NON-QUALIFIED STOCK OPTION AWARD AGREEMENT
EXHIBIT
10.5
THIS NON-QUALIFIED STOCK OPTION AWARD
AGREEMENT (this “Agreement”) is made as of the ____th day of March, 2010,
between DYNEGY INC., a Delaware corporation (“Dynegy”), and all of its
Affiliates (collectively, the “Company”), and Xxxxx X. Xxxxxxxxxx
(“Employee”). A copy of the Dynegy Inc. ________ 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 ___, 2010
(“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 $_______
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.
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
(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) 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; or
(iii) 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. 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.
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 earlier, 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 earlier, 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 dismissal by the
Company for Cause, as such term is defined below, 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
(d) 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 earlier, after which
date the Option will automatically and without notice 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 Sections 3(d) or (f) hereof) 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 earlier, after which
date the Option will automatically and without notice terminate and become null
and void; and
(f) 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 within sixty (60)
days before or within two years after the effective date of a Change in Control,
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: (i) five (5) years from the effective date
of such Change in Control; (ii) 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 (iii) 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.
(g) 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 as a result of, as determined by the Committee in
its sole discretion, Employee’s (i) refusal to implement or adhere to lawful
policies or lawful directives of the Board of Directors; (ii) engaging in
conduct which is materially injurious (monetarily or otherwise) to the Company
(including, without limitation, misuse of the Company’s funds or other
property); (iii) misconduct or dishonesty directly related to the performance of
Employee’s duties for the Company or gross negligence in the performance of
Employee’s 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; or (vi) continued
failure to perform Employee’s duties which is not cured within 10 days after
written notice is provided to Employee by the Company.
“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 position outside the Houston, Texas metropolitan area, 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 (i) 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 (ii) 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 (i) the Company, (ii) an Affiliate (as such term is defined in
the Plan) or (iii) 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.
6. Withholding
Taxes. By Employee’s acceptance hereof, Employee hereby
(i) 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, (ii) 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 (iii) 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.
8. Amendment. This
Agreement may not be amended except by an agreement in writing signed by each of
the Company and Employee consenting to such amendment. Notwithstanding the
preceding, 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 by the Company accordingly.
[Remainder
of page intentionally left blank]
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.
|
By:
|
/s/
J. Xxxxx Xxxxxxxx
|
|
Name:
|
J.
Xxxxx Xxxxxxxx
|
|
Title:
|
General
Counsel & EVP, Administration
|
|
Accepted
By:
|
______________________________ _________
|
|
Xxxxx
X. Xxxxxxxxxx Date
|
|
