Exhibit 10.16
EXECUTED AGREEMENT
Dynegy Inc.
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[LOGO] DYNEGY
November 20, 2002
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Dear Nick:
Set forth below are the terms of your employment with Dynegy Inc.
(hereinafter referred to as the "Company").
1. Title and Duties
Your title shall be Chief Financial Officer. You will report to the
President and Chief Executive Officer of the Company. Your duties will include
such lawful duties as may be delegated from time to time by the President and
Chief Executive Officer of the Company. You shall devote your full time, energy
and skill to the performance of your duties for the Company, and will exercise
due diligence and reasonable care in the performance of such duties. You will be
employed at the Company's headquarters in Houston, Texas.
2. Term
(a) Unless earlier terminated as provided for herein, the term of this
Agreement will be for two (2) years, beginning on the Effective Date and ending
on the second anniversary of the Effective Date (such period, and any extension
thereof pursuant to the next succeeding sentence, the "Term"). At the time the
Term would otherwise expire, the Term shall automatically be extended for an
additional one (1) year period unless either the Company or you provide written
notice not less than sixty (60) days prior to the date on which this Agreement
would otherwise be automatically extended that such party is electing not to so
extend the Term. The term "Effective Date" means December 2, 2002.
(b) If your employment with Dynegy is terminated for "cause" or terminates
due to your voluntary resignation (other than pursuant to a voluntary
resignation resulting from a "constructive termination" as set forth in
Paragraph 2(d)), Dynegy shall have no further obligation to you except for the
payment of amounts due before the date of such termination. You further agree
that the benefits which you have received from the execution of this Agreement
through the date of such termination constitute sufficient consideration for
your obligations pursuant to Paragraph 4, notwithstanding the fact that the
Company has no further obligation to you except for the payment of amounts due
before the date of such termination.
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For purposes of this Agreement, you may be terminated for "cause" as a
result of (i) refusal to implement or adhere to lawful policies or lawful
directives of the Board of Directors or the President or Chief Executive
Officer; (ii) engaging in conduct which is materially injurious (monetarily or
otherwise) to the Company or any of its affiliates (including, without
limitation, misuse of the Company's or an affiliate's funds or other property);
(iii) misconduct or dishonesty directly related to the performance of your
duties for the Company or gross negligence in the performance of your duties for
the Company; (iv) conviction (or entering into a plea bargain admitting criminal
guilt) in any criminal proceeding involving a felony or a crime of moral
turpitude; (v) drug or alcohol abuse; (vi) continued failure to perform your
duties under this Agreement which is not cured within 10 days after written
notice is provided to you by the Company; or (vii) any other material breach of
this Agreement by you which is not cured within 10 days after written notice is
provided to you by the Company.
(c) If your employment is terminated during the Term by the Company without
cause or by you due to a resignation following "constructive termination" (as
defined below), you shall receive the severance pay and other benefits for which
you would have been eligible under the Dynegy Inc. Executive Severance Pay Plan
(effective November 1, 2001) (the "Plan") in lieu of the payments and benefits
described in Paragraph 3 hereof. In addition to any severance pay and other
benefits for which you are eligible under the Plan, you shall receive (i) a lump
sum amount equal to the value of the 401(k) Plan matching contribution and
Portable Retirement Plan benefit you otherwise would have received through the
end of the Term of this Agreement; and (ii) any employee stock options granted
to you prior to or during the term of this Agreement shall become vested as of
your employment termination date, and you shall have the right to exercise any
such vested options through what would have been the end of the Term of this
Agreement absent such termination or resignation, but in no event later than the
original term of the option.
For purposes of this Agreement a "constructive termination" shall be deemed
to have occurred in the event that (i) your Base Salary as defined in Paragraph
3(a) is reduced; (ii) the Company materially breaches this Agreement; or (iii)
your position is relocated outside of the Houston, Texas metropolitan area. Any
resignation by you as a result of assertion of a constructive termination shall
be communicated by delivery to the President and Chief Executive Officer of the
Company of written notice of not less than thirty (30) days setting forth the
grounds therefore, during which period the Company shall be entitled to cure or
remedy the matters set forth in such notice to your reasonable satisfaction.
Unless you withdraw such notice prior to the expiration of this thirty (30) day
period, such resignation shall take effect upon the expiration of thirty (30)
days from the date of the delivery of the notice. Any other voluntary
resignation by you shall be communicated by thirty (30) days' advance written
notice delivery to the President and Chief Executive Officer of the Company.
