William B. Conway Jr.
Illinova Corporation
500 South 27th Street
Decatur, Illinois 62521
Dear Mr. Conway:
This letter is to confirm the terms of your employment with Illinova
Corporation.
I. Employment Date. Your first day of employment will be April 12, 1999 (the
"Employment Date").
I. Salary. Your annual base salary will be $295,000, subject to periodic review
to determine whether an increase is appropriate.
I. Bonus. You will be entitled to participate in the Executive Incentive
Compensation Plan. Your bonus under the Executive Incentive Compensation Plan
will be $118,000 (which is 40% of your salary) if the target level of
performance is achieved, and your bonus will be $177,000 (which is 60% of your
salary) at the maximum achievement level.
I. Long-Term Incentive Award. For 1999, your entire long-term incentive award
will be in the form of a stock option, the terms of which are reflected in the
enclosed stock option agreement. The option will be granted as of the Employment
Date, and the exercise price per share will be the fair market value of a share
of stock on the grant date. After 1999, 50% of your long-term incentive award
will be made as a stock option grant, and the remaining 50% will be made as
performance share grant.
I. Supplemental Pension. In lieu of participation in the Company's Supplemental
Executive Retirement Plan, you will be covered by the enclosed Supplemental
Pension Plan.
I. Retention Agreement. You will be covered by the enclosed Employee Retention
Agreement, which provides benefits in the event of a Change in Control.
I. Loan. To compensate you for amounts you have foregone by leaving Troutman
Sanders LLP to join Illinova Corporation, you will be entitled to a loan form
the Company of $250,000. The terms of the loan are reflected in the enclosed
letter and promissory note.
I. Lump Sum Death Benefits. If your death should occur while you are employed by
the Company, your surviving spouse (or, if she does not survive you, the
beneficiary designated by you) will be entitled to a lump sum death benefit of
two times the amount of your salary plus your target bonus at the time of your
death. In lieu of receiving this lump sum death benefit, your surviving spouse
may elect to receive the surviving spouse benefit under the Supplemental Pension
Plan. (If your spouse does not survive you, only the death benefit described in
this paragraph is payable. The Supplemental Pension Plan does not provide for
other survivor benefits.)
I. Termination. You may resign from the Company at any time for any reason, and
the Board of Directors of the company may terminate your employment at any time
for any reason. At the time of your termination of employment, you (or your
estate) will be entitled to the compensation and benefits specified in this
letter and the enclosed material, as well as to the other benefits you earned
while employed by the Company, to the extent such compensation and benefits are
payable on your termination of employment.
If the foregoing reflects your understanding of the terms of your
agreement with the Company, please so indicate by signing and returning a copy
of this letter to the undersigned, along with a signed copy of each of the
enclosures.
Very truly yours,
Illinova Corporation
Charles E. Bayless
Accepted and agreed to this 13th day of April, 1999.
William B. Conway Jr.
NON-QUALIFIED STOCK OPTION AGREEMENT
ILLINOVA CORPORATION
1992 LONG-TERM INCENTIVE COMPENSATION PLAN
THIS AGREEMENT, entered into as of the 12th day of April, 1999 (the "Grant
Date"), by and between Illinova Corporation, an Illinois corporation (the
"Company") and William B. Conway Jr. (the "Employee"),
WITNESSETH THAT:
WHEREAS, the Company maintains the Illinova Corporation 1992 Long-Term
Incentive Compensation Plan (the "Plan"), which is incorporated and forms a part
of this Agreement, for the benefit of key employees of the Company and its
Subsidiaries;
WHEREAS, to induce the Employee to accept employment by the Company,
the Company has agreed to grant to the Employee the option described in this
Agreement; and
WHEREAS, the Employee and the Company desire to enter into this
Agreement reflecting the award of such option;
NOW, THEREFORE, IT IS AGREED, by and between the Company and the
Employee as follows:
SECTION ONE
GRANT
Subject to the terms and conditions of the Plan and this Agreement, the
Employee is hereby awarded an option to purchase 30,000 shares of Stock (the
"Option"). The Option is not intended, and shall not be treated, as an incentive
stock option (as that term is used in Section 422 of the Code).
SECTION TWO
OPTION PRICE
The option price of each share of stock subject to the Option is
$21.781.
SECTION THREE
EXERCISE, EXPIRATION AND
CANCELLATION OF OPTION
The Option shall be exercisable by the Employee in accordance with the
following schedule:
If the Employee is employed through The Option shall become exercisable with
the following date: respect to the following number of
shares on and after that date:
- ------------------------------------ -------------------------------------------
One-year anniversary of Grant Date 10,000 shares
- ------------------------------------ -------------------------------------------
Two-year anniversary of Grant Date 10,000 shares
- ------------------------------------ -------------------------------------------
Three-year anniversary of Grant Date 10,000 shares
- ------------------------------------ -------------------------------------------
If the Employee's employment by the Company continues through the 9-1/2
year anniversary of the Grant Date, then any portion of the Option herein
granted and not previously exercisable shall become exercisable on such
9-1/2-year anniversary.
The Option shall expire as to any unexercised portion on the earliest of:
(a) the tenth anniversary of the date first above written;
(b) the first anniversary of the Employee's death;
(c) five years following the Employee's date of retirement; or
(d) the date of the Employee's Termination; provided that if the
Employee's employment ceases because of a Termination, any exercise of
the Option occurring on or after the Employee's date of Termination
shall be void and shall be ineffective.
For purposes of this Agreement, the Employee's "date of retirement"
shall be the date of Retirement, Early Retirement or Disability Retirement as
those terms are defined in the Plan.
If the Employee exercises the Option with respect to a portion, but not
all, of the shares of Stock subject thereto, the Option shall thereafter cease
to be exercisable with respect to the shares of Stock for which it was exercised
but, subject to the terms and conditions of the Plan and this Agreement, shall
continue to be exercisable with respect to the shares of Stock with respect to
which it was not exercised.
