Document:

DWA EX 10.7 9.30.14

Exhibit 10.7

RESTRICTED SHARE AWARD AGREEMENT UNDER THE DREAMWORKS ANIMATION SKG, INC. AMENDED AND RESTATED 2008 OMNIBUS INCENTIVE COMPENSATION PLAN, dated as of October «Day», 2014, between DreamWorks Animation SKG, Inc., a Delaware corporation (the “Company”), and Lew Coleman.

This Restricted Share Award Agreement (this “Award Agreement”) sets forth the terms and conditions of an award of [•] performance-based restricted shares (this “Award”) of the Company’s Class A Common Stock, $0.01 par value (“Share”), that are subject to certain restrictions on transfer and risks of forfeiture and other terms and conditions specified herein (“Restricted Shares”), and that are granted to you under the DreamWorks Animation SKG, Inc. Amended and Restated 2008 Omnibus Incentive Compensation Plan (the “Plan”).  This Award provides you with the opportunity to earn, subject to the terms of this Award Agreement, Shares, as set forth in Section 3 of this Award Agreement.

THIS AWARD IS SUBJECT TO ALL TERMS AND CONDITIONS OF THE PLAN AND THIS AWARD AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE DISPUTE RESOLUTION PROVISIONS SET FORTH IN SECTION 10.  BY SIGNING YOUR NAME BELOW, YOU WILL HAVE CONFIRMED YOUR ACCEPTANCE OF THE TERMS AND CONDITIONS OF THIS AWARD AGREEMENT.

SECTION 1.  The Plan.  This Award is made pursuant to the Plan, all the terms of which are hereby incorporated in this Award Agreement, including but not limited to the provisions of Section 6(e) of the Plan.  In the event of any conflict between the terms of the Plan and the terms of this Award Agreement, the terms of this Award Agreement shall govern.  Except as explicitly set forth in this Award Agreement, in the event of any conflict between the terms of this Award Agreement and the terms of any individual employment agreement between you and the Company or any of its Affiliates (an “Employment Agreement”), this Award Agreement will govern.  Notwithstanding any provision of this Award Agreement to the contrary, in the event of any conflict between the terms of Section 6(e) of the Plan, on the one hand, and this Award Agreement or your Employment Agreement, on the other hand, the terms of Section 6(e) of the Plan shall govern except with respect to vesting of the Restricted Shares upon an event of termination of your employment by the Company without cause (as defined in your Employment Agreement) or by you for good reason (as defined in your Employment Agreement), which shall be governed by the terms Section 3(a)(iv) or Section 3(b) of this Award Agreement, as applicable.

SECTION 2.  Definitions.  Capitalized terms used in this Award Agreement that are not defined in this Award Agreement have the meanings as used or defined in the Plan.  As used in this Award Agreement, the following terms have the meanings set forth below:

“Business Day” means a day that is not a Saturday, a Sunday or a day on which banking institutions are legally permitted to be closed in the City of New York.

“Determination Date” means the date as soon as reasonably practicable following the applicable Performance Period, but in no event later than March 15 of the year following the end of the applicable Performance Period, as determined by the Committee, on which the Committee determines whether the Performance Goal has been achieved.

“Performance Goal” means the goal set forth on Schedule A, the achievement of which determines whether the Restricted Shares shall be eligible to vest pursuant to this Award Agreement.

“Performance Period” means the period beginning on January 1, 2015 and ending on December 31, 2015 or December 31, 2016.

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“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and other interpretive guidance promulgated thereunder, as in effect from time to time.

“Service Completion Date” means each of the dates specified in the table in Section 3(a)(i) of this Award Agreement on which the service requirement ends with respect to the portion of the Restricted Shares specified in such table.

 “Vesting Date” means the date on which both the service requirements and performance requirements with respect to a portion of the Restricted Shares subject to this Award Agreement are satisfied.  For the first two portions of the Restricted Shares, the Vesting Date will be the later of the Service Completion Date and the date on which the Committee determines that the Performance Goal has been achieved.  For the remaining portions of the Restricted Shares, the Vesting Date will be Service Completion Date, provided that the Committee determines that the Performance Goal has been achieved.    

SECTION 3.  Vesting and Delivery.  (a)  Performance-Based Vesting.  (i)  On each Service Completion Date, the service requirements with respect to the portion of the Restricted Shares specified in the table below.  On each Determination Date, the Committee shall determine whether the Performance Goal has been achieved for the applicable Performance Period and shall provide notice to you of such determination as soon as reasonably practicable following such determination in accordance with Section 11 of this Award Agreement.  Except as otherwise determined by the Committee in its sole discretion, which shall be subject to Section 6(e) of the Plan, or provided in your Employment Agreement or in Section 3 of this Award Agreement, vesting of the Restricted Shares is contingent on the attainment of the Performance Goal as set forth on Schedule A.  Accordingly, unless otherwise determined by the Committee in its sole discretion in accordance with Section 6(e) of the Plan or provided in your Employment Agreement or in Section 3 of this Award Agreement, your Restricted Shares will not vest unless the Committee determines that the Performance Goal has been achieved.  

