Exhibit 10.3
DYNEGY INC.
CHANGE IN CONTROL SEVERANCE PAY PLAN
(Effective April 3, 2008)

 

 

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I. INTRODUCTION.
Dynegy Inc., a Delaware corporation (the “Company”), and its participating
subsidiaries hereby adopt the Dynegy Inc. Change in Control Severance Pay Plan
(the “Plan”). The Plan replaces the First Supplemental Plan to the Dynegy Inc.
Severance Pay Plan, which terminated by its terms on April 2, 2008, and provides
severance benefits to certain eligible Employees whose employment is terminated
under certain circumstances during specified periods before, on or after a
Change in Control of the Company.
II. DEFINITIONS.
2.1 Definitions. Where the following words and phrases appear in the Plan, they
shall have the respective meanings set forth below, unless their context clearly
indicates otherwise:
(a) “Board” shall mean the Board of Directors of the Company.
(b) “Cause” shall mean any termination of a Participant’s employment with an
Employer based upon a determination by the Plan Administrator that the
Participant (1) has been convicted of a misdemeanor involving moral turpitude or
a felony; (2) has failed to substantially perform the duties of such Participant
to the Employer (other than such failure resulting from the Participant’s
incapacity due to physical or mental condition) which results in a materially
adverse effect upon the Employer, financial or otherwise; (3) has refused
without proper legal reason to perform the Participant’s duties and
responsibilities to the Employer; or (4) has breached any material corporate
policy maintained and established by the Employer that is applicable to the
Participant, provided such breach results in a materially adverse effect upon
the Employer, financial or otherwise. Notwithstanding the foregoing, nothing
contained in this definition or the Plan is intended or shall be construed to
alter a Participant’s at-will (or, only in the case of a Participant who is a
party to a written employment contract with the Employer signed by the Company’s
Chief Executive Officer, contractual) employment relationship between a
Participant and his Employing Company.
(c) “Change in Control” shall mean the occurrence of any of the following
events: (i) a merger of the Company with another entity, a consolidation
involving the Company, or the sale of all or substantially all of the assets or
equity interests of the Company to another entity if, in any such case, (A) the
holders of equity securities of the Company 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 the Company 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) the dissolution or liquidation of the
Company, but excluding a reorganization pursuant to chapter 11 of Title 11, U.S.
Code, as amended; (iii) 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 the Company has not engaged in a merger or consolidation,
the Company, or (B) if the Company has engaged in a merger or consolidation, the
resulting entity;

 

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(iv) 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
(v) the Board (or the Compensation 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 the Company 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
“Company” 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.
(d) “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
(e) “Code” shall mean the Internal Revenue Code of 1986, as amended.
(f) “Company” shall mean Dynegy Inc., a Delaware corporation, and any successor
thereto.
(g) “Compensation Committee” shall mean the Compensation and Human Resources
Committee of the Board unless and until the Board designates another committee
of the Board to serve in such capacity.
(h) “Contract Employees” shall mean persons whom the Employer regards as
Contract Employees. Contract Employees are not eligible to participate in this
Plan.
(i) “Contractor’s Employees” shall mean persons working for a company providing
goods or services (including temporary employee services) to the Employer whom
the Employer does not regard to be its common law employees, as evidenced by the
Employer’s failure to withhold taxes from their compensation, even if the
persons are determined to be the Employer’s common law employees. Contractor’s
Employees are not eligible to participate in this Plan.
(j) “Disability” shall mean that the Participant is determined under the
long-term disability plan sponsored by the Company that covers the Participant
to have a disability that entitles him or her to benefits under that plan.
(k) “Effective Date” shall mean April 3, 2008; provided, that if a subsidiary
subsequently adopts the Plan, the Effective Date for such subsidiary and its
Participants shall be the date specified in the document by which the subsidiary
adopts the Plan.

 

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(l) “Employee” shall mean any Full-time and active employee employed by the
Employing Company who is paid through the payroll department of the Company or
the Employing Company; provided, however, Employee shall not mean an individual
who is hired by an Employer on or after the effective date of the particular
Change in Control. Temporary or Part-Time Employees, Foreign Employees,
independent contractors, Contract Employees, Contractors’ Employees, Project
Employees, and Leased Employees are not “Employees” under the Plan. Employees
covered by a collective bargaining agreement are not “Employees” unless an
agreement has been negotiated with the bargaining representative for coverage
under the Plan.
(m) “Employer” or “Employing Company” shall mean the Employee’s direct employer,
the Company and such other of the subsidiaries of the Company as have adopted
the Plan and have been admitted to participation by the Plan Administrator (and
any successors). The subsidiaries participating in the Plan are listed on
Attachment A.
(n) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.
(o) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
(p) “Foreign Employees” shall mean any persons who are not on a U.S. payroll of
the Company or an Employer. Foreign Employees are not eligible to participate in
this Plan.
(q) “Full-time” shall mean any Employee who is employed by the Employing Company
to regularly work 40 or more hours per week.
(r) “Good Reason” shall mean the occurrence, without the Participant’s express
written consent, within sixty (60) days before the date upon which a Change in
Control occurs or within one (1) year thereafter, of any one or more of the
following:
(1) a change in the location of the Participant’s principal place of employment
by fifty (50) miles or more from the location where he was principally employed;
or
(2) his written offer of, assignment to, or placement in a position within an
Employing Company that provides a materially lower base salary.
(s) “Involuntary Termination” shall mean any termination of a Participant’s
employment with the Employers which:
(1) does not result from a voluntary resignation by such Participant (other than
a resignation pursuant to clause (2) of this Section 2.1(t); or
(2) results from a Termination for Good Reason by such Participant; provided,
however, that the term “Involuntary Termination” shall not include a termination
for Cause or any termination as a result of such Participant’s death or
Disability.

