PHANTOM STOCK UNIT AWARD AGREEMENT
EXHIBIT
10.5
THIS PHANTOM STOCK UNIT AWARD
AGREEMENT (this “Agreement”) is made as of the 4th day of March, 2009,
between DYNEGY INC., a Delaware corporation (“Dynegy”), and all of its
Affiliates (collectively, the “Company”), and the named employee (the
“Employee”). A copy of the Dynegy Inc. 2009 Phantom Stock Plan
(the “Plan”) is annexed to this Agreement and shall be deemed a part hereof as
if fully set forth herein. Unless the context otherwise requires, all
terms that are not defined in this Agreement but which are defined in the Plan
shall have the same meaning given to them in the Plan when used
herein.
1.
The
Grant. The Compensation and Human Resources Committee of the
Board of Directors (the “Committee”) granted to Employee on March 4, 2009 (the “Grant Date”), as a
matter of separate inducement and not in lieu of any salary or other
compensation for Employee’s services, _______________________ phantom stock
units (the “Phantom Stock Units”), subject to the acceptance by the Employee of
the terms and conditions of this Agreement. The Employee acknowledges
receipt of a copy of the Plan, and agrees that this award of Phantom Stock Units
shall be subject to all of the terms and provisions of the Plan, including
future amendments thereto, if any, pursuant to the terms thereof, and to all of
the terms and conditions of this Agreement. If it is subsequently
determined by the Committee, in its sole discretion, that the terms and
conditions of this Agreement and/or the Plan are not compliant with Section 409A
of Internal Revenue Code of 1986, as amended, or any Treasury regulations or
Internal Revenue Service guidance promulgated thereunder, this Agreement and/or
the Plan may be amended accordingly.
2.
Phantom
Stock Units. The Employee hereby accepts the Phantom Stock
Units when issued and agrees with respect thereto as follows:
(a) Payment
and Determination of Value. Dynegy shall pay to the Employee
the value of a Phantom Stock Unit in cash not later than the second payroll day
immediately following the date such unit is scheduled to become vested under
Section 2(b) below and such Phantom Stock Unit shall thereafter be treated as
redeemed for purposes of this Agreement. Each Phantom Stock Unit
shall have a value equal to one share of Dynegy’s Class A common stock, $0.01
par value per share, on its vesting date.
(b) Vesting. An
Employee’s Phantom Stock Units shall become vested in three cumulative equal
annual installments as follows:
(i)
on the first anniversary of the Grant Date,
one-third of the aggregate number of Phantom Stock Units shall be vested without
further action by the Committee;
(ii) on
the second anniversary of the Grant Date, one-third of the aggregate number of
Phantom Stock Units shall be vested without further action by the Committee;
and
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(iii) on
the third anniversary of the Grant Date, one-third of the aggregate number of
Phantom Stock Units shall be vested without further action by the
Committee.
Except as
otherwise provided in Section 2(c) below, any portion of the Phantom Stock Units
that does not become vested in accordance with the preceding provisions of this
Section 2(b) shall be forfeited to the Company for no consideration as of the
date of the termination of the Employee’s employment with the
Company.