	
			
	Service Completion Date
	Percentage of the Restricted Shares Scheduled to Vest
	Number of the Restricted Shares  
Scheduled to Vest

	October [•], 2015
	25%
	[•]

	October [•], 2016
	25%
	[•]

	October [•], 2017
	25%
	[•]

	October [•], 2018
	25%
	[•]

 
Upon a determination by the Committee that the Performance Goal has been achieved, and subject to the provisions of the Plan and this Award Agreement, on each Vesting Date, if you remain employed by the Company until the applicable Service Completion Date, the Restricted Shares subject to this Award Agreement will become fully vested and nonforfeitable, and the restrictions set forth in this Award Agreement shall lapse, in an amount equal to the percentage of Restricted Shares as corresponds to the applicable Service Completion Date, as indicated above.  Furthermore, pursuant to Section 4 of this Award Agreement and except as otherwise determined by the Committee in its sole discretion in accordance with Section 6(e) of the Plan or provided in your Employment Agreement or in Section 3 of this Award Agreement, in order for any Restricted Shares to vest and the restrictions thereon set forth in this Award Agreement to lapse, the Committee must determine that the Performance Goal has been achieved and you must be employed by the Company or an Affiliate on the applicable Service Completion Date.  For the avoidance of doubt, if the Committee determines on the first Determination Date that the Performance Goal has not been satisfied, the portion of the Restricted Shares corresponding to the first Service Completion Date will remain unvested and outstanding and, provided that the Committee determines that the Performance Goal has been achieved on the second Determination Date, such Restricted Shares will vest on the second Vesting Date, along with the second portion of the Restricted Shares.

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(ii)  In the event that, prior to the final Vesting Date, you commence a leave of absence (whether paid or unpaid) in accordance with the Company’s policies as in effect from time to time, your Restricted Shares will remain outstanding pursuant to the terms of this Section 3(a)(ii).  Solely for purposes of this Award Agreement, your employment with the Company and its Affiliates will be deemed to continue until the earlier of (A) the six-month anniversary of the date that your leave of absence began and (B) March 15 of the year following the year in which your leave of absence began (the earlier of such dates, the “Final Return Date”).  Therefore, in the event any Restricted Shares are outstanding on the date your leave of absence began, such Restricted Shares will remain outstanding until the Final Return Date and, if any portion of such Restricted Shares would otherwise have vested during that period had you not been on a leave of absence, that portion will vest on the date that such Restricted Shares would have otherwise vested.  If you return to active employment prior to the Final Return Date, any outstanding Restricted Shares will remain outstanding following that date in accordance with their terms.  In the event that you do not return to active employment with the Company or its Affiliates prior to the Final Return Date, then except as set forth in your Employment Agreement or as otherwise determined by the Committee in its discretion or as otherwise set forth in Section 3 of this Award Agreement, your rights with respect to your outstanding Restricted Shares for which the Vesting Date has not yet occurred will immediately terminate upon the Final Return Date, and you will be entitled to no further payments or benefits with respect thereto. 

(iii)  In the event that your employment with the Company is subject to an Employment Agreement, and prior to the earlier of (x) the expiration or termination of such Employment Agreement and (y) the final Vesting Date, the Company determines that you shall no longer be required to perform services for the Company or its Affiliates as specified in your Employment Agreement even though your Employment Agreement will remain in effect until its scheduled expiration date, then provided that you continue to comply with the terms of your Employment Agreement (but, for the avoidance of doubt, excluding any terms requiring you to perform such services as the Company has determined you are no longer required to perform), solely for purposes of Sections 3 and 4 of this Award Agreement, you will be deemed to remain employed until the earlier of (A) the scheduled expiration date of your Employment Agreement and (B) March 15 of the year following the year in which you ceased to perform services for the Company and its Affiliates.  Upon the earlier of the events described in clauses (A) and (B) of the immediately preceding sentence, your employment with the Company and its Affiliates will be deemed to terminate, and your rights with respect to any outstanding Restricted Shares for which the Vesting Date has not yet occurred will terminate, and you will be entitled to no further payments or benefits with respect thereto.  For the avoidance of doubt, except as otherwise set forth in your Employment Agreement, in no event will the scheduled expiration of your Employment Agreement, or termination of your employment for any reason thereafter, be deemed to be a termination of your employment that is subject to Section 3(a)(iv) or 3(a)(v) of this Award Agreement.

