Exhibit 10.19
SHORT-TERM EXECUTIVE STOCK PURCHASE LOAN PROGRAM OF DYNEGY INC.
1. PURPOSE. This Short-Term Executive Stock Purchase Loan Program of Dynegy
Inc. (the "Program"), an Illinois corporation ("Dynegy"), adopted as of
July 20, 2001 and amended as of November 15, 2001, is intended to
facilitate the purchase, by certain executives of Dynegy and its
affiliates (collectively, the "Company"), of shares of Dynegy's Class A
common stock, no par value per share ("Common Stock"). The purchases
facilitated by the Program are intended to achieve the following specific
purposes:
(1) more closely align executive officers' financial interests
with the financial interests of Dynegy's shareholders;
(2) increase executive officers' motivation to manage the Company
as owners; and
(3) increase the ownership of Common Stock among senior management
of the Company.
2. ELIGIBILITY. To be eligible to participate in the Program, an individual
(the "Eligible Participant") must be an executive officer of the Company
determined by the Program Administrator (as defined below) to be eligible
for participation in the Program, as such determination shall be made from
time to time. No Eligible Participant is required to participate in the
Program.
3. PARTICIPATION. Eligible Participants may borrow from the Company an amount
not to exceed the product of their then-existing base salary (before
voluntary or involuntary deductions) multiplied by two for the sole
purpose of purchasing shares of Common Stock and paying brokerage
commissions in connection therewith. Eligible Participants may make any
number of borrowings from the Company, so long as the aggregate amount of
such borrowings does not exceed the applicable threshold set forth in the
preceding sentence. Such borrowings will be made available to Eligible
Participants until the earlier of (1) June 30, 2002 and (2) the date of
the Company's implementation of a long-term stock purchase loan program,
if any.
4. PURCHASE OF SHARES. As a condition to the Company's obligation to lend
money for a Common Stock purchase by an Eligible Participant, such
Eligible Participant shall (1) execute a promissory note in favor of the
appropriate Company payee, the form of which is attached hereto as
Appendix A (the "Promissory Note"), and (2) request such Common Stock
purchase and the related loan pursuant to the instructions for same as
communicated by the Program Administrator or its designee. All such
purchases shall be effected by Salomon Smith Barney or such other broker
as the Program Administrator shall designate (the "Broker") in accordance
with Rule 10b-18 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Eligible Participants are responsible for
determining whether such purchases are in compliance with Section 16 (the
short-swing profit rules) of the Exchange Act. In accordance with the
terms and provisions of the Program, the Company shall promptly provide
the requested loans to Eligible Participants by advancing the funds for
such purchases, including the brokerage commissions payable in connection
therewith, to the Broker. Upon settlement of each such purchase, the
purchased shares will be transferred as appropriate to the accounts of the
requesting Eligible Participants pursuant to their written instructions.
5. SALE OF SHARES PURCHASED. Each Eligible Participant is permitted to sell
all or any portion of the shares of Common Stock purchased pursuant to the
Program at any time. Eligible Participants are responsible for determining
whether such sales are in compliance with Section 16 (the short-swing
profit rules) of the Exchange Act.
6. MARGIN REGULATIONS.
(1) None of the obligations of the Eligible Participants to the
Company hereunder is or will be secured, directly or
indirectly, by Margin Stock (as such term is defined in
Regulation U promulgated by the Board of Governors of the
Federal Reserve System);
(2) Neither the Company nor any third party acting on behalf of
the Company has taken or will take possession of an Eligible
Participant's Margin Stock to secure, directly or indirectly,
any of the obligations of such Eligible Participant to the
Company;
(3) The Company does not and will not have any right to prohibit
or, in any way, restrict such Eligible Participant from
selling, pledging, encumbering or otherwise disposing of any
Margin Stock owned by such Eligible Participant;
(4) Such Eligible Participant has not granted and will not grant
the Company or any third party acting on behalf of the Company
the right to accelerate repayment of any of the obligations
under this Program of such Eligible Participant if any of the
Margin Stock owned by such Eligible Participant is sold,
pledged, encumbered or otherwise disposed of by such Eligible
Participant; and
(5) There is no agreement or other arrangement between such
Eligible Participant and the Company or any third party acting
on behalf of the Company (and no such agreement or arrangement
shall be entered into so long as this Program is in effect or
any of the obligations of such Eligible Participant under this
Program remain outstanding) which the Margin Stock of an
Eligible Participant would be made more readily available as
security to the Company than to other creditors of such
Eligible Participant.
