NON-QUALIFIED STOCK OPTION AWARD AGREEMENT
EXHIBIT
10.7
THIS NON-QUALIFIED STOCK OPTION 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 (“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 4, 2009
(“Effective Date”), as a matter of separate inducement and not in lieu of any
salary or other compensation for Employee’s services, the right and option to
purchase (the “Option”), in accordance with the terms and conditions set forth
in the Plan and in this Agreement, an aggregate number of shares (the “Shares”)
of Class A common stock of Dynegy, $0.01 par value per share (the “Common
Stock”), at a price of $1.13 per share (the “Exercise
Price”). Employee acknowledges receipt of a copy of the Plan, and
agrees that the Option 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. The Option shall not be treated as an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the “Code”). The Exercise Price is, in the judgment of
the Committee, not less than one hundred percent (100%) of the Fair Market Value
of a share of the Common Stock on the Effective Date. 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.
Exercise. Subject
to the provisions, limitations and other relevant provisions of the Plan and of
this Agreement, and the earlier expiration of the Option as herein provided,
Employee may exercise the Option to purchase some or all of the Shares as
follows:
(a) The
Option shall become exercisable in three cumulative equal annual installments as
follows:
(i)
on the first anniversary of the Effective
Date, the right to purchase one-third of the aggregate number of Shares shall
become exercisable without further action by the Committee;
(ii) on
the second anniversary of the Effective Date, the right to purchase an
additional one-third of the aggregate number of Shares shall become
exercisable without further action by the Committee; and
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(iii) on
the third anniversary of the Effective Date, the right to purchase the remaining
one-third of the aggregate number of Shares shall become exercisable without
further action by the Committee.
(b) Notwithstanding
any other provision of this Agreement, the unexercised portion of the Option, if
any, will automatically and without notice terminate and become null and void
upon the expiration of ten (10) years from the Effective Date of the
Option.
(c) Any
exercise by Employee of the Option, or portion thereof, shall be conducted by
delivery of an irrevocable notice of exercise to the Company or its designee as
provided in the Plan. In no event shall Employee be entitled to
exercise the Option for less than a whole Share.
(d) Notwithstanding
any other provision of this Agreement, upon the occurrence of a Change in
Control, the Option shall become fully vested and immediately exercisable in
full on the date of the Change in Control. For purposes hereof,
“Change in Control” shall mean the occurrence of any of the following events:
(i) 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;
(ii) the dissolution or liquidation of Dynegy, but excluding a reorganization
pursuant to chapter 11 of Title 11, U.S. Code, as amended; (iii) 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; (iv) 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 (v) 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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3.
Termination
of Employment. The Option may be exercised only while Employee
remains an employee of the Company and will terminate and cease to be
exercisable upon Employee’s termination of employment with the Company, except
that:
(a) if
Employee shall die while in the employ of the Company, the Option awarded
hereunder shall immediately vest with respect to all of the remaining Shares and
become fully exercisable without further action by the Committee, and Employee’s
legal representative, or the person, if any, who acquired the Option by bequest
or inheritance or by reason of the death of Employee, may exercise the Option,
to the extent not previously exercised, in respect of any or all such Shares at
any time up to and including the date three (3) years after the date of death,
or the end of the option term, whichever is less, after which date the Option
will automatically and without notice terminate and become null and void;
and
(b) if
Employee is determined to be disabled (as defined in the Company’s long term
disability program or 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), the Option awarded
hereunder shall immediately vest with respect to all of the remaining Shares and
become fully exercisable without further action by the Committee, and Employee
may exercise the Option, to the extent not previously exercised, in respect of
any or all such Shares at any time up to and including the date three (3) years
after the date of such determination, or the end of the option term, whichever
is less, after which date the Option will automatically and without notice
terminate and become null and void; and
(c) if
Employee’s employment with the Company terminates by reason of retirement by
Employee 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 or its subsidiaries, the Option awarded hereunder shall continue to
become exercisable in accordance with Section 2(a) of this Agreement, and
Employee may exercise the Option, to the extent not previously exercised, at any
time up to and including the date five (5) years after the date of termination
of Employee’s employment by reason of such retirement, or the end of the option
term, whichever is less, after which date the Option will automatically and
without notice terminate and become null and void; and
(d) if
Employee’s employment with the Company terminates by reason of dismissal by the
Company for Cause, then the Option, to the extent not previously exercised, will
immediately, automatically and without notice or further action by the
Committee, terminate and become null and void; and
(e) if
Employee’s employment with the Company terminates by reason of resignation by
the Employee (except as otherwise provided in Section 3(f) or (g) below) and at
a time when Employee was entitled to exercise the Option, Employee may exercise
the Option, to the extent not previously exercised, with respect to any or all
such number of Shares as to which the Option was exercisable as of the date of
Employee’s termination of employment, at any time up to and including the date
ninety (90) days after the date of termination by reason of such resignation, or
the end of the option term, whichever is less, after which date the Option will
automatically and without notice terminate and become null and void;
and
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(f) if
Employee’s employment with the Company terminates by reason of Involuntary
Termination, as such term is defined below, the Option awarded hereunder shall
immediately vest with respect to all remaining Shares and become fully
exercisable without further action of the Committee, and Employee may exercise
the Option, to the extent not previously exercised, at any time up to and
including the date three (3) years after the date of such termination of
employment, or the end of the option term, whichever is less, after which date
the Option will automatically and without notice terminate and become null and
void; and
(g) if
Employee’s employment with the Company is terminated as a result of a Change in
Control Termination, as such term is defined below, occurring (i) in connection
with, but in no event earlier than sixty (60) days prior to, a Change in Control
or (ii) on or within one year after the effective date upon which a Change in
Control occurs, the Option shall become fully vested and immediately exercisable
in full on the effective date of the Change of Control, and such Option shall
remain exercisable from such date for the lesser of: (A) five (5) years from the date of such
Change in Control; (B) the remaining period of time for exercise of the Option
hereunder (irrespective of any mandatory exercise period specified herein that
would otherwise be triggered by the termination of employment of such Employee);
or (C) such period of time (which period of time may end as early as the
consummation of a “Corporate Change,” as such term is defined in the Plan) as
the Committee may determine in connection with or in contemplation of a
Corporate Change in the exercise of its discretion under the Plan, with respect
to which the Committee has the discretion to, among other things, require the
surrender of stock options (which surrender may be in exchange for a cash
payment, if applicable) and to cancel such stock options upon the consummation
of a Corporate Change as further described in the Plan.
