January 18, 1999
George W. Miraben
Illinova Corporation
500 South 27th Street
Decatur, Illinois 62521
Dear Mr. Miraben:
This letter is to confirm the terms of your employment with Illinova
Corporation.
1. Salary. Your annual base salary will be $325,000, subject to periodic
review to determine whether an increase is ------ appropriate.
2. Bonus. You will be entitled to participate in the Executive Incentive
Compensation Plan. Your bonus under the Executive Incentive Compensation
Plan will be $130,000 (which is 40% of your salary) if the target level of
performance is achieved, and your bonus will be $195,000 (which is 60% of
your salary) at the maximum achievement level.
3. 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. 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.
4. Supplemental Pension. In lieu of participation in the Company's
Supplemental Executive Retirement Plan, you will be covered by the enclosed
Supplemental Pension Plan.
5. Retention Agreement. You will be covered by the enclosed Employee Retention
Agreement, which provides benefits in the event of a Change in Control.
6. Loan. To compensate you for amount you have foregone by leaving Tucson
Electric Power Company to join Illinova Corporation, you will be entitled
to a loan from the Company of $250,000. The terms of the loan are reflected
in the enclosed letter and promissory note.
7. 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.)
8. 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
18th Day of January, 1999
- -------------------------
George W. Miraben
George W. Miraben
Illinova Corporation
500 South 27th Street
Decatur, Illinois 62521
Dear Mr. Miraben:
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 Tucson Electric Power
Company 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 February 2,
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 February 2, 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) by the Company
for Cause, or (ii) 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. Furthermore, if termination of employment occurs at
any time without cause or with good reason, as those terms are defined in your
Employee Retention Agreement (whether or not such agreement is then in effect),
while there is a remaining balance under this agreement, then such outstanding
balance of principal and interest shall be forgiven, and 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. 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
18th day of January, 1999.
- ----------------------------
George W. Miraben
PROMISSORY NOTE
$250,000.00
February 2, 1999
Decatur, Illinois
FOR VALUE RECEIVED, the undersigned, George W. Miraben, 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 February 2, 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 February 2, 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 February 2, shall be forgiven. If the
Employee's employment with the Company terminates prior to December 31, 1999,
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
December 31, 1999 by the Company for Cause, (ii) prior to December 31, 1999 by
reason of the Employee's death, disability, voluntary resignation or any other
reason, except by the Company other than for Cause, or (iii) for any reason on
1
or after December 31, 1999, 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.
Notwithstanding the foregoing, if termination of employment occurs at any time
without cause or with good reason, as those terms are defined in Employee's
Employee Retention Agreement, while there is a remaining balance under this
promissory note, then such outstanding balance of principal and interest shall
be forgiven.
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 payment 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.
2
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 be due and payable, whereupon all unpaid and unforgiven
principal of and interest on this Note and all such costs, expense 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
3
Decatur, Illinois 62521
Attention: General Counsel
If to the Employee: George W. Miraben
Illinova Corporation
500 South 27th Street
Decatur, Illinois 62521
All notices hereunder shall be in writing (including, without limitation,
facsimile transmission) and 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 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.
---------------------------
George W. Miraben
4
ILLINOVA CORPORATION
SUPPLEMENTAL PENSION PLAN
The Supplemental Pension Plan (the "Plan") is adopted effective January
18, 1999. The Plan is established and maintained by Illinova Corporation for the
purpose of providing benefits for the Participant, George W. Miraben.
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 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
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 George W. Miraben.
1.10 "Plan" means the Illinova Corporation Supplemental Pension
Plan.
2
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.
