SETTLEMENT AGREEMENT
Xxxxxxx X. Xxxxxx, Xx. (the "Employee") and Illinova Corporation (the
"Company") have entered into a "Retention Agreement" dated April 12, 1999. For
greater certainty as to certain compensation, payments, and benefits which may
be provided under the Retention Agreement, the parties to the Retention
Agreement wish to enter into this Agreement. Accordingly, the Employee and the
Company agree that, effective December 15, 1999 (the "Effective Date"), the
provisions set forth in this Settlement Agreement will apply:
1. BENEFITS SCHEDULE. By execution of this Settlement Agreement, the
Employee agrees that the revisions described in Supplement A (the "Benefits
Schedule") which is attached to and forms a part of this Settlement Agreement
shall apply. (For purposes of this Settlement Agreement, the term "Settlement
Agreement" shall include the Benefits Schedule.) The Employee acknowledges that
the amounts payable to the Employee under this Settlement Agreement, and under
the Retention Agreement as modified by this Settlement Agreement, are in excess
of the amounts which would have been payable to the Employee under the Retention
Agreement absent modification by this Settlement Agreement.
2. ACCELERATION AUTHORIZED. The Employee authorizes the Company to
accelerate, into calendar year 1999, payments that may otherwise have been
payable after 1999 under Company compensation arrangements, including, without
limitation, the Illinova Executive Incentive Compensation Plan, Illinova Long
Term Incentive Compensation Plan, and the Illinova Corporation Supplemental
Pension Plan applicable to the Employee (the "Supplemental Plan"), but not
including the Company's health, life, or disability plans (which would not be
accelerated), in accordance with determinations made by the Company. In
addition, the Company may, in its sole discretion, accelerate severance payments
that may otherwise be due to the Employee upon termination of employment under
any agreement with the Company or any plan or arrangement maintained by the
Company. The Company may, in its discretion, limit the amount accelerated on
behalf of the Employee to the extent it determines that the acceleration would
result in payments that would not be tax deductible by reason of section 162(m)
of the Internal Revenue Code (relating to the $1 million limit on deductible
compensation). If any payment otherwise due (or which may become due) to the
Employee in a later year under the Retention Agreement, this Settlement
Agreement, or any other Company compensation arrangement is accelerated into
1999 under this Settlement Agreement, there shall be a corresponding reduction
in the Company's obligation to make payments to the Employee under that
agreement or arrangement in the later year. As soon as practicable after such
acceleration occurs, the Company will provide the Employee with a schedule of
the amount of the acceleration and the specific compensation, benefits, and
payments that were canceled as a result of the acceleration. Any obligation that
is accelerated under any agreement or arrangement will be subject to a present
value
adjustment, and any obligation that is accelerated under the Supplemental
Plan will be subject to an actuarial adjustment to reflect such acceleration.
3. RESTRICTIONS ON ACCELERATION. If approved by the Board of Directors
of the Company, the Company will endeavor to accelerate amounts into calendar
year 1999 so that the Employee's benefits will not be reduced in accordance with
the provisions of section 9 of the Retention Agreement, to the extent that the
Company determines that such amounts would otherwise become due to the Employee
in a later year. However, the Company and the Employee agree that the provisions
of section 9 of the Retention Agreement shall continue to apply, notwithstanding
the provisions of this Settlement Agreement.
4. GOOD REASON. The Employee acknowledges that (i) entering into this
Settlement Agreement does not constitute a change in the nature or scope of the
Employee's authority, and does not otherwise constitute a basis for "Good
Reason" under the Retention Agreement (as in effect both prior to and after
amendment by this Settlement Agreement), and (ii) the amendment of the Retention
Agreement by this Settlement Agreement constitutes an amendment of the Retention
Agreement that reflects the mutual written agreement of the parties to the
Retention Agreement, and the Employee hereby waives any and all rights to assert
the contrary.
5. AFFILIATES. For purposes of this Settlement Agreement, the term
"Affiliate" shall mean any "affiliate" of the Company as that term is defined in
Rule 12b-2 under the Securities Exchange Act of 1934.