7. ADMINISTRATION. The Dynegy Board of Directors (hereinafter referred to as
the "Program Administrator") shall be charged with the administration and
interpretation of the Program but may delegate the ministerial duties
hereunder to such persons or groups, including committees of the Board, as
it determines. The Program Administrator may adopt such rules as may be
necessary or appropriate for the proper administration of the Program,
including the acceptance of principal and interest payments on funds
borrowed and the retention of records relating thereto. The decision of
the Program Administrator in all matters involving the interpretation and
application of the Program shall be final and shall be given the maximum
possible deference allowed by law.
8. PAYMENT OF EXPENSES. The expenses of administering the Program shall be
paid by the Company, except those expenses which are expenses of the
Eligible Participants.
9. LIMITATION OF LIABILITY. Each Eligible Participant hereby agrees to
indemnify and hold harmless the Company and any and all of its directors,
officers, employees and agents from and against any and all losses,
claims, damages, expenses or liabilities, joint or several, that may arise
out of or are based upon the transactions contemplated hereby, including,
without limitation, the failure to place a requested order to purchase
Common Stock or any change in the market value of the Common Stock
purchased hereunder.
10. GOVERNING LAW. This Program shall be construed in accordance with the laws
of the State of Texas.
11. APPROVAL. If an Eligible Participant elects to purchase shares of Common
Stock pursuant to the Program, such election shall constitute formal
approval of this Program by the Eligible Participant and such Eligible
Participant's agreement to be bound by all of the terms and conditions of
the Program, including the Promissory Note.
APPENDIX A
SHORT-TERM EXECUTIVE STOCK PURCHASE LOAN PROGRAM OF DYNEGY INC.
PROMISSORY NOTE
________________, 200_
In accordance with and pursuant to the terms and conditions of that
certain Short-Term Executive Stock Purchase Loan Program, adopted as of July
20, 2001 and amended as of November 15, 2001 (the "Program"), by Dynegy Inc.,
an Illinois corporation, for value received, the undersigned unconditionally
promises and agrees to pay, as herein provided, to the order of Dynegy
Administrative Services Company ("Payee"), at 1000 Louisiana, Suite 5800,
Houston, Texas 77002, or at such other address given to the undersigned by
Payee, the lesser of the principal sum of $____________ and the aggregate
unpaid principal amount of all loans made by Payee to the undersigned pursuant
to Section 3 of the Program, if any, in lawful money of the United States of
America, together with interest on the unpaid principal amount thereof. Such
interest shall be computed from (and including) the date of borrowing until
(and excluding) the Maturity Date (as defined below) for such borrowing on the
basis of 12 30-day months and a 365-day year, at a rate that is the greater of
(i) 5% per annum and (ii) the then current Applicable Federal Rate for
short-term loans as published in the Revenue Rulings issued by the United
States Department of Treasury.
Interest on the unpaid principal amount outstanding under each borrowing
shall be due and payable quarterly on the 15th business day following the end
of each calendar quarter during the term of such borrowing. Any interest
payment not made in a timely manner will be capitalized and added to the
principal amount of such borrowing. The entire principal amount shall be due
and payable with respect to each borrowing on the second anniversary thereof
(the "Maturity Date"); PROVIDED, HOWEVER, notwithstanding the foregoing, that
the entire principal amount of any and all borrowings, together with interest
accrued from the last interest payment date, shall be due and payable 30 days
after the undersigned ceases to be employed for any reason (including
retirement, death or disability) by Payee or any of its affiliates (a
"Termination Event"). Notwithstanding anything to the contrary set forth in
this promissory note, to the extent permitted by applicable law, Payee may
offset any and all amounts owed Payee by the undersigned upon a Termination
Event against any amounts owed to the undersigned from Payee or any of its
affiliates as a result of such Termination Event to obtain full payment for
any and all amounts owed under this promissory note.
