Document:

ex10-6.htm

    EXHIBIT
10.6

    
 

    NON-QUALIFIED
STOCK OPTION AWARD AGREEMENT

    

    

    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 
(“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 less, after which date the Option
will automatically and without notice terminate and become null and void;
and

    

    (b) if
Employee is determined to be disabled (as defined in the Company’s long term
disability program or plan in which Employee is a participant or, if Employee
does not participate in any such plan, as defined in the Dynegy Inc. Long Term
Disability Plan, as amended, or the successor plan thereto), the Option awarded
hereunder shall immediately vest with respect to all of the remaining Shares and
become fully exercisable without further action by the Committee, and Employee
may exercise the Option, to the extent not previously exercised, in respect of
any or all such Shares at any time up to and including the date three (3) years
after the date of such determination, or the end of the option term, whichever
is less, after which date the Option will automatically and without notice
terminate and become null and void; and

    

    (c) if
Employee’s employment with the Company terminates by reason of retirement by
Employee following (i) the date on which such Employee has reached sixty (60)
years of age and (ii) at least ten (10) years of service as an employee of the
Company or its subsidiaries, the Option awarded hereunder shall continue to
become exercisable in accordance with Section 2(a) of this Agreement, and
Employee may exercise the Option, to the extent not previously exercised, at any
time up to and including the date five (5) years after the date of termination
of Employee’s employment by reason of such retirement, or the end of the option
term, whichever is less, after which date the Option will automatically and
without notice terminate and become null and void; and

    

    (d) if
Employee’s employment with the Company terminates by reason of dismissal by the
Company for Cause, then the Option, to the extent not previously exercised, will
immediately, automatically and without notice or further action by the
Committee, terminate and become null and void; and

    

    (e) if
Employee’s employment with the Company terminates by reason of resignation by
the Employee (except as otherwise provided in Section 3(f) or (g) below) and at
a time when Employee was entitled to exercise the Option, Employee may exercise
the Option, to the extent not previously exercised, with respect to any or all
such number of Shares as to which the Option was exercisable as of the date of
Employee’s termination of employment, at any time up to and including the date
ninety (90) days after the date of termination by reason of such resignation, or
the end of the option term, whichever is less, after which date the Option will
automatically and without notice terminate and become null and void;
and

    

    (f) if
Employee’s employment with the Company terminates by reason of Involuntary
Termination, as such term is defined below, the Option awarded hereunder shall
immediately vest with respect to all remaining Shares and become fully
exercisable without further action of the Committee, and Employee may exercise
the Option, to the extent not previously exercised, at any time up to and
including the date three (3) years after the date of such termination of
employment, or the end of the option term, whichever is less, after which date
the Option will automatically and without notice terminate and become null and
void; and

    

    (g) if
Employee’s employment with the Company is terminated as a result of a Change in
Control Termination, as such term is defined below, occurring (i) in connection
with, but in no event earlier than sixty (60) days prior to, a Change in Control
or (ii) on or within two years after the effective date upon which a Change in
Control occurs, the Option shall become fully vested and immediately exercisable
in full on the effective date of the Change of Control, and such Option shall
remain exercisable from such date for the lesser of: (A) five (5) years from the date of such
Change in Control; (B) the remaining period of time for exercise of the Option
hereunder (irrespective of any mandatory exercise period specified herein that
would otherwise be triggered by the termination of employment of such Employee);
or (C) such period of time (which period of time may end as early as the
consummation of a “Corporate Change,” as such term is defined in the Plan) as
the Committee may determine in connection with or in contemplation of a
Corporate Change in the exercise of its discretion under the Plan, with respect
to which the Committee has the discretion to, among other things, require the
surrender of stock options (which surrender may be in exchange for a cash
payment, if applicable) and to cancel such stock options upon the consummation
of a Corporate Change as further described in the Plan.

    

    (h) For
purposes of this Agreement:

    

    “Base
Salary” shall mean the regular base salary of Employee but excluding all
bonuses, expense reimbursements, benefits paid under any plan maintained by the
Company and all equity awards of any type.

