1
EXHIBIT 10.9
EXECUTION COPY
January 18, 2000
Xx. Xxxxxxx X. Xxxxxx
00 Xxxxxxxx Xxxxx
Xxxxxxx, 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 will be Chairman and Chief Executive Officer of the
Company. Your duties and responsibilities will be as described in the Company's
Bylaws (as amended, modified or supplemented from time to time) and as delegated
by the Board of Directors of the Company (the "Board of Directors") from time to
time during the Term of the Agreement (as defined below), to the extent such
duties and responsibilities are consistent with your duties and responsibilities
as of the day preceding the Effective Date (as defined below), or as otherwise
agreed by you. You will be employed at Dynegy's headquarters in Houston, Texas.
You shall devote your full working 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.
2. TERM
(a) Unless earlier terminated as provided for herein, the term of this
Agreement will be for three (3) years, commencing on the Effective Date and
ending on the third 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 before the date of such termination. 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.
For purposes of this Agreement, you may be terminated for "cause" by
majority vote (excluding yourself) of the Board of Directors of as a result of
(i) your refusal to implement or adhere to lawful policies or lawful directives
of the Board of Directors; (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; (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 required to be paid by the Company for the highest three (3)
calendar years preceding the calendar year in 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 through the date of
termination; (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(e), 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.
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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(e), 3(f) and 3(g) is reduced; (ii) 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 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
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 the Xxxxxx
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1996 Family Trust (an irrevocable trust created on March 22, 1996, by you and
Xxx X. Xxxxxx, as the Grantors, and Xxxxx X. Xxxxxxx, as the Trustee); (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; (v) and for a
period of three (3) years following the date of your death or disability, the
Company shall continue to maintain Directors and Officers Liability Insurance on
the same terms it thereafter maintains such insurance for its directors and
officers. 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 $1,500,000 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 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 shall be
allocated by the Company to, or expended directly for, charitable contributions
of your selection and/or payments of insurance premiums pursuant to any Split
Dollar Agreement between the Company and the Xxxxxx 1996 Family Trust (an
irrevocable trust created on March 22, 1996, by you and Xxx X. Xxxxxx, as the
Grantors, and Xxxxx X. Xxxxxxx, as the Trustee).
(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 375% of your Base Salary. These options are
subject to the vesting, forfeiture and other terms and conditions of the LTIP.
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 "Chairman"
and "Chief Executive Officer" in accordance with the requirements and provisions
of the LTIP. The current target range for annual option grants for your position
is a 75th percentile of 375% of
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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.
(d) Upon the Effective Date, any options granted to you prior to
November 1, 1999 shall become vested,
(e) 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 the Xxxxxx 1996 Family Trust (an irrevocable trust
created on March 22, 1996, by you and Xxx X. Xxxxxx, as the Grantors, and Xxxxx
X. Xxxxxxx, as the Trustee). Without limiting the foregoing, you shall receive
the perquisites set forth on Schedule I attached hereto and by this reference
incorporated herein.
(f) 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 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.
(g) In the event that you remain continuously employed through the
third anniversary of the Effective Date or your separation from employment prior
to completion of the Term of the Agreement is due to termination pursuant to
Paragraph 2(c), then the Company shall provide to you at its expense for a
period of five years thereafter an office separately located from the offices of
the Company that is comparable in size and facilities to that provided by the
Company during the Term of this Agreement. The Company shall also pay for
maintenance of such office space. You shall also be entitled to equip the office
with (and retain as your own following completion of the five year period) the
furniture, cabinets, pictures, equipment and office furnishings (but not any
intrinsically valuable art works or collectibles) used by you in your office at
the end of the Term or at the time of termination. You shall be responsible for
the tax consequences to you of the provisions of this Paragraph 3(g).
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
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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 date of 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 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
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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 five percent (5%) 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 such 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 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
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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 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
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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)(1) 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.
(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
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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. PHYSICAL EXAMINATION
You agree, during each fiscal year of the Company, to undergo a
complete physical examination at Company expense, and you further agree that the
finding or diagnosis of a terminal illness or physical or mental condition that
will materially impair your ability to perform your duties and responsibilities
under this Agreement, which is the result of such examination, will be disclosed
to the Executive Committee of the Board of Directors. You agree to direct such
disclosure to the Executive Committee of the Board of Directors by an instrument
in writing, if necessary, but no disclosure shall be made to any other party
without your written consent.
9. 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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Xx. Xxxxxxx X. Xxxxxx
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 hereto 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. Xxxxxx Dynegy Inc.
00 Xxxxxxxx Xxxxx 0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 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
9(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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Xx. Xxxxxxx X. Xxxxxx
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.
(1) 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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Xx. Xxxxxxx X. Xxxxxx
January 18, 2000
Page 13
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:
---------------------------------------
Title:
---------------------------------------
AGREED AND ACCEPTED
this ____ day of January, 2000
-------------------------------------
Xxxxxxx X. Xxxxxx
14
Xxxxxx 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. At your option, the use of an automobile of a type equivalent to that
presently provided by the Company for use by you, your spouse and
members of your immediate family, or a cash automobile allowance of
$2,000 per month.
2. Personal membership in the Petroleum Club in Houston, Texas and two
(2) other downtown 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 shall not be obligated to reimburse the Company
for any amounts paid by the Company prior to termination.
3. Personal country club membership in two (2) country 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 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.
4. 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.
5. 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.
6. Reimbursement of fees 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 One
Hundred Thousand Dollars ($100,000) per annum.
15
7. 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 at the Company's actual after-tax costs for the use of such
aircraft and (iv) such personal use by you does not exceed fifty (50)
hours of flight time usage of such aircraft on a calendar year basis.
You shall be responsible for paying any income taxes attributable to
taxable income arising from such aircraft use.