 

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(t) “Leased Employees” shall mean persons who are the Company or Employers’
leased employees, within the meaning of Code Section 414(n). Leased Employees
are not eligible to participate in this Plan.
(u) “Notice of Termination for Good Reason” shall mean a notice from a
Participant to the Company that shall indicate the specific termination
provision or provisions of the Plan relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
Termination for Good Reason. The failure of a Participant to set forth in the
Notice of Termination for Good Reason any facts or circumstances which
contribute to the showing of Good Reason shall not waive any right hereunder or
preclude asserting such fact or circumstance in enforcing his or her rights
hereunder. The Notice of Termination for Good Reason shall provide for a date of
termination not less than thirty (30) nor more than sixty (60) days after the
date such Notice of Termination for Good Reason is delivered to and acknowledged
by the General Counsel of the Company.
(v) “Participant” shall mean each Employee other than an Employee who is a
participant in the Dynegy Inc. Executive Severance Pay Plan, the Dynegy Inc.
Executive Change in Control Severance Pay Plan, or any other severance benefit
plan or arrangement (other than the Dynegy Inc. Severance Pay Plan) maintained
by the Company or any of its affiliates.
(w) “Part-Time Employees” are the employees of the Company or an Employer who
are employed to regularly work less than 40 hours per week. Part-Time Employees
are not eligible to participate in this Plan.
(x) “Plan” shall mean the Dynegy Inc. Change in Control Severance Pay Plan, as
amended from time to time.
(y) “Plan Administrator” shall mean the Dynegy Inc. Benefit Plans Committee.
(z) “Plan Year” shall mean the twelve-month period beginning each January 1st.
(aa) “Project Employees” shall mean persons employed to work on discrete
projects or creative matters. Project Employees are not eligible to participate
in this Plan, except to the extent the Company, by written notice, elects to
extend Plan participation to the individual.
(bb) “Severed Participant” shall have the meaning set forth in Section 3.1
hereof.
(cc) “Short Term Incentive Compensation Plan or Arrangement” shall mean any of
the Employer’s short term annual bonus plans in existence on the Effective Date
or any additional or successor plans, including, but not limited to, the Dynegy
Inc. Incentive Compensation Plan.

 

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(dd) “Specified Employee” shall mean a Participant who is a specified employee
within the meaning of Treasury Regulation Section 1.409A-1(i).
(ee) “Specified Employee Effective Date” shall mean the April 1st next following
a Specified Employee Identification Date.
(ff) “Specified Employee Identification Date” shall mean December 31st of each
Plan Year.
(gg) “Termination For Good Reason” shall mean a resignation of employment by the
Participant by a written Notice of Termination for Good Reason given to the
General Counsel of the Company within ninety (90) days after the occurrence of
the Good Reason event, unless such circumstances are substantially corrected
prior to the date of termination specified in the Notice of Termination for Good
Reason.
(hh) “Vice President of Human Resources” means the individual who, at the time
in question, holds a title of Vice President or above and/or is the highest
ranking officer in the Human Resources Department of the Company.
(ii) “Week of Pay” shall mean the Participant’s base weekly rate of pay,
excluding overtime, bonuses, commissions, premium pay, shift differentials,
employee benefits, expense reimbursements, and similar amounts. However, the
fact that amounts are withheld from the Participant’s pay for taxes, employee
benefits, or other reasons will be disregarded in calculating the Participant’s
Week of Pay amount. If the Participant is paid by the hour, the Participant’s
base weekly rate of pay is the Participant’s regular hourly rate multiplied by
the Participant’s scheduled hours per week (e.g., forty (40) hours per week for
Full-time Employees). The Participant’s base weekly rate of pay shall be
determined by the Plan Administrator in its sole discretion.
(jj) “Year of Service” shall mean each continuous year (365 days) of service
with an Employer without a break in service.
III. SEVERANCE BENEFITS.
3.1 Severance Benefits. Subject to the terms and conditions hereof, if a
Participant’s employment with the Employer or a successor thereto is terminated
as a result of an Involuntary Termination occurring (1) in connection with, but
in no event earlier than 60 days prior to, a Change in Control, or (2) on or
within one (1) year after the date upon which a Change in Control occurs, such
Participant (a “Severed Participant”) shall be entitled to receive the following
severance benefits (subject to any deductions and other conditions otherwise
described herein):
(a) A lump sum cash payment in an amount equal to two (2) Weeks of Pay for each
Year of Service with the Employer and a pro-rated amount for any fraction
thereof. The minimum lump sum cash payment payable to a Severed Participant
under this Section 3.1(a) is an amount equal to twenty-four (24) Weeks of Pay.
The maximum lump sum cash payment payable to a Severed Participant under this
Section 3.1(a) is an amount equal to fifty-two (52) Weeks of Pay;

