PHANTOM STOCK UNIT AWARD AGREEMENT
Exhibit 10.4
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 be 100% vested on the
third anniversary of the Grant Date. Except as otherwise provided in Section 2(c) below,
any portion of the Phantom Stock Units that does not become vested in accordance with 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.
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(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
Involuntary Termination, then 100% of the Phantom Stock Units awarded to the
Employee hereunder shall become vested as of the date of such termination of
employment and the Employee shall receive payment for such Phantom Stock Units
within thirty days following that date; and
(iii) if the Employee’s employment with the Company terminates as a result of a
Change in Control 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 otherwise provided in Sections 2(c)(ii) or 2(iii) above) or dismissal by
the Company for Cause, 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.
(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.
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(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) “Change in Control Termination” shall mean the Employee’s employment is
terminated by the Company (or a successor thereto) without Cause, or by the Employee
following: (A) a significant diminution in the Employee’s responsibilities,
authority or duties; (B) a material reduction in the Employee’s Base Salary; or (C)
relocation of the Employee’s principal place of employment by 50 miles or more, all
as determined by the Committee in its sole discretion.
(iv) “Involuntary Termination” shall have the same meaning as specified in the
Dynegy Inc. Executive Severance Pay Plan (as amended and restated effective January
1, 2008).
(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.
(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
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(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.
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. Executive 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.
| DYNEGY INC. | ||||||
| By: | /s/ J. Xxxxx Xxxxxxxx |
|||||
| Title: General Counsel & EVP, Administration | ||||||
| * | 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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