(c) Accelerated
Vesting and Payment. Notwithstanding the provisions of
Sections 2(a) and 2(b) above, the vesting and payment for some or all of the
Employee’s Phantom Stock Units shall be accelerated as follows:
(i)
if the Employee is determined to be disabled (as
defined in the Company’s long term disability program or plan in which the
Employee is a participant or, if the Employee does not participate in any such
plan, as defined in the Dynegy Inc. Long Term Disability Plan, as amended, or
the successor plan thereto) or in the event of the death of the Employee, all of
the Employee’s then outstanding Phantom Stock Units shall become vested as of
the date of such determination or death, as applicable, and the Employee shall
receive payment for such Phantom Stock Units on that date; and
(ii) if
the Employee’s employment with the Company terminates by reason of dismissal by
the Company other than for Cause, then the Employee shall become vested as of
the date of such termination, with respect to a number of Phantom Stock Units
(rounded down to the nearest whole number) equal to (I) the number of then
outstanding Phantom Stock Units subject to this Agreement multiplied by (II) a
fraction, the numerator of which shall be the number of calendar days which have
lapsed since the later of the Grant Date or most recent anniversary thereof and
the denominator of which shall be the number of calendar days from the later of
the Grant Date or the most recent anniversary thereof until the third
anniversary of the Grant Date, and shall become, and the Employee shall receive
payment for such Phantom Stock Units on that date; and
(iii) if
the Employee’s employment with the Company terminates as a result of an
Involuntary Termination occurring in connection with, but in no event earlier
than sixty (60) days prior to, a Change in Control, then 100% of the Phantom
Stock Units awarded to the Employee hereunder shall become vested as of the date
of such Change in Control and the Employee shall receive payment for such
Phantom Stock Units on that date; and
(iv) if
the Employee is employed by the Company (or a successor thereto) on the date of
a Change in Control, then 100% of the Phantom Stock Units awarded to the
Employee hereunder shall become vested as of the date of such Change in Control
and the Employee shall receive payment for such Phantom Stock Units on that
date.
In
addition, the provisions of Section 2(h) shall apply to any Employee who
terminates by reason of retirement following (I) the date on which such Employee
has reached sixty (60) years of age and (II) at least ten (10) years of service
as an employee of the Company. If the Employee’s employment with the
Company terminates by reason of resignation by the Employee (except as provided
in Section 2(c)(iii) above), then the Employee’s Phantom Stock Units shall be
forfeited to the Company for no consideration as of the date of the termination
of the Employee’s employment with the Company.
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(d) Transfer
Restrictions. The Phantom Stock Units may not be sold,
assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered
or otherwise disposed of by the Employee.
(e) Definitions. For
purposes of this Agreement, the following terms shall have the meanings
indicated below:
(i) “Cause”
shall mean, and hence arise where, as determined by the Committee in its sole
discretion, the Employee (A) has been convicted of a misdemeanor involving moral
turpitude or a felony; (B) has failed to substantially perform the duties of
such Employee to the Company (other than such failure resulting from the
Employee’s incapacity due to physical or mental condition) which results in a
materially adverse effect upon the Company, financial or otherwise; (C) has
refused without proper legal reason to perform the Employee’s duties and
responsibilities to the Company; or (D) has breached any material corporate
policy maintained and established by the Company that is applicable to the
Employee, provided such breach results in a materially adverse effect upon the
Company, financial or otherwise.
(ii) “Change
in Control” shall mean the occurrence of any of the following events: (A) a
merger of Dynegy with another entity, a consolidation involving Dynegy, or the
sale of all or substantially all of the assets or equity interests of Dynegy to
another entity if, in any such case, (I) the holders of equity securities of
Dynegy immediately prior to such event do not beneficially own immediately after
such event equity securities of the resulting entity entitled to fifty-one
percent (51%) or
more of the votes then eligible to be cast in the election of directors (or
comparable governing body) of the resulting entity in substantially the same
proportions that they owned the equity securities of Dynegy immediately prior to
such event or (II) the persons who were members of the Board immediately prior
to such event do not constitute at least a majority of the board of directors of
the resulting entity immediately after such event; (B) the dissolution or
liquidation of Dynegy, but excluding a reorganization pursuant to chapter 11 of
Title 11, U.S. Code, as amended; (C) a circumstance where 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 fifty percent (50%) or more of the combined voting power of the
outstanding securities of, (I) if Dynegy has not engaged in a merger or
consolidation, Dynegy, or (II) if Dynegy has engaged in a merger or
consolidation, the resulting entity; (D) circumstances where, 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; or (E) the Board (or the Committee) adopts a resolution
declaring that a Change in Control has occurred. For purposes of the
“Change in Control” definition, (1) “resulting entity” in the context of an
event that is a merger, consolidation or sale of all or substantially all of the
subject assets or equity interests shall mean the surviving entity (or acquiring
entity in the case of an asset or equity interest 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 Dynegy receive capital stock
of such other entity in such transaction or event, in which event the resulting
entity shall be such other entity, and (2) subsequent to the consummation of a
merger or consolidation that does not constitute a Change in Control, the term
“Dynegy” 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.