(iv)  In the event that your employment with the Company is terminated due to an involuntary termination by the Company without cause (as defined in your Employment Agreement) or a termination by you for good reason (as defined in your Employment Agreement), except as otherwise set forth in Section 3(b) of this Award Agreement, any then outstanding Restricted Shares that you hold pursuant to this Agreement shall be treated as follows.  If such termination occurs prior to the date on which the Committee determines that the Performance Goal has been achieved, the service requirements for all such outstanding Restricted Shares shall be deemed to have been met.  On the applicable Determination Date, if the Committee determines that the Performance Goal has been achieved, all outstanding Restricted Shares shall immediately vest.  If, on the final Determination Date, the Committee determines that the Performance Goal has not been achieved, then all such Restricted Shares shall be immediately forfeited in accordance with Section 4 of this Award Agreement.  If such termination occurs on or following the date on which the Committee determines that the Performance Goal has been achieved, provided that the Committee has determined that the Performance Goal has been achieved, all outstanding Restricted Shares will be treated as time-based awards pursuant to the relevant provision of your Employment Agreement.  Notwithstanding any provision of this Section 3(a)(iv) or Section 3(b) of this Award Agreement to the contrary, in the event of a change of control (as defined in your Employment Agreement) following a termination of employment without cause or for good reason, but prior to the date 

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on which the Committee determines that the Performance Goal has been achieved, any then outstanding Restricted Shares will immediately vest upon such change of control. 

(v)  In the event that your employment with the Company is terminated due to incapacity (as defined in your Employment Agreement) or death, regardless of whether such termination occurs prior to, on or after the applicable Determination Date, then all outstanding Restricted Shares shall be treated as time-based vesting awards and be subject to the relevant provision(s) of your Employment Agreement, provided that, in the event such termination occurs on or after the final Determination Date, the Committee has determined that the Performance Goal has been achieved.  In the event of any termination pursuant to this Section 3(a)(v), any Restricted Shares that do not vest pursuant to your Employment Agreement will be forfeited pursuant to Section 4 of this Award Agreement.

(b)  Vesting following a Change of Control.  In the event of a change of control (as defined in your Employment Agreement) prior to the date on which the Committee determines that the Performance Goals has been achieved, the Performance Goal shall be deemed to have been achieved, but, except as explicitly set forth in this Section 3(b) or Sections 3(a)(iv) and 3(d) of this Award Agreement, all outstanding service requirements shall continue and each portion of the outstanding Restricted Shares shall vest on the applicable Service Completion Date.  For the avoidance of doubt, if a change of control occurs prior to the date on which the Committee determines that the Performance Goal has been achieved but following the applicable Service Completion Date, the Vesting Date shall be deemed to be the effective date of the change of control.  Notwithstanding the foregoing, and subject to the procedures set forth in your Employment Agreement, if, during the one-year period following a change of control, your employment is terminated by the Company without cause (as defined in your Employment Agreement) or you terminate your employment for good reason (as defined in your Employment Agreement), then all outstanding Restricted Shares will immediately vest.  For purposes of this Section 3(b), in the event that you are no longer subject to an Employment Agreement on the date your employment terminates due to its prior expiration, the terms “cause” and “good reason” shall have the meanings set forth in your Employment Agreement immediately prior to its expiration.  

(c)  Delivery of Shares.  On or following the date of this Award Agreement, the Restricted Shares subject to this Award Agreement shall be evidenced in such manner as the Company shall determine.  Any certificate or book entry issued or entered in respect of such Restricted Shares shall be registered in your name and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to the Restricted Shares, substantially in the following form:

“The transferability of the shares of stock represented hereby is subject to the terms and conditions (including forfeiture) of the DreamWorks Animation SKG, Inc. Amended and Restated 2008 Omnibus Incentive Compensation Plan and an Award Agreement, as well as the terms and conditions of applicable law.  Copies of such Plan and Agreement are on file at the offices of DreamWorks Animation SKG, Inc.”

The Company shall require that the certificates or book entry credits evidencing title of the Restricted Shares be held in custody by the Company or such other custodian as may be designated by the Committee or the Company, until such time, if any, as your rights with respect to such Restricted Shares become vested, and the Company may require that, as a condition of your receiving the Restricted Shares, you shall have delivered to the Company or such other custodian as may be designated by the Committee or the Company a stock power, endorsed in blank, relating to such Restricted Shares.  Upon the vesting of your rights with respect to such Restricted Shares, the legend set forth above shall be removed from the certificates or book entry credits evidencing such Shares.