    

    “Cause”
shall mean, and hence arise where, as determined by the Committee in its sole
discretion, Employee (A) has been convicted of a misdemeanor involving moral
turpitude or a felony; (B) has failed to substantially perform the duties of
such Employee to the Company (other than such failure resulting from Employee’s
incapacity due to physical or mental condition) which results in a materially
adverse effect upon the Company, financial or otherwise; (C) has refused without
proper legal reason to perform Employee’s duties and responsibilities to the
Company; or (D) has breached any material corporate policy maintained and
established by the Company that is applicable to Employee, provided such breach
results in a materially adverse effect upon the Company, financial or
otherwise.

    

    “Change
in Control Termination” shall mean Employee’s employment is terminated by the
Company (or a successor thereto) without Cause, or by Employee following: (i) a
significant diminution in Employee’s responsibilities, authority or duties; (ii)
a material reduction in Employee’s Base Salary; or (iii) relocation of
Employee’s principal place of employment by 50 miles or more, all as determined
by the Committee in its sole discretion.

    

    “Involuntary
Termination” shall have the same meaning as specified in the Dynegy Inc.
Executive Severance Pay Plan (as amended and restated effective January 1,
2008).

    

    4. Registration.  The
Company intends to register the Shares for issuance under the Securities Act of
1933, as amended (the “Act”), and to keep such registration effective throughout
the period the Option is exercisable.  In the absence of such
effective registration or an available exemption from registration under the
Act, issuance of the Shares will be delayed until registration of such shares is
effective or an exemption from registration under the Act is
available.  The Company intends to use its best efforts to ensure that
no such delay will occur.  In the event exemption from registration
under the Act is available upon an exercise of the Option, Employee (or the
person permitted to exercise the Option in the event of Employee’s death or
incapacity), if requested by the Company to do so, will execute and deliver to
the Company, in writing, such agreements and other documents containing such
provisions as the Company may require to assure compliance with applicable
securities laws.

    

    Employee agrees that the Shares will
not be sold or otherwise disposed of in any manner which would constitute a
violation of any applicable federal or state securities
laws.  Employee also agrees that (a) the certificates representing the
Shares may bear such legend or legends as the Committee in its sole discretion
deems appropriate in order to assure compliance with applicable securities laws
and (b) the Company may refuse to register transfer of the Shares on the stock
transfer records of the Company, and may give related instructions to its
transfer agent, if any, to stop registration of such transfer, if such proposed
transfer would in the opinion of counsel satisfactory to the Company constitute
a violation of any applicable securities law.

    

    5. Employment
Relationship.  For purposes of this Agreement, Employee shall
be considered to be in the employment of the Company as long as Employee remains
an employee of (a) the Company, (b) an Affiliate (as such term is defined in the
Plan) or (c) a corporation (or a parent or subsidiary of such corporation)
assuming or substituting a new option for the Option.  Any question as
to whether and when there has been a termination of such employment, and the
cause of such termination, shall be determined by the Committee in its sole
discretion, and its determination shall be final and binding on all
parties.

    

    6. Withholding
Taxes.  By Employee’s acceptance hereof, Employee hereby (a)
agrees to reimburse the Company or any Affiliate by which Employee is employed
for any federal, state or local taxes required by any government to be withheld
or otherwise deducted by such corporation in respect of Employee’s exercise of
the Option, (b) authorize the Company or any Affiliate by which Employee is
employed to withhold from any cash compensation paid to Employee or in
Employee’s behalf, an amount sufficient to discharge any federal, state and
local taxes imposed on the Company, or the Affiliate by which Employee is
employed, and which otherwise has not been reimbursed by Employee, in respect of
Employee’s exercise of the Option and (c) agrees that the corporation by which
Employee is employed, may, in its discretion, hold the stock certificates to
which Employee is entitled upon exercise of the Option, as security for the
payment of the aforementioned withholding tax liability, until cash sufficient
to pay that liability has been accumulated, and may, in its discretion, effect
such withholding by retaining Shares issuable upon the exercise of the Option
having a Fair Market Value on the date of exercise which is equal to the amount
to be withheld.