If the Employee's Termination occurs prior to the date on which any
portion of the Option has become exercisable, that portion of the Option shall
be forfeited upon such Termination. Notwithstanding the foregoing provisions of
this Agreement, the Option shall not become exercisable and shall be forfeited
if the Employee does not become an employee of the Company, and the Option shall
be forfeited if the Employee becomes an employee of the Company but voluntarily
resigns within 30 days after his initial date of employment.
SECTION FOUR
METHOD OF EXERCISE
Subject to the terms and conditions of the Plan and this Agreement, the
Option may be exercised, in whole or in part, by filing a written notice with
the Secretary of the Company at its corporate headquarters prior to the date on
which the Option expires or is otherwise canceled. Such notice shall specify the
date as of which the exercise is to occur and the number of shares of Stock
which the Employee elects to purchase and shall be in such form and shall
contain such other information as the Secretary of the Company may reasonably
require. The election shall be accompanied by payment of the option price for
such shares of Stock indicated by the Employee's election, together with the
amount of any required state, federal or local withholding taxes arising in
connection with the purchase of such Stock. Subject to the provisions of the
preceding sentence and the terms of the Plan, payment shall be by cash or check
payable to the Company, by delivery of shares of Stock having an aggregate Fair
Market Value (determined as of the date of exercise) equal to the option price,
and if elected in accordance with this Section 4, the Employee's tax withholding
obligation for the shares of Stock, indicated by the Employee's election, or a
combination of both.
SECTION FIVE
TRANSFERABILITY
The Option shall not be transferable by the Employee other than by will
or the laws of descent and distribution and, during the life of the Employee, is
exercisable only by the Employee or Employee's guardian or legal representative.
SECTION SIX
NOTICE OF DISPOSITION OF SHARES
The Employee agrees to notify the Company promptly in the event of
disposal of any shares of Stock acquired upon the exercise of the Option,
including a disposal by sale, exchange, gift or transfer of legal title.
SECTION SEVEN
ADMINISTRATION
The authority to manage and control the operation and administration of
this Agreement shall be vested in the Committee, and the Committee shall have
all powers with respect to this Agreement that it has with respect to the Plan.
Any interpretation of this Agreement by the Committee and any decision made by
it with respect to the Agreement is final and binding on all persons.
SECTION EIGHT
PLAN GOVERNS
Notwithstanding anything in this Agreement to the contrary, the terms
of this Agreement shall be subject to the terms of the Plan, a copy of which may
be obtained by the Employee from the office of the Secretary of the Company.
Unless the context clearly implies or indicates the contrary, a word, term or
phrase used or defined in the Plan is similarly used or defined for purposes of
this Agreement.
SECTION NINE
AMENDMENT
This Agreement may be amended by written agreement of the Employee and
the Company, acting pursuant to authority from the Committee, without the
consent of any other person.
SECTION TEN
CONTINUED EMPLOYMENT, RIGHTS AS SHAREHOLDER
This Agreement does not constitute a contract of employment, and does
not give the Employee the right to be employed by the Company or its
Subsidiaries. This Agreement does not confer on the Employee any rights as a
shareholder of the Company prior to the date on which the Employee fulfills all
conditions for receipt of Stock pursuant to this Agreement and the Plan.
SECTION ELEVEN
GOVERNING LAW
This Agreement shall be construed and administered in accordance with
the laws of the State of Illinois, without regard to the principles of conflicts
of law.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
------------------------------
William B. Conway Jr.
Illinova Corporation
By:___________________________
Charles E. Bayless
Chairman, President and Chief
Executive Officer
ATTEST:
- ---------------------------------
ILLINOVA CORPORATION
SUPPLEMENTAL PENSION PLAN
The Supplemental Pension Plan (the "Plan") is adopted effective as of April
12, 1999. The Plan is established and maintained by Illinova Corporation for the
purpose of providing benefits for the Participant, William B. Conway Jr.
Accordingly, Illinova Corporation hereby adopts the Plan pursuant to the terms
and provisions set forth below:
ARTICLE I
Definitions
Wherever used herein the following terms shall have the meanings
hereinafter set forth:
1.1 "Accrued Vested Benefit" of the Participant shall have the meaning
determined in accordance with Section 3.1.
1.2 "Board" means the Board of Directors of the Company.
1.3 "Cause" means:
(a) the Participant's conviction of any criminal violation involving
dishonesty, fraud, or breach of trust,
(b) the Participant's willful engagement in any misconduct in the
performance of the Participant's duty that materially injures the
Company,
(c) the Participant's performance of any act which, if known to the
shareholders or regulators of the Company or any of its subsidiaries,
would materially and adversely affect the business of the Company or
any of its subsidiaries, or
(d) the Participant's willful and substantial nonperformance of assigned
duties; provided that such nonperformance has continued more than ten
days after the Company has given written notice of such nonperformance
and of its intention to terminate the Participant's employment because
of such nonperformance.
1.4 "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any regulations relating thereto.
1.5 "Company" means Illinova Corporation, an Illinois corporation, or, to
the extent provided in Section 7.8, any successor corporation or other entity
resulting from a merger or consolidation into or with the Company or a transfer
or sale of substantially all of the assets of the Company.
1.6 "Earnings" of the Participant for any calendar month means the
Participant's accrued salary and bonus for that month and, for this purpose,
shall include any portion of such salary or bonus that would otherwise have been
includible for the month but is contributed by the Company on behalf of the
Participant pursuant to the Participant's election under a "qualified cash or
deferred arrangement" (as defined in section 401(k) of the Code) that is part of
any qualified profit sharing plan maintained by the Company. For purposes of
this definition, the Participant's bonus for any month is the bonus amount
earned under the Executive Incentive Compensation Plan (or any other successor
plan providing for an annual bonus) for that month. For each calendar year, the
annual bonus shall be deemed to be earned evenly during each of the months in
which the Participant was employed by the Company during that year.