(d)  Failure to Assume or replace in a Change of Control.  In the event of a change of control prior to the final Vesting Date, unless provision is made in connection with such change of control for (i) assumption of outstanding Restricted Shares or (ii) substitution for such Restricted Shares of new time-based restricted shares of a successor corporation or its “parent corporation” (as defined in Section 

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424(e) of the Code) or “subsidiary corporation” (as defined in Section 424(f) of the Code) with appropriate adjustments as to the number and kinds of shares that preserve the material terms and conditions of such outstanding Restricted Shares as in effect immediately prior to the change of control (including, without limitation, with respect to the vesting schedules, the intrinsic value of the Restricted Shares as of the change of control and transferability of the Restricted Shares), all such Restricted Shares shall vest as of immediately prior to such change of control.

SECTION 4.  Forfeiture of Restricted Shares.  Unless the Committee determines otherwise, and except as otherwise provided in your Employment Agreement or in Section 3 of this Award Agreement, if your employment with the Company and its Affiliates terminates prior to the final Vesting Date, your rights with respect to all Restricted Shares for which the relevant Vesting Date has not occurred shall immediately terminate, and you will be entitled to no further payments or benefits with respect thereto.  Furthermore, unless the Committee determines otherwise, and except as otherwise provided in your Employment Agreement or in Section 3 of this Award Agreement, if the Committee determines on the final Determination Date that the Performance Goal has not been achieved, your rights with respect to all of the Restricted Shares shall immediately terminate, and you will be entitled to no further payments or benefits with respect thereto.

SECTION 5.  Voting Rights; Dividend Equivalents.  Prior to the date on which your rights with respect to a Restricted Share become vested, you shall not be entitled to exercise any voting rights with respect to such Restricted Share and shall not be entitled to receive dividends or other distributions with respect thereto.

SECTION 6.  Non-Transferability of Restricted Shares.  Unless otherwise provided by the Committee in its discretion, Restricted Shares may not be sold, assigned, alienated, transferred, pledged, attached or otherwise encumbered except as provided in Section 9(a) of the Plan.  Any purported sale, assignment, alienation, transfer, pledge, attachment or other encumbrance of such Restricted Shares in violation of the provisions of this Section 6 and Section 9(a) of the Plan shall be void.

SECTION 7.  Withholding, Consents and Legends.  (a)  Withholding.  The delivery of Share certificates pursuant to Section 3(c) of this Award Agreement is conditioned on satisfaction of any applicable withholding taxes in accordance with this Section 7(a) and Section 9(d) of the Plan.  In the event that there is withholding tax liability in connection with the vesting of Restricted Shares, you may satisfy, in whole or in part, any withholding tax liability by having the Company withhold from the number of Restricted Shares in which you would be entitled to vest, a number of Shares having a Fair Market Value (which shall either have the meaning set forth in the Plan or shall have such other meaning as determined by the Company in accordance with applicable withholding requirements) equal to such withholding tax liability.

(b)  Consents.  Your rights in respect of the Restricted Shares are conditioned on the receipt to the full satisfaction of the Committee of any required consents that the Committee may determine to be necessary or advisable (including, without limitation, your consenting to the Company’s supplying to any third-party recordkeeper of the Plan such personal information as the Committee deems advisable to administer the Plan).

(c)  Legends.  The Company may affix to certificates for Shares issued pursuant to this Award Agreement any legend that the Committee determines to be necessary or advisable (including to reflect any restrictions to which you may be subject under any applicable securities laws).  The Company may advise the transfer agent to place a stop order against any legended Shares.

SECTION 8.  Successors and Assigns of the Company.  The terms and conditions of this Award Agreement shall be binding upon and shall inure to the benefit of the Company and its successors and assigns.

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SECTION 9.  Committee Discretion.  Subject to the terms of the Plan, this Award Agreement and your Employment Agreement, the Committee shall have full and plenary discretion with respect to any actions to be taken or determinations to be made in connection with this Award Agreement, and its determinations shall be final, binding and conclusive.

SECTION 10.  Dispute Resolution.  (a)  Jurisdiction and Venue.  Notwithstanding any provision in your Employment Agreement, you and the Company irrevocably submit to the exclusive jurisdiction of (i) the United States District Court for the District of Delaware and (ii) the courts of the State of Delaware for the purposes of any suit, action or other proceeding arising out of this Award Agreement or the Plan.  You and the Company agree to commence any such action, suit or proceeding either in the United States District Court for the District of Delaware or, if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in the courts of the State of Delaware.  You and the Company further agree that service of any process, summons, notice or document by U.S. registered mail to the other party’s address set forth below shall be effective service of process for any action, suit or proceeding in Delaware with respect to any matters to which you have submitted to jurisdiction in this Section 10(a).  You and the Company irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Award Agreement or the Plan in (A) the United States District Court for the District of Delaware or (B) the courts of the State of Delaware, and hereby and thereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

(b)  Waiver of Jury Trial.  You and the Company hereby waive, to the fullest extent permitted by applicable law, any right either of you may have to a trial by jury in respect to any litigation directly or indirectly arising out of, under or in connection with this Award Agreement or the Plan.