 

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(b) A lump sum cash payment in an amount equal to the sum of (1) (A) the
aggregate annual target opportunity under all applicable Short Term Incentive
Compensation Plans or Arrangements that could have been earned by the Severed
Participant for the fiscal year of the Employer during which such Involuntary
Termination occurs (determined as if all applicable goals and targets had been
satisfied in full), multiplied by (B) a fraction, the numerator of which is the
number of days during the period beginning on the first day of such fiscal year
and ending an the date of such Involuntary Termination, and the denominator of
which is three hundred sixty-five (365), and (2) the aggregate annual target
opportunity under all applicable Short Term Incentive Compensation Plans or
Arrangements earned by the Severed Participant but not yet paid for the prior
fiscal year of the Company;
(c) The Employer shall permit the Severed Participant, at his or her election,
to continue to participate for up to three (3) months following the Severed
Participant’s termination of employment in the Company’s group health care plan
that provides medical and dental coverage that the Severed Participant was
participating in immediately prior to such termination of employment; provided,
however, that (1) Severed Participant must continue to pay the premiums for such
coverage based on the premiums paid by active employees of the Company for
similar coverage, (2) the availability and terms of such coverage, and the
required premium payments, shall adjust as such availability, terms and premiums
are adjusted for active employees, and (3) such coverage shall immediately end
upon the Severed Participant obtaining new employment and eligibility for
similar coverage (and the Severed Participant is obligated hereunder to promptly
report such eligibility to the Company). The Severed Participant’s election of
this extended coverage shall not adversely affect in any way Severed
Participant’s right to health care continuation coverage as required under Part
6 of Title I of ERISA, except that the period of such health care continuation
coverage under the Company’s group health care plan shall be reduced by the
period of Severed Participant’s extended coverage as provided under the terms of
this Section 3.1(c); and
(d) Outplacement assistance benefits shall be provided in such amount and in
such form as is determined by the Plan Administrator in its sole discretion, but
in no event will such benefits be provided beyond the end of the second calendar
year following the calendar year in which the Severed Participant’s employment
was terminated. The Plan Administrator’s determinations pursuant to this
Section 3.1(d) shall be made on a case-by-case basis with respect to any
individual Severed Participant or group of Severed Participants, and the Plan
Administrator shall consider such factors as it deems relevant. Outplacement
assistance benefits hereunder may vary among individual Severed Participants.
The value of such outplacement assistance benefits will not be paid to any
Severed Participant in a lump sum, but the payments necessary to provide such
benefits will be made directly to an outplacement assistance provider. The
Company may, in its sole discretion, provide outplacement assistance benefits to
the Severed Participant prior to the Severed Participant’s execution of the
Release (as defined in the following paragraph) or the expiration of any
revocation period described in the Release.

 

