by you that is not cured within ten (10) days after written notice of
such breach is delivered to you from the Company.
(c) If your employment is terminated during the Term of this
Agreement due to resignation following "constructive termination" (as defined
below) or for any other reason other than your voluntary resignation, death,
disability or discharge for cause, you shall receive as your sole compensation
in lieu of further payments to you pursuant to Paragraph 3 hereof: (i) a lump
sum amount equal to the product of (x) 2.99 and (y) the greater of (a) the
average annual Base Salary and incentive compensation, whether payable in cash
or stock options, you were paid by the Company for the highest three (3)
calendar years preceding the calendar year in
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which your employment is terminated (or such shorter period as you have actually
been employed by the Company), or (b) your Base Salary and target bonus amount
for the year in which your employment is terminated; (ii) a lump sum amount
equal to the net present value, as determined by the Board of Directors in its
sole and absolute discretion, of the benefits to be provided to you in
Paragraphs 3(f) and 3(g) of this Agreement and such other perquisites (if any)
being provided to you on the date of your termination, as if you were still
employed for the remainder of the Term of this Agreement, with regard to those
benefits to be provided to you during the Term of this Agreement, and as if you
had completed the Term of this Agreement with regard to those benefits to be
provided to you upon completion of the Term of this Agreement; (iii) any
employee stock options granted to you prior to or during the Term of this
Agreement shall become vested as of the date of your resignation due to such
constructive termination or discharge not for cause, and you shall have the
right to exercise any such vested options through the end of the Term of this
Agreement or one year from the date of termination, whichever is later; and (iv)
for a period of thirty-six (36) months from the date of such termination, all
health and welfare benefits the Company was maintaining for you and your family
as of the date of such resignation or discharge.
For purposes of this Agreement a "constructive termination"
shall be deemed to have occurred in the event that: (i) your Base Salary as
defined in Paragraph 3(a), bonus compensation under Paragraph 3(b), target range
of annual option grants under Paragraph 3(c) or other compensation as described
in Paragraphs 3(f) and 3(g) is reduced; (ii) you are removed from the Board of
Directors or no longer report to the Chief Executive Officer or Chairman of the
Board or a significant diminution in your responsibilities, authority or scope
of duties is effected by the Board of Directors, and such diminution is made
without your written consent (without regard to whether or not any change is
made to your title); (iii) the Company materially breaches this Agreement; (iv)
the relocation of the Company's principal executive offices to a location, or
the Company requires you to be based, outside a fifty (50) mile radius from the
city limits of Houston, Texas; or (v) in the event any "person" other than a
mutual fund that acquires the stock solely for investment purposes or "group"
(as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of more than 50% of the total voting stock of the Company regardless
of whether any change is made to your job duties, responsibilities or
compensation. A "constructive termination" shall not be deemed to have occurred
in a change of control situation other than as set forth in clauses (i) through
(v) above. A "constructive termination" shall not be deemed to have occurred in
connection with a merger or consolidation to which the Company is a party where
the surviving entity which is the ultimate parent company of the merged or
consolidated entities is a public company, provided no "person" or "group" as
referenced in clause (v) above owns more than 50% of the total voting stock of
such surviving entity unless a "constructive termination" under clauses (i),
(ii), (iii) or (iv) has occurred. For the avoidance of doubt, in order to claim
the benefits payable hereunder in the event of a constructive termination, you
must resign. Any resignation by you as a result of assertion of a constructive
termination shall be communicated by delivery to the Board of Directors within
thirty (30) days from the commencement of such constructive termination by
written notice setting forth the grounds therefor, during which period the
Company shall be entitled to cure or remedy the matters set
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forth in such notice to your reasonable satisfaction. Unless you withdraw such
notice prior to the expiration of such thirty-day (30) period, such resignation
shall take effect upon the expiration of thirty (30) days from the date of the
delivery of such notice. Any other resignation by you shall be communicated by
thirty (30) days' advance written notice.