    

    7. Miscellaneous.

    

    (a) This
grant is subject to all the terms, conditions, limitations and restrictions
contained in the Plan.  In the event of any conflict or inconsistency
between the terms hereof and the terms of the Plan, the terms of the Plan shall
be controlling.  In the event of any conflict or inconsistency between
the terms hereof and the terms of the Dynegy Inc. Executive Severance Pay Plan,
including any amendments or supplements thereto, the terms hereof shall be
controlling.

    

    (b) This
grant is not a contract of employment and the terms of Employee’s employment
shall not be affected hereby or by any agreement referred to herein except to
the extent specifically so provided herein or therein.  Nothing herein
shall be construed to impose any obligation on the Company or on any Affiliate
to continue Employee’s employment, and it shall not impose any obligation on
Employee’s part to remain in the employ of the Company or of any
Affiliate.

    

    (c) All
references in this Agreement to any “corporation” shall include a corporation, a
general partnership, a joint venture, a limited partnership, a business trust or
any other lawful business entity.

    

    (d) Any
notices or other communications provided for in this Agreement shall be
sufficient if in writing. In the case of Employee, such notices or
communications shall be effectively delivered when hand delivered to Employee at
his or her principal place of employment or when sent by registered or certified
mail to Employee at the last address Employee has filed with the Company. In the
case of the Company, such notices or communications shall be effectively
delivered when sent by registered or certified mail to the Company at its
principal executive offices.

    

    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.

    

    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.

    

    

    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 stock option
administrator.ex10-7.htm

    EXHIBIT
10.7

    
 

    First
Amendment to Performance Award Agreement

    

    R
E C I T A L S:

    

     

    WHEREAS, pursuant to the
Dynegy Inc. 2002 Long Term Incentive Plan (the “LTIP”), Dynegy Inc. (“Dynegy”)
granted performance units (“Performance Awards”) to certain employees as of
March 4, 2009;

     

    WHEREAS, the terms of such
Performance Award grants, including the performance goals and metrics applicable
to such awards, were set forth in written performance award agreements by and
between Dynegy and each Performance Award grantee (the “Performance Award
Agreements”);

     

    WHEREAS, with respect to
one-third of each Performance Award, payment is based on Dynegy’s Adjusted
EBITDA over the three-year award period;

     

    WHEREAS, the Board of
Directors of Dynegy has appointed the Compensation and Human Resources Committee
(the “Committee”) to administer the LTIP, and Section 2 of the Performance Award
Agreements provide that the Committee has the discretion to adjust the
performance goals to reflect actions undertaken in the best interest of Dynegy
and its shareholders (including, but not limited to, strategic transactions
affecting the performance goals as well as recapitalizations, reorganizations,
mergers, consolidations, split-ups, split-offs, spin-offs, exchanges or other
relevant changes in capitalization or structure of Dynegy);

     

    WHEREAS, Dynegy sold certain
revenue-generating assets to certain LS Power entities effective as of November
30, 2009 (the “LS Power Transaction”), which revenues were included in the
Performance Awards’ Adjusted EBITDA assumptions; and

     

    WHEREAS, given the sale of
such revenue-generating assets in the LS Power Transaction, the Committee
desires to adjust the Adjusted EBITDA assumptions used in determining the
“threshold,” “target,” and “maximum” Adjusted EBITDA levels for 2010 and 2011
and to make a corresponding modification to such “threshold,” “target,” and
“maximum” Adjusted EBITDA levels for the award period;

     

    NOW THEREFORE, effective as of
March 2, 2010, the Committee hereby amends, subject to approval by the Board of
Directors of Dynegy, each Performance Award Agreement by deleting Exhibit 1 of
each Performance Award Agreement and substituting the following Exhibit 1
therefor:

    

    

    Exhibit
1

    

    Performance Unit Award
Summary

    

    For 2009
Long Term Incentive grants made to those at the Managing Director and above
level, the Compensation and Human Resources Committee decided to base two-thirds
of the performance unit awards on long-term stock price performance and
one-third of the performance units awards on accumulated Adjusted EBITDA, each
over a three year period.  The Committee believes these metrics
provide a simple, transparent and meaningful measure of Dynegy’s performance
relative to its long-term goal of creating value for
stockholders.  The material terms of the performance units are
summarized below:

    

    
      	
              ·  

            	
              Denominated
      in $100 units, which are payable in the form of cash or stock, at the
      Compensation and Human Resources Committee’s
  discretion;

            

    

    

    
      	
              ·  

            	
              With
      respect to two-thirds of the award, payment (if any) will be made in
      accordance with Section 3 of the Agreement based on Dynegy’s three-year
      stock price performance;

            

    

    

    
      	
              ·  

            	
              Starting share price is
      the average closing price of Dynegy’s Class A common stock for the month
      February 2009 ($1.67); the Compensation and Human Resources Committee
      determined the starting share price after reviewing and taking into
      account various factors, including:  (1) Dynegy's share price
      and the total shareholder return of similarly sized general industry
      companies over a three year period from December 2005 through December
      2008; (2) the underlying value of Dynegy’s power generation portfolio
      based on various valuation methodologies; and (3) potential growth
      opportunities that may be available to
Dynegy;

            

    

    

    
      	
              ·  

            	
              Ending
      share price will be the average closing price of Dynegy’s Class A common
      stock during the month of February 2012;
and

            

    

    

    
      	
              ·  

            	
              Awards
      are payable at threshold, target, and maximum levels as illustrated in the
      table below.

            

    

    

    Stock
Price Performance Goals for Performance Period

    (March
4, 2009 — March 4, 2012)

    

    
      	 
      	 
      	
              Threshold

            	
              Target

            	
              Maximum

            
	
              Performance
      Goals

            	
              Dynegy
      Inc.

              Achieved
      Share Price*

            	
              $2.50

            	
              $4.00

            	
              $6.00

            
	
              Payment
      Levels**

            	
              %
      of each $100 Performance Unit

            	
              0%

            	
              100%

            	
              200%

            

    

    

    *Achieved
Share Price shall be the ending Share price equal to the average closing Share
price for the month of February 2012 or, if applicable, the ending Share price
determined in accordance with Section 5 of the Agreement in the event of a
Change in Control.

    

    **Payment
levels will be based upon the actual Achieved Share Price and will be
interpolated between Achieved Share Price goals.

    

    
      	
              ·  

            	
              With
      respect to one-third of the award, payment (if any) will be made in
      accordance with Section 3 of the Agreement based on Dynegy’s Adjusted
      EBITDA over the three year award
period;

            

    

    

    
      	
              ·  

            	
              For
      purposes of this Agreement, the term Adjusted EBITDA shall be determined
      based on the “Adjusted EBITDA” public guidance construction disclosed to
      the investing community in December 2008;
and

            

    

    

    
      	
              ·  

            	
              Awards
      are payable at threshold, target, and maximum levels as illustrated in the
      table below.

            

    

    
 

    Adjusted
Performance Goals for Performance Period

     (March
4, 2009 — March 4, 2012)

    

    
      	 
      	
              Threshold

            	
              Target

            	
              Maximum

            
	
              Adjusted
      EBITDA+

            	
              $2.1
      billion

            	
              $2.4
      billion

            	
              $3.0
      billion

            
	
              Payment
      Levels++

            	
              0%

            	
              100%

            	
              200%

            

    

    

    +Calculated
based on Adjusted EBITDA as determined for the fiscal years ending December 31,
2009, December 31, 2010 and December 31, 2011.

    ++Payment
levels will be based upon the Adjusted EBITDA and will be interpolated between
Adjusted EBITDA goals.

    
 

    [Signature
Page Attached]

     

    
      
         

      

      
         

         

      

      
         

      

    

    IN WITNESS WHEREOF, Dynegy has
caused this Performance Award Agreement to be amended by this First Amendment
this 2nd day
of March, 2010, to be effective as stated herein.

     

    

     

    DYNEGY
INC.

     

    
      	By:  	    /s/ J. Kevin
      Blodgett
	 Title:
       	    General Counsel
      & EVP, Administration
	Date:
     	    March 3,
      2010

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