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If the Severed Participant is provided such outplacement assistance benefits
prior to execution of the Release or the expiration of any revocation period
described in the Release, then, after execution of the Release and the
expiration of any revocation period, the Severed Participant will not be
entitled to outplacement assistance benefits in excess of those that the Plan
Administrator had already determined would be provided to such Severed
Participant. Failure to execute the Release within the specified time period or
the revocation of the Release will result in cessation of any outplacement
assistance benefits.
In order to receive severance benefits under the Plan, the Severed Participant
must execute an Agreement and Release (the “Release”) in the form customarily
provided by the Company acknowledging his or her agreement to the terms and
conditions of this Plan, the receipt of the severance payment and other benefits
and releasing the Company, the Employers and other persons and entities
designated by the Company or Employers from any liability arising from his or
her employment or termination. The Release shall be furnished to the Severed
Participant as soon as practical after the date on which the Company or the
Severed Participant receives the notice of termination, but in no event later
than the latest date that will insure that the applicable revocation period for
the Release will expire not later than March 1 of the year following the year in
which the Severed Participant’s employment is terminated.
The Severance pay provided in Subsections 3.1(a) and (b) will be paid to the
eligible Severed Participant in one lump sum within fourteen (14) days after the
Severed Participant executes the Release and the expiration of any revocation
period described in the Release in accordance with the terms and conditions of
this Plan but no later than March 15th of the calendar year following the year
of the Severed Participant’s termination. All severance pay benefits will be
subject to withholding for applicable employment and income taxes. The Severed
Participant is responsible for informing the Plan Administrator of any change in
the Severed Participant’s mailing address by written letter delivered to the
Vice President of Human Resources until the Severed Participant’s severance
benefits have been paid in full.
In the event that a Severed Participant dies after the termination of his or her
employment and before having received the full amount of the severance benefits
for which he or she was qualified, benefits provided by the Plan will be paid to
the legal representative of the Severed Participant’s estate unless the Severed
Participant notifies the Plan Administrator in writing that he or she
specifically designates a different beneficiary. Benefits will be paid as soon
as practicable after receipt of notice of proof of such death; provided,
however, that if the Severed Participant had not signed the Release prior to his
or her death, then a condition to the receipt of benefits will be the execution
of the Release by the executor or other authorized representative of the Severed
Participant’s estate.
Each of the payments of severance, continued medical and outplacement benefits
stated above are designated as separate payments for purposes of the short-term
deferral rules under Treasury Regulation Section 1.409A-1(b)(4)(i)(F), the
exemption for involuntary terminations under separation pay plans under Treasury
Regulation Section 1.409A-1(b)(9)(iii), the exemption for medical expense
reimbursements under Treasury Regulation Section 1.409A-1(b)(9)(v)(B) and the
exemption for in-kind benefits under Treasury
Regulation Section 1.409A-1(b)(9)(v)(C). As a result, (1) payments that are made
on or before the 15th day of the third month of the calendar year following the
applicable year of termination, and (2) any additional payments that are made on
or before the last day of the second calendar year following the year of the
Severed Participant’s termination and do not exceed the lesser of two times the
Severed Participant’s base salary in the year prior to his or her termination or
two times the limit under Code Section 401(a)(17) then in effect, are exempt
from the requirements of Code Section 409A.

 

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Notwithstanding any provision in the Plan to the contrary, severance benefits,
in excess of those described in the preceding paragraph or that are otherwise
subject to the six (6)-month payment delay requirements of Code Section 409A, to
a Specified Employee, shall not commence until at least six (6) months after the
date the Specified Employee terminates employment. Whether a Participant is a
Specified Employee shall be determined annually by the Plan Administrator, as of
each Specified Employee Identification Date. Any Participant so identified shall
be a Specified Employee for the entire twelve (12)-month period beginning on the
following Specified Employee Effective Date. To the extent the payments to be
made during the first six (6)-month period following a Specified Employee’s
termination of employment exceed such exempt amounts described in the preceding
paragraph or are otherwise subject to the six (6)-month payment delay
requirements of Code Section 409A, those payments shall be withheld and the
amount of the payments withheld will be paid in a lump sum, without interest,
during the seventh month after termination.
The amount of severance pay received under this Plan shall be reduced by any
amounts the Severed Participant owes to the Employer at the time the severance
pay is paid; provided, however, to the extent the amount of severance pay is not
exempt from Code Section 409A, then amounts may only be offset for such
non-exempt severance pay where the amount does not exceed $5,000 in any Plan
Year, the debt is incurred in the ordinary course of the Participant’s
employment relationship, and the reduction is made at the same time and in the
same amount as the debt otherwise would have been due and collected from the
Severed Participant. The determination of what amounts are owed by the Severed
Participant will be made in the sole discretion of the Plan Administrator. Any
such offset to the severance amount for which the Severed Participant is
eligible will be made in conformance with applicable state law that is not
otherwise preempted by ERISA.
3.2 Mitigation: Benefits Under Employment Agreement. Except as provided in
Section 3.1(c), a Participant shall not be required to mitigate the amount of
any payment or benefit provided for in this Article III by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for in this Article III be reduced by any compensation or benefit earned by the
Participant as the result of employment by another employer or by retirement
benefits. The benefits under the Plan are in addition to any other benefits to
which a Participant is otherwise entitled; provided, however, that (a) the
benefits under the Plan are not intended to duplicate the benefits to which
Participant is entitled under an employment agreement or a severance agreement
between such Participant and the Employer, and if a Participant is entitled to a
severance payment under such agreement, then the Participant shall not be
entitled to benefits under the Plan, and (b) a Participant who is entitled to
receive benefits under the Plan shall not be eligible to receive any other
benefits under any other severance plan, any other supplement thereto, or any
other severance arrangement maintained by the Employer or any of its affiliates.
3.3 Non-Disclosure and Non-Disparagement. For purposes of this Section 3.3, the
term “Company” shall refer to the Company and its subsidiaries. Participants
have access to certain information concerning the Company that is confidential
and proprietary and constitutes valuable and unique property of the Company. By
accepting severance benefits under the Plan, the Participant agrees that he or
she will not, at any time after his or her employment terminates, disclose to
others, use, copy, or permit to be copied, except pursuant to his or her duties
on behalf of the Company or its successors, assigns, or nominees, any
“Confidential Information” (defined below) of the Company (whether or not
developed by the Participant) without the prior written consent of the General
Counsel of the Company.