(d) If you die, or become disabled and cannot perform your duties,
your employment hereunder shall be terminated immediately (except that the
confidentiality, noncompetition and nonsolicitation provisions of Paragraph 4
and the provisions of Paragraphs 5 and 6 shall survive the termination of your
employment) and: (i) you (or your estate) shall be entitled to the Base Salary
(as defined in Paragraph 3(a)) payable to you hereunder for twelve (12) months
following the month in which you die or become disabled, plus the amount of any
target bonus as described in Paragraph 3(b) for the year of death or disability,
prorated for the portion of the twelve-month (12) period elapsed in which the
date of death or disability occurs; (ii) you (or your estate) shall receive, for
a period of twenty-four (24) months from the date of your death or disability,
all health insurance and health benefits that the Company was maintaining for
you and/or your estate and for your family as of the date of your death or
disability; (iii) for a period of five (5) years from the date of your death or
disability, the Company shall continue to make contributions pursuant to any
Split Dollar Agreements between the Company and you (or any irrevocable trust
created by you); and (iv) any employee stock options granted to you during the
Term of this Agreement shall become vested as of the date of your death or
disability on the same terms as provided for the vesting of stock options in
Paragraph 2(c) above. For purposes of this Agreement, you shall be disabled as
of the first date on which you become eligible to receive disability benefits
under the Company's long-term disability plan (or Social Security disability
benefits at a time when the Company does not maintain a long-term disability
plan or such plan is not available to you).
(e) Unless otherwise specified herein, all payments under this
Agreement shall be paid in a lump sum, less applicable withholding taxes, within
thirty (30) days following the date of your termination.
3. COMPENSATION
(a) Each year during the Term hereof, you will be paid a base
salary of $850,000 per annum ("Base Salary"), payable in accordance with the
Company's payroll guidelines. Increases may be made to your Base Salary at the
discretion of the Board of Directors based upon your individual performance.
(b) You shall be a participant in the Company's Incentive
Compensation Plan. As part of Dynegy's incentive compensation program, you will
have the opportunity to earn a target bonus in an amount equal to 100% of your
Base Salary and a maximum cash award in an amount equal to 200% of your Base
Salary, dependent upon certain financial or performance objectives, determined
in accordance with such program and by the Board of Directors. To the extent any
incentive compensation in excess of the maximum cash amount referenced above is
payable under the Incentive Compensation Plan in any year to you, the Company
will pay you any such amounts in noncash equivalents (e.g., stock options or
restricted securities of the Company) of equal value, as determined by the Board
of Directors in its sole and absolute
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discretion. At your election, in lieu of paying you all or part of such
incentive compensation bonus, the Company will allow you to direct that all or
part of such incentive compensation be allocated by the Company to, or expended
directly for, charitable contributions of your selection and/or payments of
insurance premiums pursuant to Split Dollar Agreements between the Company and
you (or any irrevocable trust created by you).
(c) Upon the Effective Date, you shall receive an initial grant of
stock options pursuant to the Company's Long Term Incentive Plan (the "LTIP")
with a projected value equal to 300% of your Base Salary. Each year during the
Term of this Agreement, you will be eligible to receive stock option grants
granted to an employee holding the positions of "President" and "Chief Operating
Officer" in accordance with the requirements and provisions of the LTIP. The
current target range for annual option grants for your position is a median of
200% and a 75th percentile of 300% of your Base Salary. You recognize that any
value of an award of "market" options under the LTIP is a projected value, which
is subject to the future performance of the Company stock, and that there is no
guarantee that the actual value of such options will achieve that value.
"Projected Value" means that at the end of the five years from the date of
grant, assuming an increase in market price of 15% per annum during the five
years, the stock option may be exercised to obtain the stated value in excess of
the exercise price. These options are subject to the vesting, forfeiture and
other terms and conditions of the LTIP.
(d) Upon the Effective Date, you will receive, as a signing bonus,
a grant of discounted stock options under Dynegy's Market and Employee Equity
Option Plan ("EEOP") with an immediate in-the-money value equal to $2,000,000,
with one-third (1/3) of these options vesting on each of the first, second and
third anniversary of the Effective Date. These options shall be subject to the
forfeiture and other terms and conditions of the EEOP. You and the Company
acknowledge and agree that: (i) as of the Effective Date, that certain
Employment Agreement (as the same may have been amended, modified or
supplemented from time to time, the "Employment Agreement"), dated as of May 8,
1997, between you and NGC Corporation, is hereby terminated and of no further
force and effect and (ii) the payment granted to you pursuant to this Paragraph
3(d) is in full satisfaction of all of the Company's remaining duties and
obligations under the Employment Agreement.