The undersigned is fully obligated to repay to Payee all principal,
interest and other amounts on this promissory note when due and payable. To
the extent permitted by applicable law, Payee may take any action relating to
the undersigned and his or her assets, which the Program Administrator (as
defined in the Program) deems necessary, proper or desirable, including, but
not limited to, offsetting amounts owed to Payee against wages, fees or other
amounts owed to the undersigned from Payee, to obtain full payment for amounts
owed under this promissory note.
The Payee is authorized to make (or cause to be made) appropriate
notations on the grid attached hereto, which notations shall evidence, INTER
ALIA, the date and amount of each loan evidenced hereby, the Maturity Date for
each such loan and the date of, the principal amount of and the date and
amount of each prepayment of principal and payment of interest on each such
loan.
It is expressly agreed and stipulated to be the intention of Payee and
the undersigned to comply at all times with applicable laws governing the
maximum rate or amount of interest payable on or in connection with this
promissory note. Accordingly, if any of the transactions contemplated hereby
would be usurious under applicable law now or hereafter governing the interest
payable hereunder, then, in that event, notwithstanding anything to the
contrary in this promissory note, it is agreed that the aggregate of all
consideration that constitutes interest under applicable law that is
contracted for, charged, taken, reserved or
received under this promissory note under no circumstances shall exceed the
maximum amount of interest allowed by applicable law, and any excess shall be
credited on this promissory note by Payee (or if such promissory note shall
have been paid in full, refunded to the undersigned). Determination of the
rate of interest for purposes of determining whether this transaction is
usurious under any applicable laws, to the full extent permitted by applicable
law, shall be made by amortizing, prorating, allocating and spreading
throughout the full stated term hereof until payment in full, all sums at any
time contracted for, charged, taken, reserved or received from the undersigned
for the use, forbearance or detention of money in connection herewith.
Should the principal of or interest on any borrowing under this
promissory note or any other amount payable hereunder become due and payable
on a Saturday, Sunday or legal holiday in the State of Texas on which banks
are closed for business in Houston, payment in respect thereof may be made on
the next succeeding day which is not a Saturday, Sunday or legal holiday, and
such extension of time shall in such case be included in computing interest,
if any, in connection with such payment.
Principal and interest payments shall be payable by personal check,
certified or official bank check or by wire transfer pursuant to written wire
transfer instructions delivered by Payee to the undersigned.
The undersigned reserves the right to prepay the outstanding principal
balance of any borrowing under this promissory note in whole or in part, at
any time or from time to time, without premium or penalty. Any such prepayment
shall be made together with payment of interest accrued on the amount of
principal being prepaid through the date of such prepayment. Principal amounts
repaid under this promissory note may not be reborrowed.
The undersigned hereby expressly waives presentment, demand for payment,
notice of nonpayment, notice of dishonor, notice of protest, notice of
acceleration or intent to accelerate, bringing of suit and diligence to taking
any action to collect amounts owing hereunder.
No waiver by Payee of any of its rights or remedies hereunder shall be
considered a waiver of any other subsequent right or remedy of Payee; no delay
or omission in the exercise by Payee of any rights or remedies shall be
construed as a waiver of any right or remedy of Payee; and no exercise or
enforcement of any such right shall ever be held to exhaust any right or
remedy of Payee.
The undersigned shall not assign or transfer any of its rights or
obligations hereunder without the prior written consent of Payee.
In the event that any one or more provisions of this promissory note
shall, for any reason, be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this promissory note.
The undersigned has read this promissory note and the related Program
document and by execution hereof agrees to be bound by, and acknowledges
receipt of copies of, same.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
TEXAS.
IN WITNESS WHEREOF, the undersigned has executed this promissory note as
of the date first set forth above.
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NAME:
ADDRESS:
GRID SCHEDULE
Attached to and made a part of the promissory note dated
___________________, 200_, issued by _______________________________ to Dynegy
Administrative Services Company pursuant to the Short-Term Executive Stock
Purchase Loan Program of Dynegy Inc.
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Unpaid
Amount of Maturity Applicable Principal Principal Notation
Date Borrowing Date Rate Repayments Outstanding Made by
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