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(iii) “Involuntary
Termination” shall mean any termination of Employee’s employment with the
Company that:
(A) does
not result from (1) a termination for Cause of Employee, (2) Employee’s death or
disability (as defined in Section 2(c)(i) above) or (3) a voluntary resignation
by Employee from the Company (other than a resignation pursuant to clause (B) of
this Section 2(e)(iii)), or
(B) results
from a resignation by Employee on or before the date which is sixty (60) days
after the date that Employee first receives written notice from or on behalf of
the Company of (x) a change in the location of Employee’s principal place of
employment by fifty (50) miles or more from the location where Employee was
principally employed immediately prior to the date on which the Change in
Control occurs or (y) Employee’s offer of, assignment to, or placement in a
position within the Company that provides a base salary materially lower than
Employee’s base salary on Employee’s termination date, all as determined by the
Committee in its sole discretion.
(f) Shareholder
Rights. The Employee shall not have any of the rights of a
shareholder of the Company with respect to the Phantom Stock Units.
(g) Corporate
Acts. The existence of the Phantom Stock Units shall not
affect in any way the right or power of the Board of Directors of the Company or
the shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any issue
of debt or equity securities, the dissolution or liquidation of the Company or
any sale, lease, exchange or other disposition of all or any part of its assets
or business or any other corporate act or proceeding.
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(h) Retirement
Provisions. The provisions of this Section 2(h) shall apply to
any Employee who satisfies the following requirements on the Grant Date: (I) the
Employee has reached sixty (60) years of age, and (II) the Employee has
completed at least ten (10) years of service as an employee of the
Company. If an Employee does not satisfy the requirements in the
preceding sentence on the Grant Date but subsequently satisfies those
requirements during the term of this Agreement, then the provisions of this
Section 2(h) shall apply to such Employee on a prospective basis:
(i) if
the Employee’s employment with the Company terminates by reason of retirement by
the Employee, then the Employee shall become vested in all of his or her then
outstanding Phantom Stock Units as of the date of such termination and the
Employee shall receive payment for such Phantom Stock Units within thirty days
following that date; and
(ii) notwithstanding
any provision of this Agreement or the Plan, if a “Change in Control,” as
defined in Section 2(e)(ii) above, or a “Corporate Change”, as defined in
Section II of the Plan, occurs, then the Employee shall not receive an
accelerated payment of the value of his or her Phantom Stock Units unless such
Change in Control or Corporate Change, as applicable, is determined by the
Company to qualify as a change in control event under Code Section
409A(a)(2)(A)(v). If such event does not so qualify, then (I) the
Employee shall be fully vested in his or her rights under the Phantom Stock
Units, (II) the value of the Phantom Stock Units shall be fixed as of the date
the Change in Control or Corporate Change occurred, and (III) payment of such
amount shall be made to the Employee on the earliest date permitted under
Sections 2(a) or 2(c) above.
3.
Withholding
of Tax. The Company is authorized and directed to withhold
from any cash payment made to the Employee under this Agreement any tax required
to be withheld by reason of such resulting compensation income. To
the extent that any portion of the Phantom Stock Units is treated as includible
in the Employee’s income prior to the date a cash payment is made to the
Employee under this Agreement, the Company is hereby authorized and directed to
either (i) require the Employee to make payment of such taxes to the Company
through delivery of cash or a cashier’s check within five (5) calendar days
after the Company is required to remit such taxes to the Internal Revenue
Service, or (ii) withhold from the Employee’s regular wages or bonus payments
the amount of any tax required to be withheld.
4.
