SETTLEMENT AGREEMENT
[INSERT NAME OF EMPLOYEE] (the "Employee") and Illinova Corporation
(the "Company") have entered into a "Retention Agreement" dated [INSERT DATE OF
RETENTION AGREEMENT]. 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 specifically identify such
compensation, payments, and benefits at this time. Accordingly, the Employee and
the Company agree that, effective November 19, 2000 (the "Effective Date"), the
terms of this Settlement Agreement will apply, and the current section 1 of the
Retention Agreement shall be without effect:
1. SUBSTITUTE PAYMENT PROVISIONS. The Employee agrees that the
compensation, payments, and benefits as described in Supplement A (the
"Benefits Schedule") which is attached to and forms a part of this Settlement
Agreement are in lieu of any and all compensation, payments, and benefits
under section 1 of the Retention Agreement. (For purposes of this Settlement
Agreement, the term "Settlement Agreement" shall include the Benefits
Schedule.) By execution of this Settlement Agreement, the Employee waives any
and all rights to the amounts that would have been payable under section 1 of
the Retention Agreement absent this Settlement Agreement. 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 Supplemental
Retirement Income Plan for Salaried Employees of Illinois Power Company (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 compensation,
perquisites, or benefits, 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 does not constitute an
amendment of the Retention Agreement (as in effect both prior to and after
amendment by this Settlement Agreement) by the Company that adversely affects
the Employee's rights under the Retention Agreement, and hereby waives any
and all rights to assert the contrary.
5. OTHER EMPLOYMENT. The Employee shall not be required to mitigate
damages by seeking other employment or otherwise. Except as specifically
provided in section A-1(b) of the Benefits Schedule with respect to
termination of health coverage, life insurance coverage, and disability
coverage upon the Employee's coverage under a plan or arrangement of the
Employee's employer, the Company's obligations under this Settlement
Agreement shall not be reduced in any way by reason of any compensation
received by the Employee from sources other than the Company or the
Affiliates after termination of Employee's employment with the Company. 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 X. Xxxxxxxx, Vice President, a written
revocation signed by the Employee stating "I revoke my acceptance of
the Settlement Agreement that would otherwise become effective November
19, 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 January 31, 2000."
/s/ Xxxxx X. Xxxxxxxxxxx November 19, 1999
/s/ Xxxx X. Xxxx November 15, 1999
/s/ Xxx X. Xxxxxxxx November 15, 1999
/s/ Xxxxx X. Xxxxx November 18, 1999
/s/ Xxxxxx X. Xxxxxxxx November 18, 1999
/s/ Xxxxxx X. Xxxxxxx November 19, 1999
/s/ Xxxxxxx X. Xxxxxxx November 10, 1999
/s/ Xxxx Xxxxxxx Stetzner November 15, 1999
/s/ Xxxx X. Xxxxxx November 9, 1999
------------------------------------------------------------------------
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
NOVEMBER 19, 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 [INSERT NAME OF EMPLOYEE] (the "Employee") and
Illinova Corporation (the "Company") dated January 31, 2000, and sets forth
certain rights to compensation, benefits, and payments under the Retention
Agreement between the Employee and the Company dated November 1999 (the
"Retention Agreement"). The compensation, benefits, and payments under the
Settlement Agreement (including this Benefits Schedule) shall be in lieu of
any compensation, benefits, payments, or rights that would otherwise be
provided under section 1 of the Retention Agreement in the absence of this
Settlement Agreement.