(d) If your employment is terminated by the Company without cause, or by
you following a significant diminution in your responsibilities, authority or
duties, a reduction in your Base Salary, relocation of your position outside the
Houston, Texas metropolitan area or a material breach of this Agreement by the
Company, and such termination occurs within one year after (i) the effective
date of a "change in control" (as defined below) or (ii) after the execution by
the Company of an agreement, the consummation of which will constitute a "change
in control," and before the effective date of a "change in control" or
cancellation of such
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agreement, then you shall receive the following items as your sole compensation
in lieu of the payments and benefits described in Paragraph 3 hereof: (i) a lump
sum amount equal to 2.99 times the greater of (a) your average annual Base
Salary and annual cash bonus amount pursuant to the Company's Incentive
Compensation Plan as described in Paragraph 3(b) for the three calendar years
immediately prior to the calendar year of your employment termination date or
(b) your Base Salary and target annual cash bonus amount under the Company's
Incentive Compensation Plan as described in Paragraph 3(b) for the year in which
your employment is terminated; (ii) a lump sum amount equal to the value of the
401(k) Plan matching contribution and Portable Retirement Plan benefit you
otherwise would have received through what would have been the end of the Term
of this Agreement absent such termination or resignation; (iii) for a period of
thirty-six (36) months from your employment termination date, all medical,
dental and vision benefits the Company was maintaining for you and your family
as of your employment termination date; and (iv) any employee stock options
granted to you prior to or during the Term of this Agreement shall become vested
as of your employment termination date, and you shall have the right to exercise
any such vested options through the end of what would have been the Term of this
Agreement absent such termination or resignation, but in no event later than the
original term of the option. The continued medical, dental and vision benefits
referenced herein are contingent upon the Company and your payment of its and
your respective portion of the premium required for each such benefit.
For purposes of this Agreement, "change in control" shall mean (1) a merger
of the Company with another entity, a consolidation involving the Company, or
the sale of all or substantially all of the assets of the Company to another
entity if, in any such case, (A) the holders of equity securities of the Company
immediately prior to such transaction or event do not beneficially own
immediately after such transaction or event equity securities of the resulting
entity entitled to 60% or more of the votes then eligible to be cast in the
election of directors generally (or comparable governing body) of the resulting
entity in substantially the same proportions that they owned the equity
securities of the Company immediately prior to such transaction or event or (B)
the persons who were members of the Board immediately prior to such transaction
or event shall not constitute at least a majority of the board of directors of
the resulting entity immediately after such transaction or event, (2) the
dissolution or liquidation of the Company, (3) when any person or entity,
including a "group" as contemplated by Section 13(d)(3) of the Exchange Act,
acquires or gains ownership or control (including, without limitation, power to
vote) of more than 20% (which percentage shall be increased to 40% in the case
of ownership or control by ChevronTexaco Corporation or a "group" of which
ChevronTexaco Corporation is a part) of the combined voting power of the
outstanding securities of, (A) if the Company has not engaged in a merger or
consolidation, the Company, or (B) if the Company has engaged in a merger or
consolidation, the resulting entity, or (4) as a result of or in connection with
a contested election of directors, the persons who were members of the Board
immediately before such election shall cease to constitute a majority of the
Board. For purposes of the preceding sentence, (i) "resulting entity" in the
context of a transaction or event that is a merger, consolidation or sale of all
or substantially all assets shall mean the surviving entity (or acquiring entity
in the case of an asset sale) unless the surviving entity (or acquiring entity
in the case of an asset sale) is a subsidiary of another entity and the holders
of common stock of the Company receive capital stock of such other entity in
such transaction or event, in which event the resulting entity shall be such
other entity, and (ii) subsequent to the consummation of a merger or
consolidation that does not constitute a Change in Control, the
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term "Company" shall refer to the resulting entity and the term "Board" shall
refer to the board of directors (or comparable governing body) of the resulting
entity.
(e) If you die, or become disabled and cannot perform your duties, your
employment hereunder shall be terminated and you (or your estate) shall receive:
(i) your Base Salary for twelve (12) months following the month in which your
employment is terminated, and (ii) for a period of twelve (12) months from the
date your employment is terminated, all medical, dental and vision benefits that
the Company was maintaining for you and/or your family as of the date your
employment is terminated. In addition, any employee stock options granted to you
prior to or during the term of this Agreement shall become vested as of the date
of the termination of your employment due to death or disability, and you (or
your estate) shall have the right to exercise any such vested options for a
period of twelve (12) months from the date your employment is terminated. For
purposes of this Agreement, you shall be disabled as of the first date on which
you become eligible to receive disability benefits under the Company's long-term
disability plan (or Social Security disability benefits at a time when the
Company does not maintain a long-term disability plan or such plan is not
available to you).