(e) Upon the Effective Date, any options granted to you prior to
November 1, 1999 shall become vested.
(f) You will be entitled to participate in Dynegy's benefits
programs for senior management executives, including, without limitation,
Dynegy's deferred compensation plan for executives, as well as any Split Dollar
Agreement between the Company and you (or any irrevocable trust created by you).
Without limiting the foregoing, you shall receive the perquisites set forth on
Schedule I attached hereto and by this reference incorporated herein.
(g) During the Term of this Agreement, or until termination of
this Agreement if this Agreement terminates prior to expiration of the Term
(except as provided in Paragraph 2(a) hereof), the Company will pay all premiums
on a policy of insurance providing term protection only and no cash values, with
a death benefit payable upon your death in the amount of $1,000,000. You shall
at all times own the policy and have the right to designate the
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beneficiary of any death proceeds. You will be responsible for policy selection,
coverage and effectiveness of the policy and any income taxes arising in
connection therewith; the Company's only obligation being to pay such premiums.
4. CONFIDENTIALITY
You recognize and acknowledge that:
(a) You will have access to certain information concerning the
Company that is confidential and proprietary and constitutes valuable and unique
property of the Company. You agree that you will not at any time, either during
or after your employment, disclose to others, use, copy or permit to be copied,
except pursuant to your duties on behalf of the Company or its successors,
assigns or nominees, any secret or confidential information of the Company
(whether or not developed by you) without the prior written consent of the Board
of Directors. The term "secret or confidential information of the Company"
(sometimes referred to herein as "Confidential Information") shall include,
without limitation, the Company's plans, strategies, potential acquisitions,
costs, prices, systems for buying, selling, and/or trading natural gas, natural
gas liquids, crude oil, coal, and electricity, client lists, pricing policies,
financial information, the names of and pertinent information regarding
suppliers, computer programs, policy or procedure manuals, training and
recruiting procedures, accounting procedures, the status and content of the
Company's contracts with its suppliers or clients, or servicing methods and
techniques at any time used, developed, or investigated by the Company, before
or during your tenure of employment to the extent any of the foregoing are (i)
not generally available to the public and (ii) maintained as confidential by the
Company. You further agree to maintain in confidence any confidential
information of third parties received as a result of your employment and duties
with the Company.
(b) At the termination of your employment, you will deliver to the
Company, as determined appropriate by the Company, all correspondence,
memoranda, notes, records, client lists, computer systems, programs, or other
documents and all copies thereof made, composed or received by you, solely or
jointly with others, and which are in your possession, custody or control at
such date and which are related in any manner to the past, present or
anticipated business of the Company.
(c) To protect and safeguard the Company's trade secrets and
Confidential Information and also the Company's goodwill with its suppliers and
clients, for that period of time following the termination of your employment
for any reason other than pursuant to Paragraph 2(c) hereof (i.e., in the event
of a termination pursuant to the first paragraph of Paragraph 2(c), the
non-compete obligations of this Paragraph 4(c) shall terminate) through the
expiration of the Term or twenty-four (24) months from the date of termination,
whichever is earlier, you will not, within a 50 mile radius of any location
where the Company had an office at any time during the Term hereof or any
location where a client or supplier of the Company (which is a material client
or supplier at any time during the Term hereof) had an office at any time during
the Term hereof, without the prior written consent of the Board of Directors,
directly or indirectly, engage in or be interested in (as owner, partner,
shareholder, employee, director, agent, consultant or otherwise), any business
which is a competitor of the Company, as
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hereinafter defined. For purposes of this Agreement, a "competitor of the
Company" is any entity, including, without limitation, a corporation, sole
proprietorship, partnership, joint venture, syndicate, trust or any other form
of organization or a parent, subsidiary or division of any of the foregoing,
which, during such period or the immediately preceding fiscal year of such
entity, was engaged in the unregulated marketing, gathering, transportation or
processing of natural gas or derivatives of natural gas or other hydrocarbons or
electricity. For purposes of this paragraph, the following entities shall not be
deemed to be competitors of the Company: (i) a Local Distribution Company
("LDC") to the extent that any purchases or sales by such LDC are only for
consumption on its system; (ii) a natural gas producer to the extent that such
producer sells only its own production or production of other working interest
owners in xxxxx in which it owns an interest; (iii) a natural gas pipeline
company in the jurisdictional aspects of its business, i.e., other than a
nonjurisdictional marketing affiliate or production affiliate (except as to such
production affiliate's own production as described in clause (ii) of this
Paragraph 4(c)); or (iv) an integrated regulated electric and/or gas utility as
long as such utility does not engage in the unregulated marketing of its
generation or power trading other than that related to the generation or power
marketing allocated to its own service areas. The terms of this Paragraph 4(c)
shall not apply to your present or future investments in the securities of
companies listed on a national securities exchange or traded on the
over-the-counter market to the extent such investments do not exceed one percent
(1%) of the total outstanding shares of such company.