Code
Section 409A. If and to the extent any
portion of any payment provided to the Employee under this Agreement in
connection with the Employee’s separation from service (as defined in Section
409A of Internal Revenue Code of 1986, as amended (“Code Section 409A”) is
determined to constitute “nonqualified deferred compensation” within the meaning
of Code Section 409A and the Employee is a specified employee as defined in Code
Section 409A(a)(2)(B)(i), as determined by the Company in accordance with the
procedures separately adopted by the Company for this purpose, by which
determination the Employee, as a condition to accepting benefits under this
Agreement and the Plan, agrees that he or she is bound, such portion of the
payment, compensation or other benefit shall not be paid before the earlier of
(i) the day that is six months plus one day after the date of separation from
service (as determined under Code Section 409A) or (ii) the tenth 10th day after
the date of the Employee’s death (as applicable, the “New Payment
Date”). The aggregate of any payments that otherwise would have been
paid to the Employee during the period between the date of separation from
service and the New Payment Date shall be paid to the Employee in a lump sum on
such New Payment Date, and any remaining payments will be paid on their original
schedule. Neither the Company nor the Employee shall have the right
to accelerate or defer the delivery of any such payments or benefits except to
the extent specifically permitted or required by Code Section
409A. This Agreement is intended to comply with the provisions of
Code Section 409A and this Agreement and the Plan shall, to the extent
practicable, be construed in accordance therewith. Terms defined in
this Agreement and the Plan shall have the meanings given such terms under Code
Section 409A if and to the extent required to comply with Code Section
409A. In any event, the Company makes no representations or warranty
and shall have no liability to the Employee or any other person if any
provisions of or payments under this Agreement are determined to constitute
deferred compensation subject to Code Section 409A but not to satisfy the
conditions of that section.
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5.
Employment
Relationship. For purposes of this Agreement, the Employee
shall be considered to be in the employment of the Company as long as the
Employee remains an employee of either the Company or an Affiliate (as such term
is defined in the Plan). Nothing in the adoption of the Plan or the
award of the Phantom Stock Units thereunder pursuant to this Agreement shall
confer upon the Employee the right to continued employment by the Company or
affect in any way the right of the Company to terminate such employment at any
time. Unless otherwise provided in a written employment agreement or
by applicable law, the Employee’s employment by the Company shall be on an
at-will basis, and the employment relationship may be terminated at any time by
either the Employee or the Company for any reason whatsoever, with or without
cause. Any question as to whether and when there has been a
termination of such employment, and the cause of such termination, shall be
determined by the Committee, and its determination shall be final.
6.
Notices. Any
notices or other communications provided for in this Agreement shall be
sufficient if in writing. In the case of the Employee, such notices
or communications shall be effectively delivered when hand delivered to the
Employee at his or her principal place of employment or when sent by registered
or certified mail to the Employee at the last address the Employee has filed
with the Company. In the case of the Company, such notices or
communications shall be effectively delivered when sent by registered or
certified mail to the Company at its principal executive offices.
7.
Entire
Agreement; Amendment. This Agreement replaces and merges all
previous agreements and discussions relating to the same or similar subject
matters between the Employee and the Company and constitutes the entire
agreement between the Employee and the Company with respect to the subject
matter of this Agreement. This Agreement may not be modified in any
respect by any verbal statement, representation or agreement made by any
employee, officer, or representative of the Company or by any written agreement
unless signed by an officer of the Company who is expressly authorized by the
Company to execute such document.
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8.
Binding
Effect. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under
the Employee.
9.
Miscellaneous. In
the event of any conflict or inconsistency between the terms of this Agreement
and the terms of the Plan, the terms of the Plan shall be
controlling. In the event of any conflict or inconsistency between
the terms of this Agreement and the terms of the Dynegy Inc. Severance Pay Plan,
including any amendments or supplements thereto, the terms of this Agreement
shall be controlling.
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IN WITNESS WHEREOF, the
Company has caused this Agreement to be duly executed by an officer thereunto
duly authorized, and the Employee has agreed to and accepted the terms of this
Agreement*, all as of the date first above written.
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By:
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/s/
J. Xxxxx Xxxxxxxx
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Name:
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J.
Xxxxx Xxxxxxxx
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Title:
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General
Counsel & EVP,
Administration
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*Employee
has agreed to and accepted the terms of this Agreement utilizing online grant
acceptance capabilities with E*Trade Financial, the Company’s equity plan
administrator.
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