Draft 3/20/96
ILLINOVA CORPORATION
COMPREHENSIVE DEFERRED STOCK PLAN
FOR OUTSIDE DIRECTORS
SECTION 1
General
1.1. Purpose. Illinova Corporation (the "Company") has
established the Illinova Corporation Comprehensive Deferred Stock
Plan for Outside Directors (the "Plan") in order to continue to
remain competitive in attracting and retaining outstanding
individuals as outside directors.
1.2. Operation and Administration. The operation and
administration of the Plan shall be subject to the provisions of
Section 4. Capitalized terms in the Plan shall be defined as set
forth in Section 5 or elsewhere in the Plan.
SECTION 2
Stock Unit Awards and Accounts
2.1. Stock Unit Awards. Each Eligible Director shall be
credited with "Stock Unit" awards under the Plan in accordance
with the following:
(a) On the date of the 1996 Annual Meeting of
Stockholders, and on the date of each Annual Meeting of
Stockholders thereafter, each Eligible Director who is
continuing as a Director shall be awarded the number of
Stock Units equal to $6,000 divided by the Fair Market
Value of a share of Stock on the date such Stock Units
are awarded.
(b) As of the Effective Date, each Eligible Director
will receive an initial grant of Stock Units equal to
the dollar value of his Accumulated Benefit (defined below), if any,
divided by the Fair Market Value of a share of Stock on
such date.
An Eligible Director's "Accumulated Benefit" means the net
present value on the Effective Date of a stream of payments of
$18,000 each, payable on April 1 of each year commencing with the
April 1 coincident with or next following the Eligible Director's
attainment of age 65, and continuing for the number of the
Eligible Director's Years of Service not in excess of 10. Net
present value for this purpose shall be determined using a
discount rate of 8.5 percent, compounded annually. An Eligible
Director's number of "Years of Service" means the number of 12-
consecutive-month periods the Eligible Director served on the
Board as an Outside Director prior to the Effective Date.
2.2. Accounts. An "Account" shall be established in the
name of each Participant, which shall be adjusted as follows:
(a) As of the date that Stock Units are awarded under
subsection 2.1, the Participant's Account shall be
credited with the number of Stock Units so awarded.
(b) As of each dividend payment date with respect to the
shares of Stock:
(i) If such dividend is payable in cash, the
Participant's Account shall be credited with the
number of Stock Units determined by (A)
multiplying the cash dividend payable with respect
to a share of Stock by the number of Stock Units
in the Participant's Account as of the applicable
dividend record date, and (B) dividing the product
obtained in (A) by the Fair Market Value of a
share of Stock on the date the dividend is paid.
(ii) If such dividend is payable in shares of
Stock, the Participant's Account shall be credited
with the number of Stock Units determined by
multiplying the number of shares distributed in
the dividend with respect to each share of Stock
by the number of Stock Units in the Participant's
Accounts as of the applicable dividend record
date.
(c) No additional Stock Units shall be credited to a
Participant's Account under this Section 2 after the
Participant's Date of Termination. The Company's sole
obligation to the Participant under the Plan after his
Date of Termination shall be payment of the Account
Value in accordance with Section 3.
SECTION 3
Distributions
3.1. Account Value. As of a Participant's Date of
Termination, the Stock Units in his Account shall be converted to
a dollar value, which shall be determined by multiplying the
number of Stock Units in the Participant's Account as of his Date
of Termination by the Fair Market Value of a share of Stock as of
the last day of the month immediately preceding such Date of
Termination (the "Account Value").
3.2. Form of Payment. Payment of a Participant's Account
Value shall be made solely in cash and shall be made, or commence
to be made, as soon as practicable following the Participant's
Date of Termination, as follows:
(a) in a lump sum payment; or
(b) in ten or fewer annual installments, as elected by
the Participant; provided, however, any such election
that has not been on file with the Committee at least
12 months prior to the Participant's Date of
Termination shall be disregarded and payments shall be
made in accordance with the Participant's most recent
election form that has been on file with the Committee
at least 12 months, or if no such election has been
filed, in accordance with paragraph (a) next above.
3.3. Death of Participant. In the event of a Participant's
death before he has received payment of his full Account Value,
the remaining unpaid Account Value shall be paid to his
designated beneficiary or beneficiaries as soon as practicable
thereafter in a lump sum. If no designated beneficiary has been
named or survives the Participant, the beneficiary will be the
Participant's estate.