1.7 "Final Average Earnings" means the average of the Participant's monthly
Earnings during the 36 consecutive calendar months that produces the highest
average and that occurs during the last 60 calendar months ending with the
calendar month in which the Participant's employment with the Company
terminates. If the Participant total employment period with the Company is less
than 36 calendar months, his Final Average Earnings shall be determined by
averaging (on a calendar month basis) the Earnings received by him from the
Company during his entire period of employment.
1.8 "Normal Retirement Date" means the first day of the calendar month
coinciding with or next following the Participant's 65th birthday.
1.9 "Participant" means William B. Conway Jr.
1.10 "Plan" means the Illinova Corporation Supplemental Pension Plan.
1.11 "Qualified Plan" means the Illinois Power Company Retirement Income
Plan for Salaried Employees or any successor plan.
1.12 "Qualified Plan Retirement Benefit" means the benefit payable to a
Participant pursuant to the Qualified Plan by reason of his termination of
employment with the Company for any reason other than death.
1.13 "Qualified Plan Surviving Spouse Benefit" means the benefit payable to
the Surviving Spouse of the Participant pursuant to the Qualified Plan in the
event of the death of the Participant at any time prior to commencement of
payment of his Qualified Plan Retirement Benefit.
1.14 "Supplemental Retirement Benefit" means the benefit payable to the
Participant pursuant to the Plan by reason of his termination of employment with
the Company for any reason other than death.
1.15 "Surviving Spouse" means a person who is married to the Participant at
the date of his death and for at least one year prior thereto.
1.16 "Supplemental Surviving Spouse Benefit" means the benefit payable to a
Surviving Spouse pursuant to the Plan.
1.17 The Participant's "termination" of employment with the Company shall
be deemed to occur on the day immediately following the date on which he is last
employed by the Company.
1.18 Words in the masculine gender shall include the feminine and the
singular shall include the plural, and vice versa, unless qualified by the
context. Any headings used herein are included for ease of reference only, and
are not to be construed so as to alter the terms hereof.
ARTICLE II
Eligibility
The Participant shall be eligible to receive a Supplemental Retirement
Benefit to the extent provided in Article III of the Plan. If the Participant
dies prior to commencement of payment of his Qualified Plan Retirement Benefit,
the Surviving Spouse of the Participant shall be eligible to receive a
Supplemental Surviving Spouse Benefit to the extent provided in Article IV of
the Plan.
ARTICLE III
Supplemental Retirement Benefit
3.1 Amount. The Supplemental Retirement Benefit shall be payable to the
Participant in the form of a straight life annuity over the lifetime of the
Participant only, commencing on his Normal Retirement Date, and shall consist of
a monthly amount equal to the excess of the amount described in paragraph (a)
over the amount described in paragraph (b) below:
(a) the Participant's Accrued Vested Benefit;
LESS
(b) the monthly amount of the Qualified Plan Retirement Benefit
actually payable to the Participant under the Qualified Plan.
The amounts described in (a) and (b) shall be computed as of the date of
termination of employment of the Participant with the Company in the form of a
straight life annuity payable over the lifetime of the Participant only
commencing on his Normal Retirement Date.
The Participant's "Accrued Vested Benefit" shall be determined in
accordance with the following:
(i) if the Participant's employment with the Company terminates for any
reason prior to January 1, 2000, his Accrued Vested Benefit shall be
zero, and he shall not be entitled to any benefits under the Plan;
(ii) if the Participant's employment with the Company terminates after
December 31, 1999, and the termination occurs by reason of his being
discharged by the Company without Cause, or if the Participant's
employment with the Company terminates on or after April 12, 2009 for
any reason, the Participant's Accrued Vested Benefit shall be equal to
40% of the Participant's Final Average Earnings as of the date of his
termination of employment; and
(iii)if the Participant's employment with the Company terminates after
December 31, 1999 and prior to April 12, 2009, and the termination
occurs for any reason other than his being discharged by the Company
without Cause, the Participant's Accrued Vested Benefit shall be equal
to 40% of the Participant's Final Average Earnings as of the date of
his termination of employment, multiplied by the vesting percentage
determined in accordance with the following schedule:
- ----------------------------------------- --------------------------------------
If the Participant's employment with the The vesting percentage shall be:
Company terminates during this period:
- ----------------------------------------- --------------------------------------
On or after April 12, 2000, and before
April 12, 2001 10%
- ----------------------------------------- --------------------------------------
On or after April 12, 2001, and before
April 12, 2002 20%
- ----------------------------------------- --------------------------------------
On or after April 12, 2002, and befor
April 12, 2003 30%
- ----------------------------------------- --------------------------------------
On or after April 12, 2003, and before
April 12, 2004 40%
- ----------------------------------------- --------------------------------------
On or after April 12, 2004, and before
April 12, 2005 50%
- ----------------------------------------- --------------------------------------
On or after April 12, 2005, and before
April 12, 2006 60%
- ----------------------------------------- --------------------------------------
On or after April 12, 2006, and before
April 12, 2007 70%
- ----------------------------------------- --------------------------------------
On or after April 12, 2007, and before
April 12, 2008 80%
- ----------------------------------------- --------------------------------------
On or after April 12, 2008, and before
April 12, 2009 90%
- ----------------------------------------- --------------------------------------
After April 12, 2009 100%
- ----------------------------------------- --------------------------------------
3.2 Form of Benefit. The Supplemental Retirement Benefit payable to the
Participant shall be paid in the same form under which the Qualified Plan
Retirement Benefit is payable to the Participant. The Participant's election
under the Qualified Plan of any optional form of payment of his Qualified Plan
Retirement Benefit shall also be applicable to the payment of his Supplemental
Retirement Benefit.