(c)  Confidentiality.  You hereby agree to keep confidential the existence of, and any information concerning, a dispute described in Section 10 of this Award Agreement, except that you may disclose information concerning such dispute to the court that is considering such dispute or to your legal counsel (provided that such counsel agrees not to disclose any such information other than as necessary to the prosecution or defense of the dispute).

SECTION 11.  Notice.  All notices, requests, demands and other communications required or permitted to be given under the terms of this Award Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three Business Days after they have been mailed by U.S. registered mail, return receipt requested, postage prepaid, addressed to the other party as set forth below:

	
		
	If to the Company:
	DreamWorks Animation SKG, Inc.  
1000 Flower Street
Glendale, CA  91201
Attention: General Counsel
Telecopy: (818) 695-6123

	If to you:
	At the address specified in the Company’s records

The parties may change the address to which notices under this Award Agreement shall be sent by providing written notice to the other in the manner specified above.

SECTION 12.  Headings.  Headings are given to the Sections and subsections of this Award Agreement solely as a convenience to facilitate reference.  Such headings shall not be deemed in any 

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way material or relevant to the construction or interpretation of this Award Agreement or any provision thereof.

SECTION 13.  Amendment of this Award Agreement.  The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate this Award Agreement prospectively or retroactively; provided, however, that, except as set forth in Section 14(d) of this Award Agreement,  any such waiver, amendment, alteration, suspension, discontinuance, cancelation or termination that would materially and adversely impair your rights under this Award Agreement shall not to that extent be effective without your consent (it being understood, notwithstanding the foregoing proviso, that this Award Agreement and the Restricted Shares shall be subject to the provisions of Section 7(c) of the Plan).

SECTION 14.  Section 409A.  (a)  It is intended that the provisions of this Award Agreement comply with Section 409A, and all provisions of this Award Agreement shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.

(b)  Neither you nor any of your creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A) payable under this Award Agreement to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment.  Except as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to you or for your benefit under this Award Agreement may not be reduced by, or offset against, any amount owing by you to the Company or any of its Affiliates.

(c)  If, at the time of your separation from service (within the meaning of Section 409A), (i) you shall be a specified employee (within the meaning of Section 409A and using the identification methodology selected by the Company from time to time) and (ii) the Company shall make a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then the Company shall not pay such amount on the otherwise scheduled payment date but shall instead pay it, without interest (except as otherwise provided in your Employment Agreement), on the first Business Day after such six-month period.

(d)  Notwithstanding any provision of this Award Agreement to the contrary, in light of the uncertainty with respect to the proper application of Section 409A, the Company reserves the right to make amendments to this Award Agreement as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A.  In any case, you shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on you or for your account in connection with this Award Agreement (including any taxes and penalties under Section 409A), and neither the Company nor any of its Affiliates shall have any obligation to indemnify or otherwise hold you harmless from any or all of such taxes or penalties.

SECTION 15.  Counterparts.  This Award Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  You and the Company hereby acknowledge and agree that signatures delivered by facsimile or electronic means (including by fax, email or “pdf”) shall be deemed effective for all purposes.

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IN WITNESS WHEREOF, the parties have duly executed this Award Agreement as of the date first written above.

	
		
	DREAMWORKS ANIMATION SKG, INC.,

	by

	 
	 

	 
	Name:   

	 
	Title:   

	
		
	Lew Coleman

	 
	 

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SCHEDULE A
Performance Goal with respect to the Restricted Shares

		
	1.
	The Performance Goal for the Restricted Shares shall be achieved if the Company realizes cumulative positive earnings before interest income (net) and taxes (“EBIT”) for either of the Performance Periods, determined as described in this Schedule A.  

		
	2.
	For the purpose of determining whether the Performance Goal has been achieved, the following items shall be excluded:  

		
	a.
	Share repurchases;

		
	b.
	Losses on the disposition or acquisition of a business;

		
	c.
	Expenses associated with changes in accounting principles, practices or interpretations;

		
	d.
	Losses on discontinued operations;

		
	e.
	Effects of the Tax Receivable Agreement, dated October 27, 2004, between the Company and DW Investment II, Inc., as may be amended or modified from time to time;

		
	f.
	Amount of film amortization expense that represents interest expense capitalized to films and other productions;

		
	g.
	For acquisitions occurring prior to December 31, 2013 and which include contingent earnout payments, income or losses, and fair value adjustments of contingent earnout payments, from such acquisitions;

		
	h.
	Any stock compensation expense associated with performance-vested equity awards recognized during the applicable Performance Period;

		
	i.
	Expenses classified as provisions for a recapitalization; 

		
	j.
	Write downs of capitalized development costs;

		
	k.
	Expenses from restructuring initiatives, including severance and salary continuation payments;

		
	l.
	Third-party legal fees or any payments associated with litigation;

		
	m.
	Third-party legal, audit, consulting or banking costs associated with capital raising, merger or acquisition activity; and

		
	n.
	Other expenses or losses that are disclosed as a special, one-time or extraordinary item in accordance with generally accepted accounting principles.