 

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By accepting severance benefits under the Plan, the Participant understands and
agrees that all “Records” (defined below) also constitute Confidential
Information of the Company and that the Participant’s obligations continue at
all times after his or her employment. These records do not become any less
confidential or proprietary to the Company because the Participant may commit
some of it to memory or because the Participant may otherwise maintain it
outside of the Company’s offices.
By accepting severance benefits under the Plan, the Participant agrees that he
or she will never take any Company property for the Participant’s own use or
benefit. On or before the date of the Participant’s Involuntary Termination, the
Participant will deliver to the Company, as determined appropriate by the
Company, all correspondence, memoranda, notes, Records, client lists, computer
systems, programs, or other documents and all copies thereof made, composed or
received by the Participant, solely or jointly with others, and which are in the
Participant’s possession, custody, or control at such date and which are related
in any manner to the past, present, or anticipated business of the Company.
“Confidential Information” includes but is not limited to, any formula, pattern,
compilation, program, device, method, technique, or process, that: (1) derives
independent economic value, actual or potential, from not being generally known
in the public or to other persons who can obtain economic value from its
disclosure or use, and (2) is the subject of efforts that are reasonable under
the circumstances to maintain its secrecy. “Confidential Information” also
includes any information or knowledge pertaining to the operation of the
Company’s business that is not generally available to the public and maintained
as confidential by the Company, including but not limited to the Company’s trade
secrets; Records; plans; strategies; potential acquisitions; costs; prices;
systems for buying, selling and/or trading natural gas, coal and electricity (or
other similar commodities); client lists; pricing policies; financial
information; the names of and pertinent information regarding suppliers;
computer programs; policy or procedure manuals; training and recruiting
procedures; accounting procedures; the status and content of the Company’s
contracts with its suppliers or clients; and servicing methods and techniques at
any time used, developed, or investigated by the Company before or during the
Participant’s tenure of employment. By accepting severance benefits under the
Plan, the Participant further agrees to maintain in confidence any confidential
information of third parties received as a result of the Participant’s
employment and duties with the Company.
“Records” include, but are not limited to, original, duplicated, computerized,
memorized, handwritten or any other form of information, whether contained in
materials provided to the Participant by the Company, or by any institution
acquired by the Company, or compiled by the Participant in any form or manner
including information in documents or electronic devices, such as software, flow
charts, graphs, spreadsheets, resource materials, video tapes, calendars, day
timers, planners, rolodexes, or telephone directories maintained in personal
computers, laptop computers, personal digital assistants or any other device.

 

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These are examples of the types of information the Company considers
Confidential Information. All of this information is important because, among
other things, it is unknown to the Company’s competitors, thus they are unable
to use it to compete with the Company. Accordingly, this information creates a
competitive advantage for the Company and is economically valuable. Recognizing
the irreparable nature of the injury that could be caused by the Participant’s
breach of the requirements and agreements contained herein and that money
damages would be inadequate compensation to the Company, the Participant agrees
that any breach of the non-disclosure requirements and agreements contained
herein by the Participant should be the proper subject for immediate injunctive
relief, specific performance and other equitable relief to the Company. Nothing
herein shall be construed as prohibiting the Company from pursuing any other
remedies available to the Company for such breach or threatened breach,
including the recovery of damages from the Participant. Each Participant further
agrees to communicate the contents of this Section 3.3 to any prospective
employer or associate.
Neither any Participant nor the Company shall make or authorize any public
statement, oral or written, disparaging the other in their respective business
interests and affairs. Notwithstanding the foregoing, neither party shall be
(1) required to make any statement which it or he or she believes to be false or
inaccurate, or (2) restricted in connection with any litigation, arbitration or
similar proceeding or with respect to a response to any subpoena or other legal
process.
3.4 No Benefits for Improper Conduct. Anything to the contrary herein
notwithstanding, a Participant who has engaged in conduct described in
Section 2.1(b), whether or not such conduct resulted in a termination for Cause,
shall not be entitled to receive benefits under the Plan. If the Plan
Administrator determines that a Participant engaged in conduct described in
Section 2.1(b), the Plan Administrator shall be entitled to recover, in any
manner the Plan Administrator in its discretion deems necessary or appropriate
for such recovery, from such Participant any payment or benefit provided
pursuant to this Article III and any and all expenses incidental to or necessary
for such recovery.
3.5 Effect of Plan on other Company Benefits. A Participant eligible for
benefits under the Plan may be eligible to continue participation in certain
other Company benefits and/or benefit plans. However, continuation in various
Company plans is subject to the terms and conditions of the applicable plan
documents or insurance contracts in effect on the date of the Participant’s
termination. A Participant’s rights under the other plans, documents or
insurance contracts are not affected by his or her decision to participate or to
not participate in the Plan. The severance benefits provided under the Plan
shall be in lieu of the severance benefits, if any, that would otherwise be
provided under the Dynegy Inc. Severance Pay Plan or any other Company severance
plan or agreement upon such termination.

