PERFORMANCE AWARD AGREEMENT
Exhibit 10.10
THIS PERFORMANCE AWARD AGREEMENT (this “Agreement”) is made as of the 6th day of
March, 2008, between DYNEGY INC., a Delaware corporation (“Dynegy”), and all of its Affiliates
(collectively, the “Company”), and Xxxxx Xxxxxxxx (“Employee”). A copy of the Dynegy Inc. 2000
Long Term Incentive Plan (the “Plan”) is annexed to this Agreement and shall be deemed a part of
this Agreement as if fully set forth herein. Unless the context otherwise requires, all terms that
are not defined herein 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 6, 2008 (“Effective Date”), a Performance
Award of 3,500 performance units, each of which has a designated value of $100 and represents the
right to receive an amount payable in the form of cash or shares of Dynegy’s Class A Common Stock
(a “Share” or “Shares”), as determined in the discretion of the Committee. Employee acknowledges
receipt of a copy of the Plan, and agrees that this Performance Award 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 Code Section 409A, or any Treasury regulations or
Internal Revenue Service guidance promulgated thereunder, this Agreement and/or the Plan may be
amended accordingly.
2. Performance Period and Performance Goals. Subject to the provisions of Section 5
of this Agreement, the performance period for purposes of determining whether the Performance Award
will be paid shall be March 6, 2008 through March 6, 2011 (the “Performance Period”). The
performance goals for purposes of determining whether, and the extent to which, the Performance
Award will be paid are set forth in Exhibit 1 to this Agreement, which Exhibit is made a
part of this Agreement. Notwithstanding the foregoing, the Committee shall have discretion to
adjust the performance goals to reflect actions undertaken in the best interest of the Company and
its shareholders, including, but not limited to, strategic transactions affecting the performance
goals as well as recapitalizations, reorganizations, mergers, consolidations, split-ups,
split-offs, spin-offs, exchanges or other relevant changes in capitalization or structure of the
Company.
3. Payment. Subject to the provisions of Sections 4 and 5 of this Agreement, after
the Performance Period, the Performance Award shall be paid as soon as practicable after the
Committee determines whether and to what extent the performance goals have been achieved for the
Performance Period in accordance with the terms set forth in Exhibit 1 to this Agreement;
provided, however, that any such payment shall be made no later than December 31, 2011.
4. Termination. The Performance Award and the Employee’s right to receive any cash or
Shares hereunder will automatically and without notice terminate and become null and void upon
Employee’s termination of employment with the Company prior to the Performance Award payment date,
except that:
1
| (a) | if Employee’s termination of employment is by reason of: |
| (1) | death, |
||
| (2) | retirement by Employee following (A)
the date on which such Employee has reached sixty (60) years of
age and (B) at least ten (10) years of service as an employee
of the Company, or |
||
| (3) | Involuntary Termination (as defined in
the Dynegy Inc. Executive Severance Pay Plan, as amended and
restated effective January 1, 2008) or a mutually satisfactory
resignation as determined by the Committee in its sole
discretion, or |
||
| (4) | a Change in Control Termination
occurring in connection with, but in no event earlier than
sixty (60) days prior to, a Change in Control, or |
| (b) | if Employee is determined to be disabled (as defined in the
Company’s long term disability program or the plan in which Employee is a
participant or, if 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), |
Employee shall be treated as if he had been continuously employed by the Company through the
Performance Award payment date. In such case, Employee or Employee’s legal representative, or the
person, if any, who acquired the Performance Award by bequest or inheritance or by reason of the
death of Employee, shall be entitled to receive any payment with respect to the Performance Award
in accordance with this Agreement; provided, however, that if Employee’s termination of employment
is for the reason described in Sections 4(a)(3) or (4), any such payment shall be prorated by
multiplying the payment by a fraction, the numerator of which shall be the number of calendar days
that elapsed between the date of Employee’s termination and the Effective Date and the denominator
of which shall be 1,080 but in no case shall such fraction be greater than one (1).
For purposes of this Agreement, the term “Cause” shall mean, and hence arise where, as
determined by the Committee in its sole discretion, Employee (i) has been convicted of a
misdemeanor involving moral turpitude or a felony; (ii) has failed to substantially perform the
duties of such Employee to the Company (other than such failure resulting from Employee’s
incapacity due to physical or mental condition) which results in a materially adverse effect upon
the Company, financial or otherwise; (iii) has refused without proper legal reason to perform
Employee’s duties and responsibilities to the Company; or (iv) has breached any material corporate
policy maintained and established by the Company that is applicable to Employee, provided such
breach results in a materially adverse effect upon the Company, financial or otherwise. In
addition, the term “Change in Control Termination” shall mean Employee’s employment is terminated by the Company (or a successor thereto) without Cause, or by Employee
following: (A) a significant diminution in Employee’s responsibilities, authority or duties; (B) a
material reduction in Employee’s base salary; or (C) relocation of Employee’s position outside the
Houston, Texas metropolitan area, all as determined by the Committee in its sole discretion.