3
ARTICLE III
Supplemental Retirement Benefit
3.1 Amount. The Supplemental Retirement Benefit 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, shall be 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 prior
to January 1, 2000 for any reason except circumstances pursuant to
which benefits are owed under the Employee Retention Agreement between
the Company and Participant, whether or not such agreement is then in
effect ("Retention Agreement"), 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 before
December 31, 1999 as a result of circumstances pursuant to which
benefits are owed under the Retention Agreement, or after December 31,
1999 and prior to February 1, 2004, by reason of his being discharged
by the Company without Cause or as a result of circumstances pursuant
to which benefits are owed under the Retention Agreement, or if the
Participant's employment with the Company terminates on or after
February 1, 2004 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
4
(iii) if the Participant's employment with the Company terminates after
December 31, 1999 and prior to February 1, 2004, and the termination
occurs for any reason other than his being discharged by the Company
without Cause or under circumstances pursuant to which benefits are
owed under the Retention Agreement, 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 vesting percentage shall be:
the Company terminates during this period:
- --------------------------------------------------------------------------------
On or after February 1, 2000, and 20%
before February 1, 2001
- --------------------------------------------------------------------------------
On or after February 1, 2001, and 40%
before February 1, 2002
- --------------------------------------------------------------------------------
On or after February 1, 2002, and 60%
before February 1, 2003
- --------------------------------------------------------------------------------
On or after February 1, 2003, and 80%
before February 1, 2004
- --------------------------------------------------------------------------------
After February 1, 2004 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
5
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 the the Participant, subject to the consent of the Company, from among
the alternatives that would be available under the Qualifed 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 Qualifed Plan, but determined by
applying the Surviving Spouse Benefit provisions of the
6
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 Qualifed 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 provisons of the January 13, 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 termination
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.
7
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.
8
7.4 No Enlargement of the 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 obligation 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. Each 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
9
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 director of the Company, on behalf
of the Company, has executed this Plan to witness its adoption by the Company as
of January 18, 1999, and the Participant has executed this Plan to witness his
understanding that it reflects his agreement with the Company.
10
ILLINOVA CORPORATION
By:________________________
Accepted and agreed to this
18th day of January, 1999.
- -------------------------
George W. Miraben
11
ILLINOVA CORPORATION
EMPLOYEE RETENTION AGREEMENT
THIS EMPLOYEE RETENTION AGREENENT (the "Agreement") is entered into this 18
day of January 1999 by and between ILLINOVA CORPORATION, an Illinois corporation
(the "Company") and George W. Miraben (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. In the event of a Termination Event (as
defined below) the Company shall, within 30 days of the Termination Event, make
a lump sum cash payment to the Employee equal to 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 of
the Termination Event; plus three times the latest bonus earned by Employee
during the three calendar years last preceding the Termination Event.
Also in such event the Employee and his or her dependents, if any,
shall, for thirty-six (36) months following the Termination Event or until the
Employee reaches 65 years of age, or is employed by another employer, if sooner,
continue to participate in any benefit plans of the Company which provide health
(including medical and dental), life ordisability insurance, or similar
coverage, and if the Employee becomes 50 years of age prior to the beginning of
such period then for so long as the Employee is not employed by another
employer, the Employee and dependents, if any, shall continue to participate in
any benefit plans of the Company which provide health and life insurance or
similar. coverage until the Employee becomes 55 years of age whereupon the
Employee and dependents, if any, shall be eligible to participate in any such
benefits as are then extended
1
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. For purposes of all
incentive and retirement plans of the Company The Employee shall be given
service credit for all purposes for, and shall be deemed to be an employee of
the Company during, the period the Employee continues to be eligible to
participate in benefit plans hereunder, notwithstanding the fact that the
Employee is not an employee of the Company during such period; provided that, if
the terms of any such plan do not permit such credit or deemed employee
treatment, the Company will make payments and distributions to the Employee
outside the plans in amounts substantially equivalent to the payments and
distributions, the Employee would have received pursuant to the terms of the
plans and attributable to such credit or deemed employee treatment, had such
credit or deemed employee treatment been permitted pursuant to the terms of the
plans. 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 section 2 shall not be reduced in any way by reason of
any compensation received by the Employee from sources other than the Company
after the termination of the Employee's employment with the Company.