 

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IV. GENERAL PROVISIONS.
4.1 Termination Status. For purposes of severance benefits under the Plan that
are exempt from the provisions of Code Section 409A, an eligible Participant
shall terminate employment on the date he or she ceases to be categorized as an
employee on the payroll system of the Employer. For purposes of severance
benefits under the Plan that are not exempt from the provisions of Code
Section 409A, an eligible Participant shall terminate employment on the date he
or she ceases to perform services for the Employer, or such services decrease to
a level that is 50 percent or less of the average level of services performed by
the eligible Participant over the immediately preceding 36-month period. The
last day of an eligible Participant’s active employment with the Employer shall
be considered such Participant’s termination date for purposes of the Employer’s
employee benefit plans, unless provided otherwise pursuant to such plan. For
purposes of a Participant’s eligibility for continued health benefits under
COBRA, the COBRA eligibility period shall run from the Participant’s termination
date.
4.2 Other Participating Employers. The provisions of the Plan shall be
applicable with respect to each Employer separately, and amounts payable
hereunder shall be paid solely by the Employer which employs the particular
Participant; provided, however, that the determination of whether a Change in
Control has occurred shall be made based solely on the application of that term
to the Company.
4.3 Amendment and Termination.
(a) The Plan may be amended, terminated or discontinued in whole or in part, at
any time and from time to time at the discretion of the Company; provided,
however, that the Plan may not be amended, terminated or discontinued within one
(1) year following a Change in Control (except for an amendment to the
administrative provisions of the Plan that is considered by counsel to be
required pursuant to applicable law). Any Plan amendment must be signed by the
Executive Vice President, Administration of the Company or the individual who,
at the time in question, is the highest ranking officer over administration in
the Company, to be effective. The Plan shall automatically terminate one
(1) year after the occurrence of a Change in Control; provided, however, that if
prior to such termination date a Severed Participant has terminated employment
with the Employer as a result of an Involuntary Termination or a Participant has
been subject to a Good Reason event, then the Plan shall remain in effect with
respect to such Severed Participant or Participant in accordance with its terms.
(b) For purposes of this Section 4.3, the termination of an Employer’s
participation in the Plan shall be deemed to be an amendment to the Plan, but
the commencement of participation by an Employer in the Plan shall not be
considered an amendment to the Plan. In the event of an Employer’s termination
of participation in the Plan, such Employer shall remain liable and responsible
for all amounts payable by such Employer under the Plan.
4.4 Employment Status. The adoption and maintenance of the Plan shall not be
deemed to be a contract of employment between the Employer and any person or to
be consideration for the employment of any person. Nothing herein contained
shall be deemed to (a) give any person the right to be retained in the employ of
the Employer, (b) restrict the right of the Employer to discharge any person at
any time, (c) give the Employer the right to require any person to remain in the
employ of the Employer, or (d) restrict any person’s right to terminate his
employment at any time.

 

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4.5 Obligations Unfunded. All benefits due to a Participant under the Plan are
unfunded and unsecured and are payable out of the general funds of the Employer.
One or more Employers may establish a “grantor trust” for the payment of
benefits and obligations hereunder, the assets of which shall be at all times
subject to the claims of creditors as provided for in such trust.
4.6 Withholding. Any benefits paid or provided pursuant to the Plan shall be
subject to any required tax withholding.
4.7 Severability. Any provision in the Plan that is prohibited or unenforceable
in any jurisdiction by reason of applicable law shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability
without invalidating or affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
4.8 The Plan’s Relation to other Descriptive Matter. The Plan shall contain no
terms or provisions except those set forth herein, or as hereafter amended in
accordance with the provisions of Section 4.3 of the Plan. If any description
made in any other document is deemed to be in conflict with any provision of the
Plan, the provisions of the Plan shall control.
4.9 Non-alienation of Benefits. No benefits payable under the Plan shall be
subject to anticipation, alienation, sale, transfer, assignment, pledge or other
encumbrance, and any attempt to do so shall be void.
4.10 Governing Law. The provisions of the Plan shall be construed, administered
and enforced according to ERISA and, to the extent not preempted, by the laws of
the State of Delaware.
4.11 Effect on other Plans. Subject to the provisions of 3.5, the Plan has no
effect on the rights of any participant under any other employee benefit plan or
policy sponsored by the Company such as any profit-sharing, medical, dental or
hospitalization, life insurance, AD&D, incentive compensation, or Personal Paid
Time plan. Rights under those plans or policies are governed solely by their
terms.
4.12 Miscellaneous. Where the context so indicates, the singular will include
the plural and vice versa. Titles are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of the Plan.
Unless the context clearly indicates to the contrary, a reference to a statute
or document shall be construed as referring to any subsequently enacted,
adopted, or executed counterpart.
4.13 Plan Administration. The administration and operation of the Plan is
directed by the Plan Administrator who is appointed by the Compensation
Committee (or their delegates). The Plan Administrator will have full power to
administer the Plan in all of its details. The Plan Administrator’s power and
authority will include, but will not be limited to, the sole discretion to:

•  
make and enforce such rules and regulations as it deems necessary or proper for
the efficient administration of the Plan or as are required to comply with
applicable law;

 

12

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•  
interpret the Plan and authorize the payment of any benefits under it, its
interpretation thereof to be final and conclusive regarding any employee, former
employee, Participant, former Participant and/or beneficiary;
  •  
decide all questions concerning the Plan and the eligibility of any individual
to participate in the Plan;
  •  
compute the amount of benefits which will be payable to any Participant, former
Participant or beneficiary in accordance with the provisions of the Plan, and to
determine the person or persons to whom such benefits will be paid;
  •  
keep such records and submit such filings, elections, applications, returns or
other documents or forms as may be required under the Code, and applicable
regulations, or under state or local law and regulations;
  •  
appoint such agents, counsel, accountants and consultants as may be required to
assist in administering the Plan; and
  •  
by written instrument, allocate and delegate its fiduciary responsibilities in
accordance with Section 405 of ERISA.

All such rules, regulations, determinations, constructions, decisions and
interpretations made by the Plan Administrator will be final and binding, except
as otherwise required by law. To the extent the Plan Administrator has been
granted discretionary authority under the Plan, the Plan Administrator’s prior
exercise of such authority shall not obligate it to exercise its authority in a
like fashion thereafter.
4.14 Compliance with Code Section 409A. Notwithstanding anything in the Plan to
the contrary, if any Plan provision or benefits under the Plan would result in
the imposition of an additional tax under Code Section 409A and related Treasury
Department regulations and pronouncements (“Section 409A”), that Plan provision
or benefit will be reformed (without the consent of Participants) to avoid
imposition of the applicable tax and no action to comply with Section 409A shall
be deemed to adversely affect the eligible Participant’s right to benefits.
V. CLAIM REVIEW PROCEDURE.
5.1 Authority to Adopt Procedures. The Plan Administrator shall have the power
and authority to establish written procedures for processing claims for Plan
benefits and reviews of Plan benefit claims which have been denied or modified.
Such procedures may be amended and modified from time to time in the discretion
of the Plan Administrator. The procedures as adopted and amended and modified
from time to time by the Plan Administrator are hereby incorporated by reference
as a part of the Plan.

 

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5.2 Summary of Claims Procedures. In order to file a claim for benefits under
the Plan, you must submit to the Vice President of Human Resources (the
“Benefits Administrator”) a written claim for Plan benefits containing a
description of (a) an alleged failure to receive a benefit payable under the
Plan or (b) an alleged discrepancy between the amount of a benefit owed and the
amount of the benefit you received under the Plan. In connection with the
submission of a claim, you may examine the Plan and any other relevant documents
relating to the claim, and you may submit written comments relating to such
claim to the Benefits Administrator. If you need additional information
regarding your claim for benefits, then you can submit a written request to the
Benefits Administrator for such information. Failure to furnish a written claim
description or to otherwise comply with the claim submission procedure will
invalidate your claim unless the Benefits Administrator determines that it was
not reasonably possible to comply with such procedure.
(a) Upon the filing of a claim for benefits, the Benefits Administrator will
determine if the request is clear, and if so, will proceed with the processing
of the claim. If the Benefits Administrator determines that the claim is not
clear, then the claim will be referred to the Plan Administrator for review.
(b) Within 90 days from the date a completed claim for benefits is filed (or
such longer period as may be necessary due to unusual circumstances, but in any
event no longer than the time period described in the next paragraph), the Plan
Administrator will make a decision as to whether the claim is to be approved,
modified, or denied. If the Plan Administrator approves the claim, then the
Benefits Administrator will process the claim as soon as administratively
practicable.
(c) In the event of an “Adverse Benefit Determination” (which includes a denial
or modification of your claim, or an invalidation for failing to follow the
Plan’s claim submission procedures), you will be notified in writing not later
than 90 days following the date the claim was filed (or within 180 days under
special circumstances, in which case you will be informed of the extension and
the circumstances requiring the extension in writing prior to its commencement)
of the following:

  •  
The specific reason or reasons for the Adverse Benefit Determination;
    •  
The Plan provisions upon which the Adverse Benefit Determination is based;
    •  
Any additional material or information necessary to perfect the claim and the
reasons why such material or information is necessary;
    •  
The Plan’s claims review procedure; and
    •  
A description of your right to bring a civil action under ERISA with respect to
the Adverse Benefit Determination upon completion of the Plan’s claims
procedures.