(f) Any termination of your employment after the expiration of the Term of
this Agreement shall be subject to the Company's practices and procedures,
including severance and other employee benefit plans.
Unless otherwise specified herein, all payments under this Agreement shall
be paid in a lump sum, less applicable withholding taxes, within thirty (30)
days following your termination.
3. Compensation
(a) During the term of this Agreement, you will be paid a base annual
salary of $500,000, payable in accordance with the Company's payroll guidelines.
Your salary will be reviewed each year and may be increased, but not decreased,
in such amounts as may be determined by the Company. Increases may be made to
your Base Salary at the discretion of the Board of Directors based upon your
individual performance. There is no guarantee of a salary increase at any time.
(b) You shall participate in the Company's Incentive Compensation Plan. The
target bonus for your position is 100% of your base annual salary, dependent
upon certain financial or performance objectives, determined in accordance with
such program, and by the Board. Your bonus compensation can be within a range of
50% to 200% of your annual base salary. Incentive awards are paid to eligible
employees based on overall company, business unit, and individual performance
with emphasis placed on competitive market reward levels and with
differentiation made for stronger performers. Award ranges are subject to change
based on market competitive norms. In the sole discretion of the Board,
incentive awards in excess of the 200% target bonus range may be made in
non-cash equivalents including, but not limited to, grants of options to
purchase shares of Class A Common Stock of the Company or grants of restricted
shares of Class A Common Stock of the Company. There is no guarantee of a bonus
payment at any time. You must be an active employee on payroll on the date the
awards are distributed to receive an award.
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(c) During the term of this Agreement, you will also be eligible to
participate in Dynegy's Long Term Incentive Program which provides for stock
option awards of Class A Common Stock of the Company. The value of any such
award will be in parity with the awards granted to similarly situated employees
who also report directly to the Chief Executive Officer. Such option grants will
be made dependent upon a number of factors, including but not limited to the
Company and your financial and performance objectives, determined in accordance
with the provisions of the annual stock option award program, and by the Board.
There is no guarantee of a grant of options at any time. Any options granted to
you will have an exercise price equal to the highest closing price reported on
the NYSE for Class A Common Stock of the Company on the date of grant in
accordance with the requirements and provisions of the Company's currently
applicable option grant program. Any options granted during the term of this
Agreement are subject to the vesting, forfeiture and other terms and conditions
of the option grant program under which they were granted. You recognize that
any value of an award of "market" options is a projected value, which is subject
to the future performance of the Company stock, and that there is no guarantee
that the actual value of such options will achieve that value.
(d) On the Effective Date, the Company shall pay to you $350,000 as a
signing bonus for the execution of this Agreement.
(e) You shall be eligible to participate in such other plans and receive
such other perquisites as the Board of Directors of the Company in its sole
discretion determines, including, but not limited to, four (4) weeks of paid
vacation per annum.
4. Confidentiality, Non-Competition and Non-Solicitation
You recognize and acknowledge that:
(a) You will have access to certain information concerning the Company that
is confidential and proprietary and constitutes valuable and unique property of
the Company. You agree that you will not at any time, either during or after
your employment, disclose to others, use, copy or permit to be copied, except
pursuant to your duties on behalf of the Company or its successors, assigns or
nominees, any secret or confidential information of the Company (whether or not
developed by you) without the prior written consent of the Board of Directors of
the Company. The term "secret or confidential information of the Company"
(sometimes referred to herein as "Confidential Information") shall include,
without limitation, the Company's plans; strategies; potential acquisitions;
costs; prices; systems for buying, selling, and/or trading natural gas, natural
gas liquids, crude oil, coal, electricity, bandwidth and communications
services; client lists; pricing policies; financial information; the names of
and pertinent information regarding suppliers; computer programs; policy or
procedure manuals; training and recruiting procedures; accounting procedures;
the status and content of the Company's contracts with its suppliers or clients;
or servicing methods and techniques at any time used, developed, or investigated
by the Company; before or during your tenure of employment to the extent any of
the foregoing are (i) not generally available to the public and (ii) maintained
as confidential by the Company. You further agree to maintain in confidence any
confidential information of third parties received as a result of your
employment and duties with the Company.