(d) For a period of twenty-four (24) months after the expiration
or termination of your employment for whatever reason, other than pursuant to
Paragraph 2(c) above or for a period of twelve months following the termination
of your employment pursuant to Paragraph 2(c) above, you shall not solicit,
raid, entice, encourage or induce any person who at the time of expiration or
termination of employment is an employee of the Company, or any of its
subsidiaries or affiliated companies, to become employed by any person, firm or
corporation, and you shall not approach any such employee for such purpose or
authorize or knowingly approve the taking of such actions by any other person,
firm or corporation or assist any such person, firm or corporation in taking
such action.
(e) You agree that the foregoing restrictions contain reasonable
limitations as to the time, geographical area, and scope of activity to be
restrained and that these restrictions do not impose any greater restraint than
is necessary to protect the goodwill and other legitimate business interests of
the Company, including, but not limited to, the protection of Confidential
Information. You also agree that the general public shall not be harmed by
enforcement of this Paragraph 4. Should any provision in this Paragraph 4 be
held unreasonably broad with respect to the restrictions as to time,
geographical area or scope of activity to be restrained, any such restriction
shall be construed by limiting and reducing it to the extent necessary to render
it reasonable, and as so construed, such provision shall be enforced.
Accordingly, you consent and agree that if you violate any of the
provisions of this Paragraph 4, the Company and its subsidiaries and affiliated
companies would sustain irreparable harm and, therefore, in addition to any
other remedies which the Company may have under this Agreement or otherwise, the
Company shall be entitled to an injunction from any court of competent
jurisdiction restraining you from committing or continuing any such violation of
this Paragraph 4. You acknowledge that damages at law would not be an adequate
remedy for
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violation of this Paragraph 4, and you therefore agree that the provisions of
this Paragraph 4 may be specifically enforced against you in any court of
competent jurisdiction. Nothing herein shall be construed as prohibiting the
Company from pursuing any other remedies available to the Company for such
breach or threatened breach, including the recovery of damages from you.
5. INDEMNIFICATION
If, at any time during or after the Term of this Agreement, you
are made a party to, or are threatened to be made a party in, any civil,
criminal or administrative action, suit or proceeding by reason of the fact that
you are or were a director, officer, employee or agent of the Company, or of any
other corporation or any partnership, joint venture, trust or other enterprise
for which you served as such at the request of the Company, then you shall be
indemnified by the Company, to the fullest extent permitted under applicable
law, against expenses actually and reasonably incurred by you or imposed on you
in connection with, or resulting from, the defense of such action, suit or
proceeding, or in connection with, or resulting from, any appeal therein if you
acted in good faith and in a manner you reasonably believed to be in or not
opposed to the best interest of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe your conduct was
unlawful, except with respect to matters as to which it is adjudged that you are
liable to the Company or to such other corporation, partnership, joint venture,
trust or other enterprise for gross negligence or willful misconduct in the
performance of your duties. As used herein, the term "expenses" shall include
all obligations actually and reasonably incurred by you for the payment of
money, including, without limitation, attorney's fees, judgments, awards, fines,
penalties and amounts paid in satisfaction of a judgment or in settlement of any
such action, suit or proceeding, except amounts paid to the Company or such
other corporation, partnership, joint venture, trust or other enterprise by you.
The foregoing indemnification provisions shall be in addition to any other
rights to indemnification to which you may be entitled.