3.3 Commencement of Benefit. Payment of the Supplemental Retirement
Benefit to the Participant shall commence on the same date as payment of the
Qualified Plan Retirement Benefit to the Participant commences. Any election
under the Qualified Plan made by the Participant with respect to the
commencement of payment of his Qualified Plan Retirement Benefit shall also be
applicable with respect to the commencement of payment of his Supplemental
Retirement Benefit.
3.4 Approval of Company. Notwithstanding the provisions of Sections 3.2
and 3.3 above, an election made by the Participant under the Qualified Plan with
respect to the form of payment of his Qualified Plan Retirement Benefit or the
date for commencement of payment thereof shall not be effective with respect to
the form of payment or date for commencement of payment of his Supplemental
Retirement Benefit hereunder unless such election is expressly approved in
writing by the Company with respect to his Supplemental Retirement Benefit. If
the Company shall not approve such election in writing, then the form of payment
or date for commencement of payment of the Participant's Supplemental Retirement
Benefit shall be selected by the Company in its sole discretion. If benefits are
payable to the Participant under this Plan, but no benefits are payable to the
Participant under the Qualified Plan, the time and form of benefit shall be
selected by the Participant, subject to the consent of the Company, from among
the alternatives that would be available under the Qualified Plan (or such other
alternatives permitted by the Company).
3.5 Actuarial Equivalent. A Supplemental Retirement Benefit which is
payable in any form other than a straight life annuity over the lifetime of the
Participant, or which commences at any time prior to the Participant's Normal
Retirement Date, shall be the actuarial equivalent of the Supplemental
Retirement Benefit set forth in Section 3.1 above as determined by the same
actuarial adjustments as those specified in the Qualified Plan with respect to
determination of the amount of the Qualified Plan Retirement Benefit.
ARTICLE IV
Supplemental Surviving Spouse Benefit
4.1 Amount. If the Participant dies either:
(i) while employed by the Company; or
(ii) prior to commencement of payment of his Supplemental Retirement Benefit
under this Plan, but after his employment with the Company has
terminated with an Accrued Vested Benefit that is greater than zero;
then a Supplemental Surviving Spouse Benefit is payable to his
Surviving Spouse as hereinafter provided. The monthly amount of the
Supplemental Surviving Spouse Benefit payable to a Surviving Spouse
shall be equal to the excess of the amount described in paragraph (a)
over the amount described in paragraph (b) below:
(a) the monthly amount of the Qualified Plan Surviving Spouse Benefit to
which the Surviving Spouse of the Participant would have been entitled
under the Qualified Plan, but determined by applying the Surviving
Spouse Benefit provisions of the Qualified Plan as though the amount of
the monthly benefit (payable in the form of a straight life annuity
commencing at the Participant's Normal Retirement Date) which the
Participant had earned on the date of his death had been equal to the
amount of his Accrued Vested Benefit (as defined in Section 3.1 of this
Plan);
LESS
(b) the monthly amount of the Qualified Plan
Surviving Spouse Benefit actually payable to the Surviving Spouse under
the Qualified Plan.
Notwithstanding any other provision of the Plan, the Surviving Spouse
shall be entitled to benefits under this Section 4.1 only if she waives all
rights to receive the lump sum death benefits to which she would otherwise be
entitled under the provisions of the April 12, 1999 letter to the Participant
from the Company, with such waiver to be made within 90 days after the
Participant's death in accordance with the procedures established by the
Company.
4.2 Form and Commencement of Benefit. A Supplemental Surviving Spouse
Benefit shall be payable over the lifetime of the Surviving Spouse only in
monthly installments commencing on the date for commencement of payment of the
Qualified Plan Surviving Spouse Benefit to the Surviving Spouse and terminating
on the date of the last payment of the Qualified Plan Surviving Spouse Benefit
made before the Surviving Spouse's death.
ARTICLE V
Administration of the Plan
5.1 Administration by the Company. The Company shall be responsible for
the general operation and administration of the Plan and for carrying out the
provisions thereof.
5.2 General Powers of Administration. All provisions set forth in the
Qualified Plan with respect to the administrative powers and duties of the
Company, expenses of administration and procedures for filing claims shall also
be applicable with respect to the Plan. The Company shall be entitled to rely
conclusively upon all tables, valuations, certificates, opinions and reports
furnished by any actuary, accountant, controller, counsel or other person
employed or engaged by the Company with respect to the Plan.
ARTICLE VI
Amendment or Termination
The Plan may be amended or terminated at any time by the Board,
provided however that, notwithstanding any other provision of the Plan, no
amendment or termination that would adversely affect the rights of the
Participant or his Surviving Spouse (including, without limitation, his right to
accrue future benefits) may be made by the Company except with the written
consent of the Participant (or, in the event of his death, with the written
consent of the Surviving Spouse).
ARTICLE VII
General Provisions
7.1 Funding. The Plan at all times shall be entirely unfunded and no
provision shall at any time be made with respect to segregating any assets of
the Company for payment of any benefits hereunder. No Participant, Surviving
Spouse or any other person shall have any interest in any particular assets of
the Company by reason of the right to receive a benefit under the Plan and any
such Participant, Surviving Spouse or other person shall have only the rights of
a general unsecured creditor of the Company with respect to any rights under the
Plan.
7.2 General Conditions. Except as otherwise expressly provided herein,
all terms and conditions of the Qualified Plan applicable to a Qualified Plan
Retirement Benefit or a Qualified Plan Surviving Spouse Benefit shall also be
applicable to a Supplemental Retirement Benefit or a Supplemental Surviving
Spouse Benefit payable hereunder. Any Qualified Plan Retirement Benefit or
Qualified Plan Surviving Spouse Benefit, or any other benefit payable under the
Qualified Plan, shall be paid solely in accordance with the terms and conditions
of the Qualified Plan and nothing in this Plan shall operate or be construed in
any way to modify, amend or affect the terms and provisions of the Qualified
Plan.
