Exhibit 10.4
PHANTOM STOCK UNIT AWARD AGREEMENT
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. Kevin Blodgett
 
Name: J. Kevin Blodgett    
 
      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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