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(b) At the termination of your employment you will deliver to the Company,
as determined appropriate by the Company, all correspondence, memoranda, notes,
records, client lists, computer systems, programs, or other documents and all
copies thereof made, composed or received by you, solely or jointly with others,
and which are in your possession, custody, or control at such date and which are
related in any manner to the past, present, or anticipated business of the
Company.
(c) To protect and safeguard the Company's trade secrets and Confidential
Information and also the Company's goodwill with its suppliers and clients, for
a period of six (6) months following the termination of your employment for any
reason you will not, without the prior written consent of the Board of Directors
of the Company, directly or indirectly, engage in (as owner, partner,
shareholder, employee, director, agent, consultant or otherwise) any business
which is a competitor of the Company, as hereinafter defined. The restrictions
contained in the preceding paragraph shall not apply in the event the Company
repudiates this Agreement or if you have not received all compensation for which
you are eligible in Paragraph 3 herein. For purposes of this Agreement, a
"competitor of the Company" is any entity, including without limitation a
corporation, sole proprietorship, partnership, joint venture, syndicate, trust
or any other form of organization or a parent, subsidiary or division of any of
the foregoing, that conducts significant operations in competition with one of
the Company's three principal business units or subsidiaries - Dynegy Midstream
Services, Dynegy Midwest Generation and Illinois Power Company. The terms of
this Paragraph 4(c) shall not apply to your present or future investments in the
securities of companies listed on a national securities exchange or traded on
the over-the-counter market to the extent such investments do not exceed one
percent (1%) of the total outstanding shares of such company.
(d) For a period of two (2) years after the expiration or termination of
your employment for whatever reason, you shall not, either on your own behalf or
on behalf of your new employer (either directly or indirectly via a corporate
recruiter or headhunter) induce or otherwise entice any employee of the Company
to leave the Company, nor shall you attempt to hire any of the Company's
employees.
(e) You agree that the foregoing restrictions contain reasonable
limitations as to the time, geographical area, and scope of activity to be
restrained and that these restrictions do not impose any greater restraint than
is necessary to protect the goodwill and other legitimate business interests of
the Company, including but not limited to the protection of Confidential
Information. You also agree that the general public shall not be harmed by
enforcement of this Paragraph 4. Should any provision in this Paragraph 4 be
held unreasonably broad with respect to the restrictions as to time,
geographical area, or scope of activity to be restrained, any such restriction
shall be construed by limiting and reducing it to the extent necessary to render
it reasonable, and as so construed, such provision shall be enforced.
Accordingly, you consent and agree that if you violate any of the
provisions of this Paragraph 4, the Company and its subsidiaries and affiliated
companies would sustain irreparable harm and, therefore, in addition to any
other remedies which the Company may have under this Agreement or otherwise, the
Company shall be entitled to an injunction from any court of competent
jurisdiction restraining you from committing or continuing any such violation of
this Paragraph. You acknowledge that damages at law would not be an adequate
remedy for
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violation of this Paragraph 4, and you therefore agree that the provisions of
this Paragraph 4 may be specifically enforced against you in any court of
competent jurisdiction. Nothing herein shall be construed as prohibiting the
Company from pursuing any other remedies available to the Company for such
breach or threatened breach, including the recovery of damages from you.
5. Arbitration
The parties hereto may attempt to resolve any dispute hereunder informally
via mediation or other means. Otherwise, any controversy or claim arising out of
or relating to this Agreement, or any breach thereof, shall, except as provided
in Paragraph 4, be adjusted only by arbitration in accordance with the rules of
the American Arbitration Association, and judgment upon such award rendered by
the arbitrator may be entered in any court having jurisdiction thereof. The
arbitration shall be held in the City of Houston, Texas, or such other place as
may be agreed upon at the time by the parties to the arbitration. The
arbitrator(s) shall, in their award, allocate between the parties the costs of
arbitration, which shall include reasonable attorneys' fees of the parties, as
well as the arbitrator's fees and expenses, in such proportions as the
arbitrator deems just.
6. Indemnification
If, at any time during or after the Term of this Agreement, you are made a
party to, or are threatened to be made a party in, any civil, criminal or
administrative action, suit or proceeding by reason of the fact that you are or
were a director, officer, employee, or agent of the Company, or of any other
corporation or any partnership, joint venture, trust or other enterprise for
which you served as such at the request of the Company, then you shall be
indemnified by the Company, to the fullest extent permitted under applicable
law, against expenses actually and reasonably incurred by you or imposed on you
in connection with, or resulting from, the defense of such action, suit or
proceeding, or in connection with, or resulting from, any appeal therein if you
acted in good faith and in a manner you reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe your conduct was
unlawful. The foregoing indemnification provision shall apply regardless of
whether you are alleged to have engaged in any wrongdoing including intentional,
willful, negligent of grossly negligent conduct, but shall not apply if it is
adjudged that you are liable to the Company or to any other corporation,
partnership, joint venture, trust, enterprise or third party individual for
gross negligence or willful misconduct in the performance of your duties.