		
	3.
	In each instance, the above-referenced items must be determined in accordance with generally accepted accounting principles.

		
	4.
	The Committee may, in its sole discretion, include any of the items set forth in paragraph 2 above in its calculation of EBIT if the inclusion has the effect of decreasing the level of EBIT achieved, but in no event may such item or items be included if such inclusion would have the effect of increasing the amount of EBIT.

		
	5.
	Unless the Committee determines otherwise, and except as otherwise provided in your Employment Agreement or in Section 3 of this Award Agreement, if the Company’s EBIT was zero or less for both of the applicable Performance Periods, the Performance Goal will not have been achieved, and you will not be entitled to payment with respect to any of the Restricted Shares pursuant to this Award Agreement, and such Restricted Shares will expire and be forfeited.EX-10.2

 Exhibit 10.2 

PEPCO HOLDINGS, INC. 

RESTRICTED STOCK AWARD AGREEMENT 

(Performance-Based/162(m)) 

THIS RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”) is made this      day of
            , 20     (the “Date of Grant”), by and between Pepco Holdings, Inc. (the “Company”), and
            , an employee of the Company (the “Participant”). 

WHEREAS, by action taken on             , 20    , the
Committee approved a grant to the Participant, subject to the continued employment of the Participant through the Date of Grant, of an award (the “Award”) of              shares
(the “Target Shares”) of performance-based Restricted Stock, pursuant to the Pepco Holdings, Inc. 2012 Long-Term Incentive Plan, as it may be amended, amended and restated and/or restated from time to time (the “Plan”). 

WHEREAS, the Company desires to enter into an agreement with the Participant on the terms and conditions hereinafter set forth,
evidencing the grant to the Participant of the Award approved by the Committee. 
 NOW, THEREFORE, in consideration of the mutual
covenants hereinafter set forth and for other good and valuable consideration, the Company and Participant agree as follows: 
 1.
Restricted Stock Award. 
  

	 	(a)	The Company hereby grants to the Participant the Award consisting of the Target Shares. 

  

	 	(b)	The shares of Restricted Stock that may be received under this Award are subject to the terms and conditions set forth herein, including the performance-based vesting requirements set forth on Schedule A attached
hereto, and in the Plan. The performance period begins on                      and ends on
                     (the “Performance Period”), as described in more detail on Schedule A attached hereto. The performance
objectives and related business criteria with respect to the Performance Period (collectively, the “Performance Goals”) and other relevant information related to this Award are set forth on Schedule A attached hereto.

  

	 	(c)	The restriction period of this Award (the “Restriction Period”) shall begin on the Date of Grant and end on the date that the Committee determines that the Performance Goals have been satisfied as provided on
Schedule A. 

  

	 	(d)	The Committee has determined that this Award (to the extent vested) is intended to be “performance-based compensation” as defined in Section 162(m) (“Section 162(m)”) of the Internal Revenue
Code of 1986, as amended, including the Treasury Regulations promulgated thereunder (the “Code”). 

  
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 2. Vesting. 
  

	 	(a)	Subject to compliance with Section 12 hereof, the restrictions on the shares of Restricted Stock subject to this Award shall remain in effect through the end of the Restriction Period and shall lapse (i) only
to the extent that the Performance Goals are satisfied as provided on Schedule A, and (ii) except as otherwise provided in Section 2(c) hereof, if the Participant remains continuously employed by the Company or a Subsidiary until
the end of the Performance Period. 

  

	 	(b)	Except as otherwise provided by Section 2(c) hereof, if the employment of the Participant by the Company or any Subsidiary terminates prior to the end of the Performance Period, this Award and the Target Shares
shall be immediately forfeited in their entirety. 

  

	 	(c)	Upon (i) the Disability or death of the Participant during the Performance Period and prior to any termination of Participant’s employment with the Company or any Subsidiary, or (ii) the Retirement (as
defined below) of the Participant during the Performance Period, the number of unvested Target Shares shall be reduced by multiplying such number of Target Shares by a fraction, (A) the numerator of which shall be the number of days in the
Performance Period that have elapsed as of the day immediately prior to such Retirement, Disability or death, and (B) the denominator of which shall be 365. The balance of the unvested Target shares of Restricted Stock evidenced by this
Agreement shall be immediately forfeited by the Participant without compensation or other consideration. For purposes of this Agreement, the term “Retirement” shall mean separating from service with the Company or any Subsidiary on or
after attaining age fifty-five (55) and achieving at least ten (10) years of continuous employment with the Company or any Subsidiary. 

