Performance Unit Award Agreement

Genon Energy, Inc. 2010 Omnibus Incentive Plan 2011 Performance Unit Award Agreement

Exhibit 10.5
GENON ENERGY, INC.
2010 OMNIBUS INCENTIVE PLAN

2011 PERFORMANCE UNIT AWARD AGREEMENT
To: [Omnibus Incentive Plan Participant]:
Congratulations on your selection as a recipient of performance units (“Performance Units”) under the GenOn Energy, Inc. 2010 Omnibus Incentive Plan (the “Plan”). This Award Agreement (“Agreement”) and the Plan together govern your rights and set forth all of the conditions and limitations affecting such rights.
Terms used in this Agreement that are defined in the Plan will have the meanings ascribed to them in the Plan.
  (i)  
Termination. A “termination” of employment with the Company includes a termination of employment with a Subsidiary (other than a direct transfer of employment between Subsidiaries or the Company and a Subsidiary).
  (ii)  
Retirement. “Retirement” means termination of employment other than for Cause on or after the date when you are at least 55 years old and have at least five years of service (based on your employment with the Company and its Subsidiaries or predecessor companies).
  (iii)  
Cause. “Cause” means: (i) your willful and continued failure to substantially perform your duties with the Company (other than any such failure resulting from Disability), as determined by the Company; or (ii) willfully engaging in conduct (other than conduct covered under (i) above) which is demonstrably and materially injurious to the Company, monetarily or otherwise, as determined by the Company, including, but not limited to, conviction of a felony.
If there is any inconsistency between the terms of this Agreement and the terms of the Plan, the Plan’s terms will supersede and replace the conflicting terms of this Agreement.
1.  
Terms. Pursuant to the terms and conditions of the Plan and this Agreement, you have been granted Performance Units as outlined below:
     
Grant Date:
  February 23, 2011
 
Number of Performance Units at Target:
                          
     
Adjustment of Number of Performance Units: See Schedule I to this Agreement for the manner in which your target number of Performance Units will be adjusted based on the short-term incentive (“STI”) performance factor for calendar year 2011.

 


 

2.  
Vesting. Except as provided in Section 3 below and subject to the adjustment described in Schedule 1 to this Agreement, the Performance Units will vest and become non-forfeitable as follows:
 
33 1/3% of the Performance Units will vest on the date the Committee determines the 2011 plan year STI performance factor (“Determination Date”);
 
33 1/3% of the Performance Units will vest on the first anniversary of the Determination Date; and
 
   
the remainder of the Performance Units will vest on the second anniversary of the Determination Date.
   
The performance factor is typically determined during the first quarter of the fiscal year.
3.  
Impact of Change in Employment Status. The Vesting Dates of your Performance Units will change if the status of your employment with the Company changes, according to the following table:
     
Employment Event   Treatment of Unvested Performance Units
Death
  Fully vest (at Target if death occurs prior to the determination of the performance factor for 2011)
Termination due to Disability
  Continue vesting as if in active employment
Termination due to Retirement
  Continue vesting as if in active employment
Involuntary termination other than for Cause
  Vest in any Performance Units scheduled to vest on the Vesting Date next following termination; forfeit remainder, if any
Involuntary termination for Cause
  Forfeit
Voluntary resignation
  Forfeit
4.  
Book Entry Account. Within a reasonable time after the date of this Agreement, the Company shall instruct its transfer agent or stock plan administrator to establish a book entry account representing the Performance Units in your name effective as of the Grant Date, provided that the Company shall retain control of such account until the Performance Units have become vested in accordance with this Agreement and shares of Common Stock have been issued in settlement of the Performance Units. The number of Performance Units credited to your account shall be adjusted as provided in Schedule I to this Agreement.
 
5.  
Distribution of Shares. You shall receive one share of Common Stock in satisfaction of each vested Performance Unit credited to your account, which shall be registered in your name and transferable by you, on the date on which such Performance Units vest.
 