7.3 No Guaranty of Benefits. Nothing contained in the Plan shall
constitute a guaranty by the Company or any other entity or person that the
assets of the Company will be sufficient to pay any benefit hereunder.
7.4 No Enlargement of Employee Rights. No Participant or Surviving
Spouse shall have any right to a benefit under the Plan except in accordance
with the terms of the Plan. Establishment of the Plan shall not be construed to
give any Participant the right to be retained in the service of the Company.
7.5 Spendthrift Provision. No interest of any person or entity in, or
right to receive a benefit under, the Plan shall be subject in any manner to
sale, transfer, assignment, pledge, attachment, garnishment, or other alienation
or encumbrance of any kind; nor may such interest or right to receive a benefit
be taken, either voluntarily or involuntarily, for the satisfaction of the debts
of, or other obligations or claims against, such person or entity, including
claims for alimony, support, separate maintenance and claims in bankruptcy
proceedings.
7.6 Applicable Law. The Plan shall be construed and administered under
the laws of the State of Illinois.
7.7 Incapacity of Recipient. If any person entitled to a benefit
payment under the Plan is deemed by the Company to be incapable of personally
receiving and giving a valid receipt for such payment, then, unless and until
claim therefor shall have been made by a duly appointed guardian or other legal
representative of such person, the Company may provide for such payment or any
part thereof to be made to any other person or institution then contributing
toward or providing for the care and maintenance of such person. Any such
payment shall be a payment for the account of such person and a complete
discharge of any liability of the Company and the Plan therefor.
7.8 Corporate Successors. The Plan shall be binding upon, and inure to
the benefit of, the Company and its successors and assigns and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company's assets and business, and the successor
shall be substituted for the Company under the Plan.
7.9 Unclaimed Benefit. The Participant shall keep the Company informed
of his current address and the current address of his spouse. The Company shall
not be obligated to search for the whereabouts of any person. If the location of
the Participant is not made known to the Company within three (3) years after
the date on which payment of the Participant's Supplemental Retirement Benefit
may first be made, payment may be made as though the Participant had died at the
end of the three-year period. If, within one additional year after such
three-year period has elapsed, or, within three years after the actual death of
the Participant, the Company is unable to locate any Surviving Spouse of the
Participant, then the Company shall have no further obligation to pay any
benefit hereunder to such Participant or Surviving Spouse or any other person
and such benefit shall be irrevocably forfeited.
7.10 Limitations on Liability. Notwithstanding any of the preceding
provisions of the Plan, neither the Company nor any individual acting as an
employee or agent of the Company shall be liable to any Participant, former
Participant, Surviving Spouse or any other person for any claim, loss, liability
or expense incurred in connection with the Plan.
IN WITNESS WHEREOF, the undersigned, on behalf of the Company, has
executed this Plan to witness its adoption by the Company April _____, 1999, and
the Participant has executed this Plan to witness his understanding that it
reflects his agreement with the Company.
ILLINOVA CORPORATION
By:________________________
Accepted and agreed to this
____ day of April, 1999.
William B. Conway Jr.
ILLINOVA CORPORATION
EMPLOYEE RETENTION AGREEMENT
THIS EMPLOYEE RETENTION AGREEMENT (the "Agreement") is entered into the
12th day of April, 1999 by and between ILLINOVA CORPORATION, an Illinois
corporation (the "Company") and William B. Conway Jr. (the "Employee").
WHEREAS, the Company desires to retain the services of Employee in
connection with any change in control of the Company;
NOW, THEREFORE, in consideration of continued employment and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Employee agree as follows:
1. Change in Control Benefits. The provisions of paragraphs (a), (b), (c),
(d) and (e) below shall apply if a Termination Event occurs:
(a) The Employee shall be entitled to receive from the Company, within 30 days
of the Termination Event or, in the case of a Termination Event that occurs
under paragraph 2(a)(iv)(C) (relating to termination prior to a Change in
Control at the request of an acquiror), within 30 days following the Change
in Control, a lump sum cash payment equal to three times the sum of: (I)
the greater of the Employee's annual salary rate in effect on the date of
the Change in Control, or the Employee's annual salary rate in effect on
the date Employee's employment with the Company terminates; plus (II) the
amount of the latest annual bonus earned by Employee, provided that the
amount described in this paragraph (II) shall be zero unless the Employee
has received an annual bonus in one or more of the three calendar years
last preceding the termination.
(b) Notwithstanding any provision in the promissory note or the tax letter to
the contrary, any obligation of the Employee for payment of principal and
interest otherwise due under the promissory note shall be forgiven, and the
Employee shall be entitled to the tax gross-up payment as described in the
tax letter with respect to such forgiven interest (but not with respect to
the forgiven principal). For purposes of this paragraph (b), the term
"promissory note" shall mean the promissory note dated April 12, 1999 with
respect to the borrowing of $250,000 by the Employee from the Company, and
the term "tax letter" shall mean the letter from the Company to the
Employee dated April 12, 1999 providing for the tax gross-up with respect
to the forgiveness of interest under the promissory note.
(c) Notwithstanding any provision in the Supplemental Pension Plan to the
contrary, the Employee's Accrued Vested Benefit under the Supplemental
Pension Plan shall be equal to 40% of the Employee's Final Average Earnings
(as defined under the Supplemental Pension Plan) as of the date of his
termination of employment with the Company.
(d) The Employee and his dependents, if any, shall, for thirty-six (36) months
following the Employee's termination of employment or until the Employee
reaches 65 years of age or is employed by another employer, if sooner,
continue to participate in any benefit plans for the Company which provide
health (including medical and dental), life or disability insurance, or
similar coverage; provided, however, that if the Employee has attained 50
years of age prior to his date of termination, the Employee and dependents,
if any, shall be eligible to participate in any benefit plans of the
Company which provide health and life insurance or similar 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.