6. OTHER COMPENSATION. Except for the covenants and agreements set
forth in this Settlement Agreement, the Employee has received and will receive
no additional compensation or any other type of remuneration from the Company in
consideration of the elections and waivers made pursuant to this Settlement
Agreement. Notwithstanding any provision of this Settlement Agreement or the
Retention Agreement to the contrary, the benefits payable to the Employee under
this Settlement Agreement shall be in lieu of, and not in addition to, any
benefits to which the Employee might otherwise be entitled under any other
severance plan or arrangement maintained by the Company. The acceleration of
compensation under sections 2 and 3 will be disregarded for purposes of the
Illinois Power Company Retirement Income Plan for Salaried Employees, the
Supplemental Plan, and all other plans and arrangements, and will not increase
the Employee's benefits under any such plan or arrangement. The Employee
acknowledges that he or she will have no control over what the Company may do
with the amounts, if any, waived pursuant to this Settlement Agreement.
7. TAX RETURNS. The Employee agrees to employ PricewaterhouseCoopers to
prepare his or her personal income tax returns for calendar years 1999 and 2000.
The Company will reimburse the Employee for the cost of such preparation.
8. RIGHT OF REVOCATION.
(a) The Employee may revoke this Settlement Agreement by filing, prior to
the Effective Date, with Xxx Xxxxxxxx, Vice President, a written
revocation signed by the Employee stating "I revoke my acceptance of
the Settlement Agreement that would otherwise become effective December
15, 1999." Unless the Employee has revoked this Settlement Agreement by
the Effective Date, and except as otherwise provided in section 8(b),
this Settlement Agreement will become irrevocable on the Effective
Date.
(b) If the Company does not accelerate in accordance with sections 2 and 3,
then, for a period of 14 days following the date written notice is
provided to the Employee (by mailing to the Employee's last residence
address indicated in the Company's records) of the Company's
determination not to accelerate, the Employee shall be entitled to
revoke this Settlement Agreement by filing, prior to the 15th day
following provision by the Company of such written notice a written
revocation signed by the Employee stating "I revoke my acceptance of
the Settlement Agreement that became effective December 15, 1999."
/s/ Xxxxxxx X. Xxxxxx Xx. Xxxxxxx X. Xxxxxx Xx. December 14, 1999
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SIGNATURE PRINT NAME DATE
THIS FORM MUST BE RETURNED TO THE ILLINOIS POWER COMPANY, XXX X. XXXXXXXX, VICE
PRESIDENT, AT 000 XXXXX 00 XXXXXX, XXXXXXX, XXXXXXXX 00000, BY 5:00 P.M. ON
DECEMBER 15, 1999 AND SHALL BECOME IRREVOCABLE AT THAT TIME.
Supplement A
BENEFITS SCHEDULE
This Benefits Schedule is attached to and is a part of the Settlement
Agreement between Xxxxxxx X. Xxxxxx, Xx. (the "Employee") and Illinova
Corporation (the "Company") dated December 14, 1999, and sets forth certain
rights to compensation, benefits, and payments under the Retention Agreement
between the Employee and the Company dated April 12, 1999 (the "Retention
Agreement"). The Employee and the Company agree that the provisions set forth in
this Benefits Schedule will apply:
A-1. CHANGE IN CONTROL BENEFITS. The following shall be substituted for
section 1(a)(II) of the Retention Agreement:
"(II) The amount of the Employee's annual award under the Illinova
Executive Incentive Compensation Plan for calendar year 1999 (which
ordinarily would be paid in March, 2000, but may be paid in December
1999)."
A-2. WELFARE BENEFITS. The following shall be substituted for section 1(d)
of the Retention Agreement:
"(d) WELFARE PLAN CONTINUATION. The Employee and his or her dependents
shall be eligible for coverage under the health (including medical and
dental) plan, life insurance plan, and disability plan (if any)
provided to full-time employees of Illinois Power Company (or its
successor) from time to time, subject to the same requirements and
limitations as are applicable to full-time employees (including,
without limitation, any requirement for employee contributions to pay
premiums for such coverage). Eligibility for each of such health
coverage, life insurance coverage, and disability coverage,
respectively, shall continue until the earliest of:
(i) The first day the Employee becomes eligible for health
coverage, life insurance coverage, or disability coverage,
respectively, under a plan or arrangement of the Employee's
new employer.