6. ARBITRATION
The parties hereto may attempt to resolve any dispute hereunder
informally via mediation or other means. Otherwise, any controversy or claim
arising out of or relating to this Agreement, or any breach thereof, shall,
except as provided in Paragraph 4, be adjudged only by arbitration in accordance
with the rules of the American Arbitration Association, and judgment upon such
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitration shall be held in the city of Houston, Texas, or such
other place as may be agreed upon at the time by the parties to the arbitration.
The arbitrator(s) shall, in their award, allocate between the parties the costs
of arbitration, which shall include reasonable attorneys' fees of the parties,
as well as the arbitrators' fees and expenses, in such proportions as the
arbitrator(s) deem just; provided, however, notwithstanding the above, in the
event you are the prevailing party, then the Company agrees to reimburse you for
all such costs of arbitration, including, but not limited to, attorneys' fees
and expenses reasonably incurred by you; provided further, notwithstanding the
above, in the event the Company is the prevailing party, then the total costs of
arbitration, including but not limited to attorneys' fees reasonably incurred by
the Company and arbitrators' fees and expenses, that may be allocated to you by
the arbitrator(s) shall not in any event exceed Twenty-Five Thousand Dollars
($25,000). Notwithstanding the
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foregoing, you shall be entitled to seek specific performance in a court of
competent jurisdiction of your right to be paid your full compensation until
your separation from employment, during the pendency or dispute of any
controversy arising under or in connection with this Agreement.
7. EXCISE TAXES
(a) In the event that any payment or benefit received or to be
received by you pursuant to the terms of this Agreement in connection with and
contingent on the termination of your employment with the Company (the "Contract
Payments") or of any other plan, arrangement or agreement of the Company (or any
affiliate) ("Other Payments" and, together with the Contract Payments, the
"Payments") would be subject to the excise tax (the "Excise Tax") imposed by
Section 4999 of the Internal Revenue Code of 1986 (as amended from time to time,
the "Code") as determined as provided below, the Company shall pay to you, at
the time specified in Section 7(b) below, an additional amount (the "Gross-Up
Payment") such that the net amount retained by you, after deduction of the
Excise Tax on Payments and any federal, state and local income tax and the
Excise Tax upon the Gross-Up Payment, and any interest, penalties or additions
to tax payable by you with respect thereto, shall be equal to the total present
value (using the applicable federal rate (as defined in Section 1274(d) of the
Code in such calculation) of the Payments at the time such Payments are to be
made. The Company shall have the right to make any such Gross-Up Payment, in
whole or in part, in the form of a noncash payment of equal value (as determined
by Independent Counsel) to that portion of the Gross-Up Payment had it been paid
in cash. For purposes of determining whether any of the Payments will be subject
to the Excise Tax and the amounts of such Excise Tax, (1) the total amount of
the Payments shall be treated as "parachute payments" within the meaning of
section 280G(b)(2) of the Code, and all "excess parachute payments" within the
meaning of section 280G(b)(l) of the Code shall be treated as subject to the
Excise Tax, except to the extent that, in the opinion of independent counsel
selected by the Company and reasonably acceptable to you ("Independent
Counsel"), a Payment (in whole or in part) does not constitute a "parachute
payment" within the meaning of section 280G(b)(2) of the Code, or such "excess
parachute payments" (in whole or in part) are not subject to the Excise Tax, (2)
the amount of the Payments that shall be treated as subject to the Excise Tax
shall be equal to the lesser of (A) the total amount of the Payments or (B) the
amount of "excess parachute payments" within the meaning of section 280G(b)(1)
of the Code (after applying clause (1) hereof), and (3) the value of any noncash
benefits or any deferred payment or benefit included in the Payments or Gross-Up
Payment, as applicable, shall be determined by Independent Counsel in accordance
with the principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, you shall be deemed to pay
federal income taxes at the highest marginal rates of federal income taxation
applicable to the individuals in the calendar year in which the Gross-Up Payment
is to be made and state and local income taxes at the highest marginal rates of
taxation applicable to individuals as are in effect in the state and locality of
your residence in the calendar year in which the Gross-Up Payment is to be made,
net of the maximum reduction in federal income taxes that can be obtained from
deduction of such state and local taxes, taking into account any limitations
applicable to individuals subject to federal income tax at the highest marginal
rates.