6.  
Stockholder Rights; Dividend Equivalents. The Performance Units do not confer on you any rights of a stockholder of the Company unless and until shares of Common Stock are in fact issued to you in connection with the vested Performance Units. However, if and when cash dividends or other cash distributions are paid or distributed with respect to the Common Stock while the Performance Units are outstanding, the dollar amount of such dividends or distributions with respect to the number of shares of Common Stock then underlying the Performance Units shall be reflected in your account. Any such cash dividends or other cash distributions shall vest and be paid in cash if and at such times the underlying Performance Units are vested and paid.

 

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7.  
Transferability. No rights granted under this Agreement can be assigned or transferred, whether voluntarily or involuntarily, by operation of law or otherwise, except by will or the laws of descent and distribution. In the event of any transfer or assignment of rights granted under this Agreement in accordance with this Section 7, the person or persons, if any, to whom such rights are transferred by will or by the laws of descent and distribution shall be treated after your death the same as you under this Agreement. Any attempted transfer or assignment of rights under this Agreement prohibited under this Section 7 shall be null and void.
 
8.  
Change in Control. Upon a Change in Control, the Performance Units will become fully vested and nonforfeitable as of the date of the Change in Control. If a Change in Control occurs prior to the determination of the STI performance factor for 2011, the number of Performance Units that become fully vested and nonforfeitable is the target number reflected in this Agreement.
 
9.  
Withholding; Code Section 409A. The Company has the right to deduct applicable taxes from any payment under this Agreement and withhold, at the time of vesting of shares of Common Stock, an appropriate number of shares of Common Stock for payment of required withholding taxes or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. The Fair Market Value of the shares of Common Stock withheld for payment of required withholding taxes must equal no more than the required minimum withholding taxes. The Performance Units granted under this Agreement are intended to comply with or be exempt from Code Section 409A, and ambiguous provisions of this Agreement, if any, shall be construed and interpreted in a manner consistent with such intent.
 
10.  
Notice. Any written notice required or permitted by this Agreement shall be mailed, certified mail (return receipt requested) or hand-delivered. Notice to the Company shall be addressed to the Company’s General Counsel at 1000 Main St., Houston, TX 77002. Notice to you shall be addressed to you at your most recent home address on record with the Company. Notices are effective upon receipt.
 
11.  
Requirements of Law. The granting of Performance Units and the issuance of shares of Common Stock under the Plan will be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
 
12.  
Miscellaneous.
  a.  
Limitation of Rights. The granting of this Award shall not give you any rights to similar grants in future years or any right to be retained in the employ or service of the Company or its Subsidiaries or interfere in any way with the right of the Company or any such Subsidiary to terminate your services at any time, or your right to terminate your services at any time.
  b.  
Severability. If any term, provision, covenant or restriction contained in this Agreement is held by a court or a federal regulatory agency of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions contained in this Agreement shall remain in full force and effect, and shall in no way be affected, impaired or invalidated.
  c.  
Governing Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware.

 

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13.  
Acceptance of Award. You are deemed to accept this Award and to agree that it is subject to the terms and conditions set forth in this Agreement and the Plan unless you provide the Company written notification not later than 30 days after the Grant Date of your rejection of this Award (in which case your Award will be forfeited and you shall have no further right or interest therein as of the Grant Date).
         
  GENON ENERGY, INC.
 
 
  /s/ Karen D. Taylor    
  Karen D. Taylor   
  Senior Vice President, Human Resources and Administration   

 

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SCHEDULE I
GENON ENERGY, INC.
2010 OMNIBUS INCENTIVE PLAN
The Performance Units are adjusted based on the 2011 short-term incentive (“STI”) performance factor approved by the Compensation Committee. The STI performance factor as determined for 2011 establishes the multiplier applied to the total Performance Unit grant. Payouts may range from 0 to 200 percent of your target Performance Unit Award.
Example: 1,000 Performance Units are granted in 2011. STI performance factor as determined during the first quarter of 2012 is 120%.
1,000 Performance Units x 120% = 1,200 units
400 Performance Units vest on the Determination Date in 2012
400 Performance Units vest on the first anniversary of the Determination Date in 2013
400 Performance Units vest on the second anniversary of the Determination Date in 2014
Vested Performance Units will settle in Company stock.

 

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