A-1. SEVERANCE BENEFITS. If a Termination Event (as defined in the Retention
Agreement) occurs, the Employee shall be entitled to the Severance
Benefits described in this section A-1:
(a) LUMP SUM PAYMENT. The Company shall, within 30 days after a
Termination Event, make a lump sum cash payment to the Employee equal
to the sum of:
(i) thirty-six (36) months' salary at the greater of (I) the
Employee's salary rate in effect on the date of the Change in
Control, or (II) the Employee's salary rate in effect on the
date Employee's employment with the Company terminates; PLUS
(ii) three times the greater of (i) the annual bonus for the
calendar year immediately prior to the calendar year in which
the Employee's Termination Event occurs; or (ii) the annual
bonus for the second calendar year prior to the calendar year
in which the Employee's Termination Event occurs. For purposes
of this section (ii):
(A) The annual bonus for calendar year 1998 shall be the
Employee's award under the Illinova Executive
Incentive Compensation Plan (the "Annual Incentive
Plan") for the calendar year 1998, which award for
purposes of this Settlement Agreement consists of the
total cash payments actually made in 1999 which are
attributable to the 1998 calendar year (including
both the cash payment which is characterized as a
Current Payment and the cash payment which is
characterized as a Deferred Payment under the terms
of the Annual Incentive Plan).
(B) The annual bonus for calendar year 1999 shall be the
Employee's award under the Annual Incentive Plan for
calendar year 1999 (which ordinarily would be paid in
March, 2000, but may be paid in December 1999).
(C) The annual bonus for calendar year 2000, and for
subsequent calendar years, shall be the Employee's
award under the annual bonus plan for the performance
period of that calendar year (regardless of when such
bonus is paid).
(b) 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 A-1(b) 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").
(c) SUPPLEMENTAL RETIREMENT ENHANCEMENT. Subject to the terms of the
Illinois Power Company Retirement Income Plan for Salaried Employees
(the "Qualified Retirement Plan") and the Supplemental Retirement
Income Plan for Salaried Employees of Illinois Power Company (the
"Supplemental Plan"), the Company shall provide a benefit to the
Employee which, when added to the benefit earned by the Employee under
the Qualified Retirement Plan and the Supplemental Plan as of his or
her termination of employment, would equal the benefit he or she
would have received under the Qualified Retirement Plan and the
Supplemental Plan if:
(i) the Employee's Service (for eligibility and vesting purposes)
and the Employee's Credited Service (for benefit accrual
purposes) were increased by three years;
(ii) the Employee's age at termination of employment were deemed to
be the earlier of (i) his or her age at the time of his or her
termination of employment plus three years; or (ii) his or her
age at the last day of the calendar month prior to the date on
which benefit payments under the Qualified Plan commence (but
not younger than his or her age at the time of termination of
employment); and
(iii) the benefits were based on the Employee's actual final average
earnings (as determined in accordance with the terms of the
Qualified Retirement Plan and the Supplemental Plan) on the
Employee's termination and without regard to payments made
pursuant to the Retention Agreement and this Settlement
Agreement.
(d) RETIREE WELFARE BENEFITS. 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 section
A-1(b) of this Benefits Schedule 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-2. LONG-TERM INCENTIVE PAYMENT. If the Employee is employed through
December 31, 1999 or the Employee's employment is terminated prior to
that date by the Company without Cause (as defined in the Retention
Agreement), and if the Employee is participating in the Illinova Long
Term Incentive Compensation Plan (the "Long-Term Incentive Plan"), 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-2 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:
--------------------------------------------------------------------------------------------------------------------
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:
--------------------------------------------------------------------------------------------------------------------
January 1, 1999 through December 31, 1999 100%
--------------------------------------------------------------------------------------------------------------------
January 1, 1999 through December 31, 2000 50%
--------------------------------------------------------------------------------------------------------------------
January 1, 1999 through December 31, 2001 33%
--------------------------------------------------------------------------------------------------------------------
Except as provided in this section A-2, the Employee shall not be
entitled to any amounts with respect to the Long-Term Incentive Plan
for any period.
A-3. Compensation Cessation. Except as otherwise specifically provided
in this Settlement Agreement, or the provisions of Retention Agreement
(excluding section 1 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 Plan shall be construed
to give the Employee any right to be reemployed 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.