Notwithstanding any provision in this Agreement to the contrary, the
benefits under this paragraph 1 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 maintained by the Company.
For purposes of this paragraph 1 (including the defined terms used herein)
references to the "Company" shall include any subsidiary of the Company by which
the Employee is employed.
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.
2
(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 or
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 tberefore:
(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) or 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 vote 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
3
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 a potential acquiror.
4
For purposes of the foregoing, a termination will not be deemed to have
occurred solely because of the transfer of the Employee from one subsidiary of
the Company to another.
(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, but 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 all
out-of-pocket expenses, including attorneys' fees, incurred by the Employee in
connection with any claim or legal action or proceeding involving the 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. If so
requested by the Employee, such expenses shall be advanced to the Employee as
they are incurred from time to time during the pendency of such claim, legal
action or proceeding; provided that if the proviso of the preceding sentence
becomes applicable, the Employee shall, within ten (10) days after the Company
has prevailed, repay all advanced amounts with interest from the date or dates
on which they were advanced at the rate described in the next sentence. 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 the Plan.
5
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 is
required to make under the Plan amounts sufficient to satisfy applicable
withholding requirements under any federal, state, or local law.
6. Successors. The obligations of the Company provided for in the Agreement
shall be the binding legal obligations of any successor to the Company by
purchase, merger, consolidation, or otherwise. Rights under the Agreement may
not be assigned by the. Employee. during the Employee's life, and upon the
Employee's death will ensure 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 the Agreement shall be governed by the laws of the State of
Illinois. The invalidity of unenforceability of any provision of the Agreement
shall not effect the validity or enforceability of any other provision.
8. Amendment and Termination. This agreement may be amended or terminated
by the Board of Directors of the Company, provided that from and after the date
of a Change in Control or during any period of time when the Company has
knowledge that any third person has taken steps reasonably calculated to effect
a Change in Control until twelve (12) months after the third person has
abandoned or terminated the efforts to effect Change in Control, the Agreement
may not be terminated and may not be amended 'in amended in a manner that
adversely affects the rights of the Employee.
6
9. Tax Documents. This paragraph shall apply if all or any portion of the
payments and benefits provided to an Employee under the Agreement, any benefit
(including any such plan adopted in the future), would otherwise constitute
"excess parachute payments" within the meaning of Section 280G of the Internal
Revenue Code of I986 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 the
Agreement on and as of the 18 day of January, 1999. This Agreement supersedes
and replaces any prior agreement between the company and the undersigned
regarding this subject
ILLINOVA CORPORATION
By:
-----------------
-----------------
Employee
7
NON-QUALIFIED STOCK OPTION AGREEMENT
ILLINOVA CORPORATION
1992 LONG-TERM INCENTIVE COMPENSATION PLAN
THIS AGREEMENT, entered into as of the 18th day of January, 1999 (the "Grant
Date") by and between ILLINOVA CORPORATION, an Illinois corporation, (the
"Company") and George M. Miraben (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 $24.688.
SECTION THREE
EXERCISE, EXPIRATION AND CANCELLATION
OF OPTION
The option shall be exercisable by the Employee at any time subsequent to a
Change in Control as defined in the Employee Retention Agreement between the
Company and the Employee (whether or not such agreement is then in effect) and
otherwise in accordance with the following schedule:
- --------------------------------------------------------------------------------
If the Employee is employed through The Option shall become exercisable
the following date: with 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 as defined in the Plan;
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
Participant does not become an employee of the Company, and the Option shall be
forfeited if the Participant 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 cancelled. 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.
--------------------------------
GEORGE W. MIRABEN
ILLINOVA CORPORATION
BY:_____________________________
CHARLES E. BAYLESS
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
ATTEST:
- ------------------------------------
LEAH MANNING STETZNER
CORPORATE SECRETARY