2
5. Change In Control. In the event a “Change in Control” (as defined below) occurs
during the Performance Period, provided the ending Share price, as determined in accordance with
this Section 5, would entitle Employee to receive a Performance Award based upon the performance
goals set forth in Exhibit 1 to this Agreement, Employee shall receive a payment with
respect to the Performance Award, which shall be determined by using either, as applicable (a) the
agreed price per Share received by the shareholders of Dynegy as a result of the Change in Control
transaction, or if there is no agreed price per Share, then (b) the average closing Share price for
the twenty (20) consecutive trading days immediately preceding the effective date of the Change in
Control, as the ending Share price for the Performance Period. Such payment, if any, shall be made
regardless of whether Employee’s employment with the Company is terminated (other than For Cause)
on or after the effective date of such Change in Control, and shall be made in the form of cash to
Employee as soon as administratively feasible but no later than the later of December 31 of the
calendar year in which the Change in Control occurs or the 15th day of the third month
following the effective date of the Change in Control. The Performance Period shall end as of the
effective date of a Change in Control, and any Performance Award payments hereunder shall only be
made in accordance with this Section 5.
For purposes of this Agreement, “Change in Control” shall mean the occurrence of any of the
following events: (1) 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, (A) 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
(B) 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;
(2) the dissolution or liquidation of Dynegy, but excluding a reorganization pursuant to chapter 11
of Title 11, U.S. Code, as amended; (3) 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, (A) if Dynegy has not engaged in a merger
or consolidation, Dynegy, or (B) if Dynegy has engaged in a merger or consolidation, the resulting
entity; (4) 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 (5) the Board (or the Committee) adopts a resolution
declaring that a Change in Control has occurred. For purposes of the “Change in Control”
definition, (A) “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 (B) 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.
3
6. Status of Stock. Employee agrees that any Shares distributed pursuant to this
Agreement will not be sold or otherwise disposed of in any manner which would constitute a
violation of any applicable federal or state securities laws. Employee also agrees that (a) the
certificates representing the Shares may bear such legend or legends as the Committee in its sole
discretion deems appropriate in order to assure compliance with applicable securities laws and (b)
the Company may refuse to register the transfer of the Shares on the stock transfer records of the
Company, and may give related instructions to its transfer agent, if any, to stop registration of
such transfer, if such proposed transfer would in the opinion of counsel satisfactory to the
Company constitute a violation of any applicable securities law.
7. Employment Relationship. For purposes of this Agreement, Employee shall be
considered to be in the employment of the Company as long as Employee remains an employee of the
Company or an Affiliate (as such term is defined in the Plan). Nothing in the adoption of the Plan
or the grant of the Performance Award thereunder pursuant to this Agreement shall confer upon
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, 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 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 in its sole discretion, and its determination shall be final and
binding on all parties.
8. Withholding of Tax. To the extent that payment of the Performance Award results in
compensation income to Employee for federal or state income tax purposes, the Company is authorized
to withhold from any cash or Shares distributable to the Employee under this Agreement) then or
thereafter payable to Employee any tax required to be withheld by reason of such resulting
compensation income.
9. Miscellaneous.
(a) This grant is subject to all the terms, conditions, limitations and restrictions
contained in the Plan. In the event of any conflict or inconsistency between the terms
hereof 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 hereof and the terms of the Dynegy Inc.
Executive Severance Pay Plan, including any amendments or supplements thereto, or the Dynegy
Inc. Severance Pay Plan, including any amendments or supplements thereto, the terms hereof
shall be controlling.
4
(b) Any notices or other communications provided for in this Agreement shall be
sufficient if in writing. In the case of Employee, such notices or communications shall be
effectively delivered when hand delivered to Employee at his or her principal place of
employment or when sent by registered or certified mail to Employee at the last address
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.
(c) Employee shall be presumed to have agreed to and accepted the terms of this
Agreement unless he submits a written objection to the Committee or the undersigned officer
within 30 days after the Effective Date.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer
thereunto duly authorized as of the date first above written.
| DYNEGY INC. | ||||||
| By: |  |
|||||
| Name: | J. Xxxxx Xxxxxxxx | |||||
| Title: | General Counsel & EVP, Administration | |||||
5
Exhibit 1
Performance Goals for Performance Period
(March 6, 2008 — March 6, 2011)
(March 6, 2008 — March 6, 2011)
| Threshold | Target | Maximum | ||||||
| Dynegy Inc. | ||||||||
Performance Goals |
Achieved Share Price* | $10.00 | $12.00 | $14.00 | ||||
| % of each $100 | ||||||||
Payment Levels** |
Performance Unit | 0% | 100% | 200% |
*Achieved Share Price shall be the ending Share price equal to the average closing Share price for
the month of February 2011or, if applicable, the ending Share price determined in accordance with
Section 5 of the Agreement in the event of a Change in Control.
**Payment levels will be based upon the actual Achieved Share Price and will be interpolated
between Achieved Share Price goals.
6