(e) Notwithstanding any provision of the applicable stock option agreement to
the contrary, any stock option or portion thereof that is exercisable on
the date of the Employee's Termination (as that term is used in the
applicable stock option agreement) shall not be forfeited on the date of
Termination, but shall instead remain exercisable for the 30-day period
following the Termination (or, if greater, the period otherwise specified
by the applicable option agreement); provided that, in no event shall such
the option be exercisable after the date on which the option would
otherwise expire if the Employee had continued in the employ of the
Company.
The Employee shall not be required to mitigate damages by seeking other
employment or otherwise. Except as specifically provided above with the respect
to the Employee's becoming an employee of another employer, the Company's
obligations under this paragraph 1 shall not be reduced in any way by reason of
any compensation received by the Employee from sources other than the Company
after termination of the Employee's employment with the Company.
The benefits under this paragraph 1 shall be in lieu of, and not inaddition
to, any benefits to which the Employee might otherwise be entitled under any
other severance plan maintained by the Company providing benefits upon
involuntary termination of employment.
If a Termination Event occurs under paragraph 2(a)(iv)(C) (relating to
termination prior to a Change in Control at the request of an acquiror), then
the Employee's entitlement to compensation and benefits under this paragraph 1
shall be determined as though: (i) the Employee is rehired by the Company
immediately prior to the Change in Control at the salary rate equal to his
highest salary rate during the one-year period prior to the date of the Change
in Control; (ii) his employment with the Company is terminated under
circumstances described in paragraph 2(a)(iv)(A) (relating to termination by the
Company without Good Cause) immediately after the Change in Control; (iii) he
had retained any options and other benefits that were forfeited by reason of his
termination prior to the Change in Control; and (iv) this Agreement is in full
force and effect at the time of the Change in Control, and at the time of his
deemed termination of employment.
If the Employee is employed by the Company on the date of a Change in
Control then, with respect to any stock option granted to the Employee by the
Company prior to the Change in Control that is outstanding on the date of the
Change in Control, that option shall vest and be exercisable on and after the
date of the Change in Control. Except as otherwise provided in the preceding
sentence with respect to exercisability of options, the options shall remain
subject to the expiration provisions and other terms of the option awards
without regard to the preceding sentence; and the preceding sentence shall not
apply to any stock option to the extent that the terms governing such option
expressly reference this Agreement and expressly provide that the provisions of
such sentence are inapplicable.
2. Definitions.
(a) For purposes of this Agreement:
(i) "Good Cause" shall mean:
(A) the Employee's conviction of any criminal violation involving
dishonesty, fraud, or breach of trust,
(B) the Employee's willful engagement in any misconduct in the
performance of the Employee's duty that materially injures the
Company,
(C) the Employee's performance of any act which, if known to the
shareholders or regulators of the Company or any of its
subsidiaries, would materially and adversely affect the business
of the Company or any of its subsidiaries, or
(D) the Employee's willful and substantial nonperformance of
assigned duties; provided that such nonperformance has continued
more than ten days after the Company has given written notice of
such nonperformance and of its intention to terminate the
Employee's employment because of such nonperformance.
(ii) "Good Reason" shall exist if, without an Employee's express
written consent, the Company shall:
(A) reduce the salary of the Employee; or
(B) materially reduce the amount of paid vacations to which the
Employee is entitled, or the Employee's fringe benefits and
perquisites; or
(C) significantly change the nature or decrease the scope of the
Employee's authority; or
(D) change by 50 miles or more the principal location in which
the Employee is required to perform services.
(iii) "Change in Control" shall be deemed to occur on the earliest of
the existence of one of the following and the receipt of all necessary
regulatory approvals therefor:
(A) The acquisition other than from the Company, by any entity,
person or group (including all Affiliates or Associates of such
entity, person or group) of beneficial ownership, as that term
is defined in Rule 13d-3 under the Securities Exchange Act of
1934, of more than 20% of the outstanding shares of capital
stock of the Company entitled to vote generally in the election
of directors, but excluding for this purpose any such
acquisition by the Company or any of its subsidiaries or any
employee benefit plan (or related trust) of the Company or its
subsidiaries, or any corporation with respect to which,
following such acquisition, more than 80% of, respectively, the
then outstanding shares of common stock of such corporation and
the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
common stock and voting securities of the Company immediately
prior to such acquisition in substantially the same proportion
as their ownership, immediately prior to such acquisition, of
the then outstanding shares of common stock of the Company or
the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors, as the case may be;
(B) The effective time of a reorganization, merger or
consolidation of the Company, in each case, with respect to which
all or substantially all of the individuals and entities who were
the respective beneficial owners of the common stock and voting
securities of the Company immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger, or consolidation beneficially own,
directly and indirectly more than 80% of respectively, the then
outstanding shares of common stock or the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation resulting from such reorganization, merger or
consolidation, or of a complete liquidation or dissolution of the
Company or of the sale or other disposition of a Substantial
Portion of the Property of the Company; or
(C) The election to the Board of Directors of the Company of
directors constituting a majority of the number of the directors
in office unless such directors were recommended for election by
the existing Board of Directors.
(iv) A "Termination Event" means the date that the Employee's
employment with the Company terminates under one of the following
circumstances:
(A) The Employee's employment is terminated by the Company
without Good Cause within two (2) years following a Change in
Control.
(B) The Employee voluntarily terminates employment with Good
Reason within two (2) years following a Change in Control.
(C) The Employee's employment is terminated prior to a Change in
Control at the request of an acquiror. For purposes of the
definition of Termination Event, a termination will not be deemed
to have occurred solely because of the transfer of the Employee
between the Company and a subsidiary of the Company, or between
two subsidiaries of the Company.
(b) For purposes of the foregoing, (i) "Affiliate" or "Associate" shall
have the meaning set forth in Rule 12b-2 under the Securities Exchange
Act of 1934, and (ii) "Substantial Portion of the Property of the
Company" shall mean 80% of the aggregate book value of the assets of
the Company and its Affiliates and Associates as set forth on the most
recent balance sheet of the Company, prepared on a consolidated basis,
by its regularly employed, independent, certified public accountant.