3. Rights as Stockholder. The Participant, as the owner of record of the Target Shares, is entitled to all the rights of a stockholder
of the Company, including the right to vote and the right to receive dividends payable either in stock or in cash, subject, however, to the restrictions stated in this Agreement and referred to in the legend described in Section 5 below that
appears on any certificate representing Stock issued under this Agreement. If the Participant would otherwise receive any cash dividends in respect of shares of Restricted Stock covered under this Agreement, such dividends shall be immediately
reinvested in shares of Restricted Stock based upon the Fair Market Value of such Restricted Stock on the date of payment of the dividend. If the Participant receives any additional Stock by reason of being the holder of shares of Restricted Stock
under this Award (including as a result of reinvestment of cash dividends), all such additional Stock shall be Restricted Stock subject to the provisions of this Agreement (including vesting conditions) and any certificates evidencing ownership of
the additional shares of Restricted Stock, if any, shall bear the legend described in Section 5 below. 

  
 -2- 

 4. Restrictions on Transferability of Award or Stock. Neither this Award nor any Stock
covered hereby (including any additional Restricted Stock described in Section 3 hereof) may be sold, exchanged, transferred, pledged, hypothecated, assigned, alienated or otherwise disposed (each, a “Disposition”), and shall not be
subject to attachment or other legal process except (i) to the extent specifically mandated and directed by applicable state or Federal statute, (ii) as provided in Section 8 hereof with respect to withholding of applicable taxes,
(iii) to the extent that the restrictions have lapsed in accordance with Section 2 hereof, or (iv) pursuant to a Permitted Transfer. Any Disposition or attempted Disposition of this Award or the Stock (or any interest herein) in
violation of this Section 4 shall be null and void and the Company shall have the right to disregard such Disposition on its books and records. 

5. Escrow; Restrictive Legends. Following the execution of this Agreement, the Company shall cause the Target Shares to be represented
by a certificate issued in the name of the Participant. The Company shall retain possession of any and all certificates representing the Target Shares or any additional shares of Restricted Stock described in Section 3 hereof, and shall place
all shares of Restricted Stock covered by this Award in escrow until such shares become transferable as provided in Section 4 hereof. However, to the extent that the Company issues certificates representing the shares of Restricted Stock before
such shares are transferable, such certificates shall have affixed thereto a legend in substantially the following form, in addition to any other legends that may be required under federal or state securities laws: 

THE DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS, CONDITIONS AND RESTRICTIONS ON TRANSFER (INCLUDING
FORFEITURE) SET FORTH IN A RESTRICTED STOCK AWARD AGREEMENT DATED AS OF             , 20    , BETWEEN PEPCO HOLDINGS, INC. AND THE HOLDER OF RECORD OF THIS CERTIFICATE.
NO SALE, EXCHANGE, TRANSFER, PLEDGE, HYPOTHECATION, ASSIGNMENT, ALIENATION OR OTHER DISPOSITION OF SUCH SECURITIES SHALL BE VALID OR EFFECTIVE (AND ANY PURPORTED OR ATTEMPTED DISPOSITION SHALL BE NULL AND VOID) EXCEPT UPON FULFILLING ALL OF THE
TERMS AND CONDITIONS OF SUCH AGREEMENT. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE TO THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE CORPORATE SECRETARY OF PEPCO HOLDINGS, INC. 

6. Terms and Conditions. The terms and conditions included in the Plan are incorporated herein by reference, and to the extent that any
conflict or ambiguity may exist between the terms and conditions included in this Agreement and the terms and conditions included in the Plan, the terms and conditions included in the Plan shall control. By execution of this Agreement, the
Participant acknowledges receipt of a copy of the Plan and further agrees to be bound thereby and by the actions of the Committee and/or the Board pursuant to the Plan. 

  
 -3- 

 7. No Employment Right; Tenure. This Agreement shall not constitute a contract of
employment between the Company or any Subsidiary and the Participant. The Participant’s right, if any, to serve the Company as a director, officer, employee or otherwise shall not be enlarged or otherwise affected by this Agreement or his or
her designation as a Participant under the Plan. 
 8. Tax Withholding. The Participant acknowledges this Award may give rise to a
tax liability and a withholding obligation associated therewith. The Company or a Subsidiary may withhold up to, but no more than, the minimum applicable statutory federal, state and/or local taxes (collectively, “Tax Withholding
Requirements”) by the withholding or retention of Stock by the Company or a Subsidiary from another award or payment made on the date this Award first becomes taxable. 