SECTION 4
Operation and Administration
4.1. Administration. The authority to manage and control
the operation and administration of the Plan shall be vested in
the Compensation and Nominating Committee of the Board of
Directors (the "Committee"). Subject to the limitations of the
Plan, the Committee shall have the sole and complete authority
to:
(a) interpret the Plan and to adopt, amend and rescind
administrative guidelines and other rules and
regulations relating to the Plan;
(b) correct any defect or omission or to reconcile any
inconsistency in the Plan or in any payment made
hereunder; and
(c) to make all other determinations and to take all other
actions necessary or advisable for the implementation
and administration of the Plan.
The Committee's determinations on matters within its control
shall be conclusive and binding on the Company and all other
persons.
4.2. Shares Subject to the Plan. Shares of Stock which may
be distributed under the Plan may be either authorized and
unissued shares or treasury shares (including, in the discretion
of the Company, shares purchased in the open market).
4.3. Gender and Number. Where the context admits, words in
one gender shall include the other gender, words in the singular
shall include the plural and words in the plural shall include
the singular.
4.4. Director and Shareholder Status. The Plan will not
give any person the right to continue as a director of the
Company, or any right or claim to any benefits under the Plan
unless such right or claim has specifically accrued under the
terms of the Plan. Participation in the Plan shall not create
any rights in a director (or any other person) as a shareholder
of the Company until shares of stock are registered in the name
of the director (or such other person).
4.5. Source of Payments. The Plan constitutes only a
promise of the Company to make payments or awards to Eligible
Directors (or other persons) in the future in accordance with the
terms of the Plan, and Participants shall have the status of
general unsecured creditors of the Company.
4.6. Compliance With Applicable Laws and Withholding of
Taxes. All payments under the Plan are subject to withholding of
all applicable taxes.
4.7. Transferability. No award under the Plan, and no
interest therein, may be transferred or otherwise voluntarily or
involuntarily assigned or alienated.
4.8. Adjustments to Number of Stock Units Awarded Under the
Plan. In the event of any change in the outstanding shares of
Stock of the Company by reason of any stock dividend, split,
spinoff, recapitalization, merger, consolidation, combination,
exchange of shares or otherwise, the terms, type of shares, and
the number of any outstanding Stock Units under the Plan will be
equitably adjusted by the Committee in its sole discretion to
preserve the benefit of the award for the Company and the
Participant.
4.9. Amendment and Termination of Plan. The Board may at
any time and in any way amend or terminate the Plan, provided
that, subject to subsection 4.8 (relating to certain adjustments
to shares), no such amendment or termination shall impair the
rights of Participants with respect to awards made under the Plan
prior to the date such amendment is adopted by the Board.
4.10. Governing Law. This Plan shall be governed by the
internal laws of the state of Illinois without regard to any
principles of conflict of laws.
4.11. Successors. The obligations of the Company under the
Plan shall be binding upon any assignee or successor in interest
thereto.
SECTION 5
Defined Terms
For purposes of the Plan, the terms listed below shall be
defined as follows:
(a) Board. The term "Board" shall mean the Board of
Directors of the Company.
(b) Date of Termination. A Participant's Date of
Termination shall be the date following the last day on
which he serves as an Outside Director.
(c) Director. The term "Director" means a member of the
Board.
(d) Effective Date. The "Effective Date" of the Plan is
February 7, 1996.
(e) Eligible Director. As of any date, each individual who
is then an Outside Director shall be an "Eligible
Director".
(f) Fair Market Value. The "Fair Market Value" of a share
of Stock of the Company as of any date shall be the
closing market composite price for such Stock as
reported on the New York Stock Exchange Composite Tape on
that date or, if Stock is not traded on that date, on
the next preceding date on which Stock was traded.
(g) Outside Director. The term "Outside Director" means a
Director who is not an officer or employee of the
Company or a Related Company.
(h) Participant. A "Participant" is any Eligible Director
who has received an award of Stock Units under Section
2 of the Plan.
(i) Related Company. The term "Related Company" means any
company during any period in which it is a subsidiary
corporation (as that term is defined in section 424(f)
of the Internal Revenue Code) with respect to the
Company.
(j) Stock. The term "Stock" shall mean shares of common
stock of the Company.
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