(c) Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur for the Employee by virtue of any transaction in which such an
Employee is a participant in a group effecting an acquisition that
constitutes a Change in Control if, after such acquisition, the
Employee holds an equity interest in the entity that has made the
acquisition.
3. Litigation Expenses. The Company shall pay to the Employee the
attorneys' fees incurred by the Employee in connection with any claim or legal
action or proceeding involving this Agreement, whether brought by the Employee
or by or on behalf of the Employee or by another party; provided, however, the
Company shall not be obligated to pay to the Employee out-of-pocket expenses,
including attorneys' fees, incurred by the Employee in any claim or legal action
or proceeding in which the Employee is a party adverse to the Company if the
Company prevails in such litigation. The Company shall pay prejudgment interest
on any money judgment obtained by the Employee, calculated at the published
prime interest rate charged by the Company's principal banking connection, as in
effect from time to time, from the date that payment(s) to the Employee should
have been made under this Agreement.
4. Post-termination Payment Obligations Absolute. The Company's obligation
to pay the Employee the amounts and to make the other arrangements provided for
herein to be paid and made after termination of the Employee's employment with
the Company shall be absolute and unconditional and shall not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right that the Company may have against the
Employee or anyone else. The Company hereby waives any contract formation
defenses that it may have with respect to the Employee Retention program and
this Agreement.
5. Withholding. The Company may withhold from any payment that it
isrequired to make under this Agreement amounts sufficient to satisfy applicable
withholding requirements under any federal, state, or local law
6. Successors. The obligations of the Company provided for in this
Agreement shall be the binding legal obligations of any successor to the Company
by purchase, merger, consolidation, or otherwise. Rights under this Agreement
may not be assigned by the Employee during the Employee's life, and upon the
Employee's death will inure to the benefit of the Employee's heirs, legatees and
the legal representatives of the Employee's estate.
7. Interpretation. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Illinois. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision.
8. Amendment. This Agreement may be amended or cancelled only by the mutual
agreement of the parties in writing without the consent of any other person. So
long as the Employee lives, no person, other than the parties hereto, shall have
any rights under or interest in this Agreement or the subject matter hereof.
9. Tax Payments. This paragraph 9 shall apply if all or any portion of the
payments and benefits provided to the Employee under this Agreement, or any
benefit (including any plan adopted in the future), would otherwise constitute
"excess parachute payments" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), that are subject to the tax
imposed by Section 4999 of the Code (or similar tax and/or assessment). If,
after the application of such tax and/or assessment, the amount of such payment
and benefits would be less than if the payment and benefits had been reduced to
an amount that would result in there being no excess parachute payments, then
such payments and benefits shall be so reduced (the minimum extent necessary so
that no excess parachute payments result). If reduction is necessary hereunder,
the Employee shall elect which of the payments and benefits shall be reduced.
Determination of whether payments and benefits would constitute excess parachute
payments, and the amount of reduction so that no excess parachute payments shall
exist, shall be made, at the Company's expense, by the independent accounting
firm employed by the Company immediately prior to the occurrence of any change
of control of the Company which will result in the imposition of such tax.
IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement on the ____ day of April, 1999. This Agreement supersedes and replaces
any prior agreement between the Company and the undersigned, regarding this
subject.
ILLINOVA CORPORATION
By:______________________________________
-----------------------------------------
WILLIAM B. CONWAY JR.
PROMISSORY NOTE
$250,000.00 April 12, 1999
Decatur, Illinois
FOR VALUE RECEIVED, the undersigned, William B. Conway Jr., an
individual (the "Employee"), promises to pay to the order of Illinova
Corporation, an Illinois corporation (the "Company"), on the date on which the
Employee's employment with the Company terminates (the "Maturity Date"), the
principal sum of $250,000.00 and any accrued interest on this Note, subject to
the provisions of this Note relating to forgiveness of such obligations.
This Note evidences obligations in connection with a loan made by the
Company to the Employee as part of the inducement to the Employee to become
employed by the Company.
The unpaid principal amount of this Note from time to time outstanding
shall bear interest at a rate per annum (based upon a 365/366 day year) equal to
the applicable Federal rate as of April 12, 1999, as determined for purposes of
section 1274(d) of the Internal Revenue Code of 1986, as amended, compounded
annually. After the Maturity Date, any unpaid and unforgiven principal amount
and accrued unforgiven interest on the unpaid principal amount of this Note
shall be payable on demand.
As of each of the first five one-year anniversaries of April 12, 1999,
if the Employee is employed by the Company on such anniversary, an amount equal
to $50,000.00 of the principal amount due under this Note, together with the
amount of interest that has accrued with respect to the entire unpaid principal
and interest amount since the preceding April 12 shall be forgiven. If the
Employee's employment with the Company terminates prior to April 12, 2004, and
such termination is the result of being discharged by the Company for reasons
other than Cause, any remaining principal and interest shall be forgiven. If the
Employee's employment with the Company terminates (i) prior to April 12, 2004 by
the Company for Cause, or (ii) prior to April 12, 2004 by reason of the
Employee's death, disability, or voluntary resignation, then any remaining
principal and interest shall become due and payable on the date of such
termination of employment. For purposes of this Note, the term "Cause" shall
mean:
(a) the Employee's conviction of any criminal violation involving
dishonesty, fraud, or breach of trust,
(b) the Employee's willful engagement in any misconduct in the performance
of the Employee's duty that materially injures the Company,
(c) the Employee's performance of any act which, if known to the
shareholders or regulators of the Company or any of its subsidiaries,
would materially and adversely affect the business of the Company or
any of its subsidiaries, or
(d) the Employee's willful and substantial nonperformance of assigned
duties; provided that such nonperformance has continued more than ten
days after the Company has given written notice of such nonperformance
and of its intention to terminate the Employee's employment because of
such nonperformance.