However, in no event shall you ever be required to reimburse the Company for any
fees and/or payments that have been made on your behalf as part of any
indemnification. As used herein, the term "expenses" shall include all
obligations actually and reasonably incurred by you for the payment of money,
including, without limitation, attorneys' fees, judgments, awards, fines,
penalties and amounts paid in satisfaction of a judgment or in settlement of any
such action, suit or proceeding, except amounts paid to the Company or such
other corporation, partnership, joint venture, trust or other enterprise by you.
The foregoing indemnification provisions shall be in addition to any other
rights to indemnification to which you may be entitled.
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7. Other Provisions
(a) THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW,
RULE OR PRINCIPLE THAT MIGHT OTHERWISE REFER TO THE SUBSTANTIVE LAW OF ANOTHER
JURISDICTION.
(b) Except as otherwise indicated, this Agreement is not assignable without
the written authorization of both parties; except that the Company may assign
this Agreement to any entity to which the Company transfers substantially all of
its assets or to any entity which is a successor to the Company by
reorganization, incorporation, merger or similar business combination.
(c) Except as otherwise provided herein, the provisions of Paragraphs 4, 5,
6 and 7 of this Agreement shall survive the termination of this Agreement.
(d) This Agreement supersedes all previous employment agreements, whether
written or oral, between the Company and you. This Agreement may be amended only
by written amendment duly executed by both parties and their legal
representatives and authorized by action of the Board. Except as otherwise
specifically provided in this Agreement, no waiver by either party hereto of any
breach by the other party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of a subsequent
breach of such condition or provision or a waiver of a similar or dissimilar
provision or condition at the same or at any prior or subsequent time.
(e) Any notice or other communication required or permitted pursuant to the
terms of this Agreement shall be in writing and shall be deemed to have been
duly given when hand delivered or mailed by United States mail, first class,
postage prepaid and registered with return receipt requested, addressed to the
intended recipient at his or its address set forth below and, in the case of a
notice or other communication to the Company, directed to the attention of the
Board of Directors with a copy to the Secretary of the Company, or to such other
address as the intended recipient may have theretofore furnished to the sender
in writing in accordance herewith, except that until any notice of change of
address is received, notices shall be sent to the following addresses:
If to you: If to the Company:
▇▇▇▇ ▇. ▇▇▇▇▇▇ Chief Executive Officer
1590 Hoveden Dr. Dynegy Inc
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(f) If any one or more of the provisions or parts of a provision contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity or unenforceability shall not
affect any other provision or part of a provision of this Agreement, but this
Agreement shall be reformed and construed as if such invalid or illegal
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or unenforceable provision or part of a provision had never been contained
herein and such provisions or part thereof shall be reformed so that it would be
valid, legal and enforceable to the maximum extent permitted by law.
(g) You shall not be required to mitigate damages (or the amount of any
compensation provided under this Agreement to be paid) following your
termination of employment, by seeking employment or otherwise.
(h) Neither you nor the Company will make or authorize any public statement
disparaging the other in its or his business interests and affairs.
Notwithstanding the foregoing, neither party shall be (i) required to make any
statement which it or he believes to be false or inaccurate, or (ii) restricted
in connection with any litigation, arbitration or similar proceeding or with
respect to its response to any legal process.
(i) The waiver by the Company of breach of any provision of this Agreement
by you shall not operate or be construed as a waiver of any subsequent breach by
you. The waiver by you of a breach of any provision of this Agreement by the
Company shall not operate or be construed as a waiver of any subsequent breach
by the Company.
(j) The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(k) This Agreement may be executed in one or more counterparts, which
shall, collectively and separately, constitute one agreement.
(1) Notwithstanding anything to the contrary set forth in this Agreement,
the Company may cause any of its subsidiaries for which you render services to
pay or otherwise satisfy, in whole or in part, some or all of the Company's,
obligations hereunder.
If the foregoing reflects your understanding of the terms of your
employment with the Company, please execute each copy of this letter in the
space provided below.
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DYNEGY INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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President and
Chief Executive Officer
AGREED AND ACCEPTED this 20th day
of November 2002.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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