(h) For purposes of
this Agreement:
“Base
Salary” shall mean the regular base salary of Employee but excluding all
bonuses, expense reimbursements, benefits paid under any plan maintained by the
Company and all equity awards of any type.
“Cause”
shall mean, and hence arise where, as determined by the Committee in its sole
discretion, 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 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 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 Employee, provided such breach
results in a materially adverse effect upon the Company, financial or
otherwise.
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“Change
in Control Termination” shall mean Employee’s employment is terminated by the
Company (or a successor thereto) without Cause, or by Employee following: (i) a
significant diminution in Employee’s responsibilities, authority or duties; (ii)
a material reduction in Employee’s Base Salary; or (iii) relocation of
Employee’s principal place of employment by 50 miles or more, all as determined
by the Committee in its sole discretion.
“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).
4.
Registration. The
Company intends to register the Shares for issuance under the Securities Act of
1933, as amended (the “Act”), and to keep such registration effective throughout
the period the Option is exercisable. In the absence of such
effective registration or an available exemption from registration under the
Act, issuance of the Shares will be delayed until registration of such shares is
effective or an exemption from registration under the Act is
available. The Company intends to use its best efforts to ensure that
no such delay will occur. In the event exemption from registration
under the Act is available upon an exercise of the Option, Employee (or the
person permitted to exercise the Option in the event of Employee’s death or
incapacity), if requested by the Company to do so, will execute and deliver to
the Company, in writing, such agreements and other documents containing such
provisions as the Company may require to assure compliance with applicable
securities laws.
Employee
agrees that the Shares 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 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.
5.
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 (a) the Company, (b) an Affiliate (as such term is defined in the
Plan) or (c) a corporation (or a parent or subsidiary of such corporation)
assuming or substituting a new option for the Option. 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.
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6.
Withholding
Taxes. By Employee’s acceptance hereof, Employee hereby (a)
agrees to reimburse the Company or any Affiliate by which Employee is employed
for any federal, state or local taxes required by any government to be withheld
or otherwise deducted by such corporation in respect of Employee’s exercise of
the Option, (b) authorize the Company or any Affiliate by which Employee is
employed to withhold from any cash compensation paid to Employee or in
Employee’s behalf, an amount sufficient to discharge any federal, state and
local taxes imposed on the Company, or the Affiliate by which Employee is
employed, and which otherwise has not been reimbursed by Employee, in respect of
Employee’s exercise of the Option and (c) agrees that the corporation by which
Employee is employed, may, in its discretion, hold the stock certificates to
which Employee is entitled upon exercise of the Option, as security for the
payment of the aforementioned withholding tax liability, until cash sufficient
to pay that liability has been accumulated, and may, in its discretion, effect
such withholding by retaining Shares issuable upon the exercise of the Option
having a Fair Market Value on the date of exercise which is equal to the amount
to be withheld.
7.
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, the terms hereof shall be
controlling.
(b) This
grant is not a contract of employment and the terms of Employee’s employment
shall not be affected hereby or by any agreement referred to herein except to
the extent specifically so provided herein or therein. Nothing herein
shall be construed to impose any obligation on the Company or on any Affiliate
to continue Employee’s employment, and it shall not impose any obligation on
Employee’s part to remain in the employ of the Company or of any
Affiliate.
(c) All
references in this Agreement to any “corporation” shall include a corporation, a
general partnership, a joint venture, a limited partnership, a business trust or
any other lawful business entity.
(d) 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.
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IN WITNESS WHEREOF, the
Company has caused this Agreement to be duly executed by an officer thereunto
duly authorized, and 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 stock option
administrator.
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