(ii) In the case of health coverage and life insurance coverage, if
the Employee has attained age 50 but has not attained age 52
on the date of termination, the Employee's 55th birthday; and
if the Employee has not attained age 50, or is older than age
52 on the date of termination, the three-year anniversary of
the Employee's Termination Event. In the case of disability
coverage, the three-year anniversary of the Employee's
Termination Event.
(iii) The date the Employee attains age 65.
Medical coverage provided under this section 1(d) shall be counted
towards the Company's obligation to provide coverage under the
provisions of section 4980B
of the Internal Revenue Code and section 601 of the Employee Retirement
Income Security Act (sometimes referred to as "COBRA coverage").
If, either: (a) the Employee has attained age 50 but has not attained
age 55 on the date of termination of employment, and the Employee's
medical and life coverage under this section 1(d) are continued until
the Employee attains age 55, or (b) the Employee has attained age 55 on
or before the date of termination of employment, then the Employee and
his or her dependents, if any, shall be eligible to participate in any
benefit plans of the Company which provide health and life or similar
benefits coverage as are then extended to employees of the Company
electing early retirement at age 55 on the same terms and subject to
the same conditions as are applicable to such employees; provided that
such coverage shall not be furnished if the Employee waives coverage by
giving written notice of waiver to the Company. Nothing in the
Settlement Agreement (including this Benefits Schedule) shall be
construed to limit the right which the Company otherwise has to amend
or termination any health, life or other plan covering the Company's
employees (or their dependents)."
A-3. LONG-TERM INCENTIVE PAYMENT. If (i) the Employee is employed through
December 31, 1999; or (ii) the Employee's employment is terminated
prior to that date by the Company without Good Cause (as defined in the
Retention Agreement); then the Company shall provide the Employee with
an award for each of the three performance periods currently in effect
(January 1, 1999 through December 31, 1999; January 1, 1999 through
December 31, 2000; and January 1, 1999 through December 31, 2001). The
determination of the performance for the periods will be determined
near the end of 1999, and will be equal to the performance figures
available as of the date of such determination, with such performance
deemed to have continued through the end of the performance periods, as
determined by the Compensation Committee of the Board of Directors of
the Company. The amount of the benefit payable under this section A-3
to the Employee for each of these performance periods shall be equal to
the amount that would be payable on such performance for the entire
period, but subject to a pro-rata reduction to reflect the portion of
the performance period after December 31, 1999, in accordance with the
following schedule:
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For the Performance Period: The following percent of the total award that is
determined to be payable by the Company for the
Performance Period shall be:
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January 1, 1999 through December 31, 1999 100%
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January 1, 1999 through December 31, 2000 50%
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January 1, 1999 through December 31, 2001 33%
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Except as provided in this section A-3, the Employee shall not be
entitled to any amounts with respect to the Long-Term Incentive Plan
for any period.
A-4. Compensation Cessation. Except as otherwise specifically provided in
this Settlement Agreement, or the provisions of Retention Agreement
(excluding section 1(d) as in effect prior to amendment by this
Settlement Agreement), the Employee shall not be eligible for any
compensation or benefits for periods after the Employee's date of
termination. Nothing in this Settlement Agreement or the Retention
Agreement shall be construed to give the Employee any right to be
reemployed or otherwise retained by the Company or an Affiliate
after such termination of employment. However, the Employee, if
reemployed, shall be eligible for such compensation and benefits,
and shall be eligible for participation in such benefit plans and
arrangements, with respect to any such reemployment as may be agreed
upon by the Employee and the employer, and shall be subject to the
terms that may be applicable to the Employee under any such plan or
arrangement.