9. Section 83(b) Election. The Participant understands that it may be beneficial in certain circumstances to elect to be taxed at
the time the Award is granted rather than when and as the restrictions lapse by filing an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, within 30 days from the Date of Grant. Such an election must be filed with
the Internal Revenue Service office with which the Participant files his annual income tax return and should be made by registered or certified mail, return receipt requested. A copy of any such election must be furnished to the Company promptly
after it is filed and included with the Participant’s income tax return. A form for making such an election has been provided to the Participant. 

10. Securities Law Compliance. The Participant agrees that any resale of Stock covered by the Award shall comply in all respects with
the requirements of all applicable securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and the respective rules and
regulations promulgated thereunder) and any other law, rule or regulation applicable thereto, as such laws, rules, and regulations may be amended from time to time. The Company shall not be obligated to permit the resale of any Stock if such resale
would violate any such requirements. 
 11. Other Plans and Agreements. Any gain realized by the Participant pursuant to this
Agreement shall not be taken into account as compensation in the determination of the Participant’s benefits under any pension, savings, group insurance, or other benefit plan maintained by the Company or a Subsidiary, except as determined by
the board of directors of such company or as expressly provided under the terms of such other plan. The Participant acknowledges that receipt of this Agreement shall not entitle the Participant to any other benefits under the Plan or any plans
maintained by the Company or a Subsidiary. 
 12. Section 162(m) Compliance. Notwithstanding anything in this Agreement to the
contrary but in addition to the provisions contained in the Plan and in this Agreement with respect to the payment of compensation intended to comply with Section 162(m): 
  

	 	(a)	In no event shall this Award vest in whole or in part unless the Committee has certified in writing that the Performance Goals hereunder shall have been satisfied, and the Retirement, Disability or death of the
Participant shall serve only to reduce the number of shares of Restricted Stock that may vest if and when such Performance Goals are satisfied. 

  
 -4- 

	 	(b)	No adjustment that is otherwise permitted under this Agreement shall be made to this Award in whole or in part if such adjustment would prevent the Award (or any other Award, whether to the Participant or any other
participant) from satisfying the requirements for “performance-based compensation” of Section 162(m). 

 13.
Committee Authority. The Committee shall have complete discretion in the exercise of its rights, powers, and duties under this Agreement and the Plan. Any interpretation or construction of any provision of, and the determination of any
question arising under, this Agreement shall be made by the Committee in its sole discretion and shall be final, conclusive, and binding. The Committee may designate any individual or individuals to perform any of its functions hereunder. 

14. Changes in Capitalization. The shares of Restricted Stock under this Award shall be subject to the provisions of the Plan relating
to adjustments for changes to the Company’s capitalization. The Award shall not affect the right of the Company or any Subsidiary to reclassify, recapitalize or otherwise change its capital or debt structure or to merge, consolidate, convey any
or all of its assets, dissolve, liquidate, windup or otherwise reorganize. 
 15. Section 409A. This Agreement shall be
interpreted to ensure, to the fullest extent possible, that the payments contemplated hereby do not result in adverse tax consequences under Section 409A of the Code. 

16. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, without giving
effect to the choice of law principles thereof. 
 17. Binding Effect. This Agreement shall inure to the benefit of, and be binding
on, the Company and its successors and assigns, and the Participant and his or her heirs, administrators, executors, other legal representatives and permitted assigns, whether so expressed or not. 

18. No Waiver. No waiver of any provision of this Agreement will be valid unless in writing and signed by the person against whom such
waiver is sought to be enforced, nor will failure to enforce any right under this Agreement constitute a continuing waiver of the same or a waiver of any other right hereunder. 

19. Further Assurances. The Participant hereby agrees to take whatever additional action and execute and deliver all agreements,
instruments and other documents the Company may deem necessary or advisable to carry out or effect any of the obligations or restrictions imposed on the Participant or the Award pursuant to the express provisions of the Agreement and/or the Plan.

  
 -5- 

 20. Definition of Terms. Capitalized terms used herein but not otherwise defined in this
Agreement shall have the meanings ascribed to them under the Plan. 
 21. Entire Agreement. This Agreement and the Plan constitute
the entire understanding and agreement between the parties hereto with regard to the subject matter hereof, and they supersede all other negotiations, understandings and representations (if any) made by and between such parties. 

[Signatures appear on the following page] 

  
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 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officers, under its corporate seal, and the Participant has hereunder set his hand and seal, all as of the Date of Grant. 
  

									
	ATTEST:	 		 	PEPCO HOLDINGS, INC.
					
	By:	 	  
	 		 	By:	 	  

	Name:	 		 		 	Name:	 	
	Title:	 		 		 	Title:	 	
				
		 		 		 	PARTICIPANT:
				
		 		 		 	  

  
 -7- 

 Schedule A 

Performance Goals and Related Information

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