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(b) The Gross-Up Payments provided for in Paragraph 7(a) hereof
shall be made upon the earlier of (i) the payment to you of any Payment or (ii)
the imposition upon you or payment by you of any Excise Tax.
(c) If it is established pursuant to a final determination of a
court or an Internal Revenue Service proceeding or the opinion of Independent
Counsel that the Excise Tax is less than the amount taken into account under
Section 7(a) hereof, you shall repay to the Company within thirty (30) days of
your receipt of notice of such final determination or opinion the portion of the
Gross-Up Payment attributable to such reduction (plus the portion of the
Gross-Up Payment attributable to the Excise Tax and federal, state and local
income tax imposed on the Gross-Up Payment being repaid by you if such repayment
results in a reduction in Excise Tax or a federal, state and local income tax
deduction) plus any interest received by you on the amount of such repayment. If
it is established pursuant to a final determination of a court or an Internal
Revenue Service proceeding or the opinion of Independent Counsel that the Excise
Tax exceeds the amount taken into account hereunder (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess within thirty (30) days of the Company's receipt of
notice of such final determination or opinion.
(d) In the event of any change in, or further interpretation of,
sections 280G or 4999 of the Code and the regulations promulgated thereunder,
you shall be entitled, by written notice to the Company, to request an opinion
of Independent Counsel regarding the application of such change to any of the
foregoing, and the Company shall use its best efforts to cause such opinion to
be rendered as promptly as practicable. All fees and expenses of such
Independent Counsel incurred in connection with this Agreement shall be borne by
the Company.
8. OTHER PROVISIONS
(a) THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW,
RULE OR PRINCIPLE THAT MIGHT OTHERWISE REFER TO THE SUBSTANTIVE LAW OF ANOTHER
JURISDICTION.
(b) Except as otherwise indicated, this Agreement is not
assignable without the written authorization of both parties, provided that the
Company may assign this Agreement to any entity to which the Company transfers
substantially all of its assets or to any entity which is a successor to the
Company by reorganization, incorporation, merger or similar business
combination.
(c) Except as otherwise provided herein, the provisions of
Paragraphs 4, 5 and 6 of this Agreement shall survive the termination of this
Agreement.
(d) Except as otherwise provided in Paragraph 7 hereof, all
payments to you under this Agreement will be subject to the withholding of all
applicable employment taxes and income taxes; provided, however, that at your
request the parties hereto will use reasonable efforts to explore alternatives
to allow the Company to make charitable contributions on behalf
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January 18 2000
Page 11
of the employee by redirecting a portion of your annual bonuses to charitable
organization(s) chosen by you in accordance with Paragraph 3(b) of this
Agreement.
(e) This Agreement supersedes all previous employment agreements,
written or oral, between the Company and you. This Agreement may be amended only
by written amendment duly executed by both parties or their legal
representatives and authorized by action of the Board of Directors. Except as
otherwise specifically provided in this Agreement, no waiver by either party
hereto of any breach by the other party hereto of any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of a
subsequent breach of such condition or provision or a waiver of a similar or
dissimilar provision or condition at the same or at any prior or subsequent
time.
(f) Any notice or other communication required or permitted
pursuant to the terms of this Agreement shall be in writing and shall be deemed
to have been duly given when delivered or mailed by United States mail, first
class, postage prepaid and registered with return receipt requested, addressed
to the intended recipient at his or its address set forth below and, in the case
of a notice or other communication to the Company, directed to the attention of
the Board of Directors with a copy to the Secretary of the Company, or to such
other address as the intended recipient may have theretofore furnished to the
sender in writing in accordance herewith, except that until any notice of change
of address is received, notices shall be sent to the following addresses:
IF TO YOU IF TO THE COMPANY:
Xxxxxxx X. Xxxxxxxxx Dynegy Inc.
21715 Chestnut Grove 0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000 Xxxxxxx, XX 00000
Attn: Chief Executive Officer
(g) If any one or more of the provisions or parts of a provision
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity or unenforceability shall not
affect any other provision or part of a provision of this Agreement, but this
Agreement shall be reformed and construed as if such invalid or illegal or
unenforceable provision or part of a provision had never been contained herein
and such provisions or part thereof shall be reformed so that it would be valid,
legal and enforceable to the maximum extent permitted by law.