Subject to the other terms and conditions hereof, the Employee may
voluntarily prepay all or any portion of the unpaid and unforgiven principal
amount of this Note from time to time outstanding and any accrued and unforgiven
interest thereon, without premium or penalty.
All payments of principal of and interest on this Note shall be payable
in lawful currency of the United States of America at Decatur, Illinois or such
other place as the Company shall designate to the Employee in writing, in cash
or by check. If payment hereunder falls due on a day which is either a Saturday,
Sunday or any other day on which banks in Decatur, Illinois are not generally
open for business to the public (i.e., not a "Business Day"), then such due date
shall be extended to the immediately succeeding Business Day, and additional
interest shall accrue and be payable for the period of any such extension.
The Employee agrees that if any of the following events of default
(each an "Event of Default") shall occur and be continuing:
(i) default in the performance or observance of any other agreements of
the Employee contained herein, or
(ii) the institution of any bankruptcy, insolvency, receivership or similar
proceeding relating to the Employee or his assets, and if such case or
proceeding is not commenced by the Employee, it is consented to or
acquiesced in by the Employee or remains for 60 days undismissed;
then the Company may declare this Note and all unpaid and unforgiven principal
of and interest on this Note and all accrued costs, expenses and other amounts
under this Note to be due and payable, whereupon all unpaid and unforgiven
principal of and interest on this Note and all such costs, expenses and other
amounts shall immediately become due and payable following such declaration.
The Employee hereby represents and warrants to the Company as of the
date hereof (i) that this Note is the legally valid and binding obligation of
the Employee, enforceable against the Employee in accordance with its terms, and
(ii) that the execution, delivery and performance by the Employee of this Note
does not conflict with or contravene (a) any law, rule or regulation binding
upon the Employee or affecting any of the Employee's assets, (b) any provision
of any contract, instrument or agreement binding upon the Employee or affecting
any of the Employee's assets, or (c) any writ, order, judgment, decree or
decision of any court or governmental instrumentality binding upon the Employee
or affecting any of the Employee's assets.
All notices, certificates and other communications ("Notices")
hereunder shall be in writing and may be either delivered personally, by
nationally recognized express courier for overnight delivery, or by facsimile
(with request for assurance of receipt in a manner appropriate with respect to
communications of that type, provided that a confirmation copy is concurrently
sent by a nationally recognized express courier for overnight delivery) or
mailed, postage prepaid, by certified or registered mail, return receipt
requested, addressed as follows:
If to the Company: Illinova Corporation
500 South 27th Street
Decatur, Illinois 62521
Attention: General Counsel
If to the Employee: William B. Conway Jr.
Illinova Corporation
500 South 27th Street
Decatur, Illinois 62521
All notices hereunder shall be sent to the Employee or the Company, as
appropriate, at such party's address shown above, or at such other address as
such party may, by written notice received by the other party hereto, have
designated as its or his address for such purpose. Notices sent by facsimile
transmission shall be deemed to have been given when sent; notices sent by mail
shall be deemed to have been given five days after the date mailed by registered
or certified mail, postage prepaid; and notices sent by hand delivery shall be
deemed to have been given when received.
This Note has been made and delivered at Decatur, Illinois and shall be
construed in accordance with and governed by the internal laws of the State of
Illinois. Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited by or invalid under applicable law,
such provision shall be ineffective to the least extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Note.
IN WITNESS WHEREOF, the Employee has caused this Note to be executed as
of the day and year first above written.
-----------------------------
William B. Conway Jr.
April 12, 1999
William B. Conway Jr.
Illinova Corporation
500 South 27th Street
Decatur, Illinois 62521
Dear Mr. Conway:
This letter is to confirm our verbal agreement that Illinova
Corporation (the "Company") will loan you $250,000.00. The Company is making the
loan to compensate you for amounts you have foregone by leaving Troutman Sanders
LLP to join the Company. As a condition of receiving the loan, you must sign and
return one copy of this letter and the enclosed promissory note.
As indicated in the promissory note, 20% of the principal amount of the
loan will be forgiven on each of the first through fifth anniversaries of April
12, 1999, if you are employed by the Company on such anniversary. Also, as of
each such anniversary, the entire amount of interest accrued on the outstanding
principal during the prior one-year period shall be forgiven.
As of each anniversary, the amount of the forgiveness of principal or
interest on that date will be taxable income to you. As of each date on which
the forgiveness occurs, you will become entitled to a tax gross-up payment from
the Company in an amount equal to the aggregate of the additional Federal, state
and local income taxes payable by you by reason of the forgiveness of the
interest amount (but not by reason of the forgiveness of the principal amount),
and by reason of your receipt of the gross-up payment.
If, prior to April 12, 2004, your employment is terminated by the
Company for reasons other than Cause (as defined in the attached promissory
note), the amount of any outstanding balance of principal and interest will be
forgiven, and you will become entitled to a tax gross-up payment in an amount
equal to the aggregate of the additional Federal, state and local income taxes
payable by you by reason of the forgiveness of the interest amount (but not by
reason of the forgiveness of the principal amount), and by reason of your
receipt of the gross-up payment. However, if your employment is terminated (i)
prior to April 12, 2004 by the Company for Cause, or (ii) prior to April 12,
2004 by reason of your death, disability, or voluntary resignation, then the
amount of any outstanding balance of principal and interest will become
immediately due and payable. After termination of your employment, if amounts
are due from you to repay the loan, and such amounts are otherwise unpaid, the
Company retains the right to offset such liability against amounts otherwise due
to you from the Company.
If the foregoing reflects your understanding of the terms of your
agreement with the Company, please so indicate by signing and returning a copy
of this letter to the undersigned, along with a signed copy of each of the
enclosures.
Very truly yours,
Illinova Corporation
By:
Charles E. Bayless
Accepted and agreed to this
____ day of April, 1999.
William B. Conway Jr.