Exhibit 10.5

 

FORM OF NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

 

THIS NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (this “Agreement”) is made as of
the 8th day of March, 2016, between DYNEGY INC., a Delaware corporation
(“Dynegy”), and all of its Affiliates (collectively, the “Company”), and Named
Employee (“Employee”).  A copy of the Dynegy Inc. 2012 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 8, 2016 (“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 common stock of Dynegy, $0.01 par value per share (the
“Common Stock”), at a price of [PRICE] 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.

 

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(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)                                 Upon Corporate Change, if the Committee
seeks to terminate the Agreement under Section XIII(b)(2) of the Plan, the
Committee will comply with Section XIII(b)(3) of the Plan to assess value of the
Agreement.

 

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
twelve (12) months 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 twelve (12) months 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 dismissal by the Company for Cause 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 thirty (30)
days after the date of termination by reason of dismissal by the Company for
Cause, 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 resignation by the Employee (except as otherwise
provided in Section 3 (g) below) and at a time when Employee was entitled to
exercise the Option, Employee may exercise the

 

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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
thirty (30) 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

 

(e)                                  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 twelve (12) months 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

 

(f)                                   if the Employee’s employment with the
Company terminates as a result of an Involuntary Termination within six months
following a Corporate Change, the Option shall become fully vested and
immediately exercisable in full on the effective date of the Corporate Change,
and such Option shall remain exercisable from such date for the lesser of:
(A) twelve (12) months from the date of such Corporate Change; (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 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; and

 

(g)                                  if the Employee’s employment with the
Company terminates by reason of retirement following the date on which such
Employee has (I) reached sixty (60) years of age and (II) completed at least ten
(10) years of service as an employee of the Company, the Option awarded
hereunder shall immediately vest with respect to all remaining Shares and become
exercisable without further action of the Committee, and Employee may exercise
the Option, to the extent not previously exercised, beginning on the later of
the termination date or original vesting date up to and including the date
twelve (12) months after the later of the termination date or the date of the
original vesting date, 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.

 

(h)                                 For purposes of this Agreement:

 

“Involuntary Termination” shall have the same meaning as specified in the Dynegy
Inc. Severance Plan.

 

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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, if any, 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.

 

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 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.

 

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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.
Severance 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.

 

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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:

 

 

Name:

Julius Cox

 

Title:

Executive Vice President and CAO

 

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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
restricted stock administrator.

 

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