(h) Neither you nor the Company will make or authorize any public
statement disparaging the other in its or his business interests and affairs.
Notwithstanding the foregoing, neither party shall be (i) required to make any
statement which it or he believes to be false or inaccurate, or (ii) restricted
in connection with any litigation, arbitration or similar proceeding or with
respect to its response to any legal process. The provisions in this Paragraph
8(h) shall survive the termination of your employment hereunder, irrespective of
the reason therefor.
(i) The waiver by the Company of breach of any provision of this
Agreement by you shall not operate or be construed as a waiver of any subsequent
breach by you. The
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January 18 2000
Page 12
waiver by you of a breach of any provision of this Agreement by the Company
shall not operate or be construed as a waiver of any subsequent breach by the
Company.
(j) You shall not be required to mitigate damages (or the amount
of any compensation provided under this Agreement to be paid) following your
termination of employment, by seeking employment or otherwise.
(k) If any provision of this Agreement as applied to either party
or to any circumstances shall be adjudged by a court of competent jurisdiction
to be void or unenforceable, the same shall in no way affect any other provision
of this Agreement or the validity or enforceability of this Agreement.
(l) The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(m) This Agreement may be executed in one or more counterparts,
which shall, collectively and separately, constitute one agreement.
(n) Notwithstanding anything to the contrary set forth in this
Agreement, the Company may cause any of its subsidiaries for which you render
services to pay or otherwise satisfy, in whole or in part, some or all of the
Company's obligations hereunder.
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January 18 2000
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If the foregoing reflects your understanding of the terms of your
employment with the Company, please execute each copy of this letter in the
space provided below.
DYNEGY INC.
By:
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman & CEO
AGREED AND ACCEPTED
this _____ day of January, 2000
-------------------------------
Xxxxxxx X. Xxxxxxxxx
14
EXECUTION COPY
Xxxxxxxxx Employment Agreement - Schedule I
EXECUTIVE PERQUISITES
Except as provided below, as long as you remain in the employment of the Company
during the Term of this Agreement, you will be entitled to the following:
1. Personal country club membership in Kingwood Country Club, including
the reimbursement of all dues and business-related expenses. This
membership shall be assigned to you in the event of termination of the
Agreement for any reason, and you shall pay dues from the date of
termination, but you shall not be obligated to reimburse the Company
for any amounts paid by the Company prior to termination.
Notwithstanding anything to the contrary in this Agreement or this
Schedule, in no case shall the Company be obligated to pay any amount
of dues, fees or reimbursement for or to any country club or luncheon
club that, in the determination of the Board of Directors in its sole
discretion, restricts membership or the performance of services or the
use of facilities on the basis of race, religion, gender or national
origin.
2. Personal membership in two (2) Houston luncheon clubs of your choice,
including the reimbursement of all dues and business-related expenses.
These memberships shall be assigned to you in the event of termination
of the Agreement for any reason, and you shall pay dues from the date
of termination, but you will not be obligated to reimburse the Company
for any amounts paid by the Company prior to termination.
3. Vacations and holidays in accordance with the Company's policies in
effect from time to time for its senior executive officers, but not
less than six (6) weeks of vacation during each fiscal year.
4. A benefit package including medical, hospital, dental, disability and
life insurance plans and coverage for you and your spouse and children
at least as favorable to you (and your spouse and children) as that
provided to you immediately prior to the commencement of the Term of
this Agreement unless, with respect to any particular plan or coverage,
the continuation of such existing plan or coverage would have material
adverse financial or regulatory consequences to the Company.
5. Reimbursement of fees for annual medical physical examinations and for
financial and/or federal income tax planning (and reasonable accounting
and legal fees associated therewith), the allocable cost of which
perquisites to you are not to exceed $25,000 annually.
6. Use of any aircraft owned or leased by the Company for Company business
in accordance with the policies adopted by the Board of Directors,
which policy is subject to the approval of the Board of Directors from
time to time, You may also, in accordance with such policies, which
shall not be amended as they apply to you without your prior consent,
use any aircraft owned or leased by the Company for your own personal
business; provided, however, that (i) such use does not adversely
interfere with the use of such aircraft for Company business, (ii) you
shall maintain any records reasonably requested by the Board of
Directors, (iii) you shall compensate the Company for such use -