(d) Within 60 days following receipt of an Adverse Benefit Determination, you
may submit a written request to the Plan Administrator for review of such
determination. During this review process, you will have the opportunity to
submit written comments and other information relating to the claim and you will
have reasonable access to, and copies of, all documents and other information
related to the claim free of charge. Any items you submit to the Plan
Administrator will be considered without regard to whether such items were
considered in the initial benefit determination.

 

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(e) Within 60 days following a request for review (or within 120 days under
special circumstances, in which case you will receive written notice of the
extension and the circumstances requiring the extension prior to its
commencement), the Plan Administrator must, after providing you with a full and
fair review, render its final decision in writing (or electronically). However,
the review process may be delayed if you fail to provide information that is
requested by the Plan Administrator. If the Plan Administrator approves the
claim on review, then the Benefits Administrator will process the claim as soon
as administratively practicable. In the event of an Adverse Benefit
Determination on review, the Plan Administrator’s final decision will include:

  •  
The specific reason or reasons for the Adverse Benefit Determination;
    •  
The Plan provisions upon which the Adverse Benefit Determination is based;
    •  
A statement that you are entitled to reasonable access to, and copies of, all
documents and other information related to the claim free of charge; and
    •  
A description of your right to bring a civil action under ERISA with respect to
the Adverse Benefit Determination.

(f) You may, by submitting a written statement to the Plan Administrator,
authorize an individual or entity to pursue your claim for benefits under the
Plan and/or your request for a review of an Adverse Benefit Determination made
with respect to a claim.
(g) Completion of the claims procedures described in this Section 5.2 will be a
condition precedent to the commencement of any legal or equitable action in
connection with a claim for benefits under the Plan by a claimant or by any
other person claiming rights individually or through a claimant.
VI. ERISA RIGHTS.
As a participant in the Plan, you are entitled to certain rights and protections
under ERISA. ERISA provides that all Plan participants shall be entitled to:
6.1 Receive Information About Your Plan and Benefits:
(a) Examine without charge, at the Plan Administrator’s office and at other
specified locations, such as worksites and union halls, all documents governing
the Plan, including insurance contracts and collective bargaining agreements,
and a copy of the latest annual report (Form 5500 Series) filed by the Plan with
the U.S. Department of Labor and available at the Public Disclosure Room of the
Employee Benefits Security Administration.
(b) Obtain, upon written request to the Plan Administrator, copies of documents
governing the operation of the Plan, including insurance contracts and
collective bargaining agreements, and copies of the latest annual report
(Form 5500 Series) and updated summary plan description. The Plan Administrator
may make a reasonable charge for the copies.
6.2 Prudent Actions By Plan Fiduciaries. In addition to creating rights for Plan
participants, ERISA imposes obligations upon the people who are responsible for
the operation of employee benefit plans. The people who operate the Plan, called
“fiduciaries” of the Plan, have a duty to do so prudently and in the interest of
you and other Plan participants and beneficiaries. No one, including your
employer, your union, or any other person may fire you or otherwise discriminate
against you in any way to prevent you from obtaining a welfare benefit or
exercising your rights under ERISA.

 

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6.3 Enforce Your Rights. If your claim for a benefit is denied or ignored, in
whole or in part, you have a right to know why this was done, to obtain copies
of documents relating to the decision without charge, and to appeal any denial,
all within certain time schedules. Under ERISA, there are steps you can take to
enforce the above rights. For instance, if you request a copy of Plan documents
or the latest annual report from the Plan and do not receive them within
30 days, you may file suit in a Federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to $110 a
day until you receive the materials, unless the materials were not sent because
of reasons beyond the control of the administrator. If you have a claim for
benefits that is denied or ignored, in whole or in part, you may file suit in a
state or Federal court. In addition, if you disagree with the Plan’s decision or
lack thereof concerning the qualified status of a domestic relations order, you
may file suit in Federal court. If it should happen that Plan fiduciaries misuse
the Plan’s money, or if you are discriminated against for asserting your rights,
you may seek assistance from the U.S. Department of Labor, or you may file suit
in a Federal court. The court will decide who should pay court costs and legal
fees. If you are successful, the court may order the person you have sued to pay
these costs and fees. If you lose, the court may order you to pay these costs
and fees (for example, if it finds that your claim is frivolous).
6.4 Assistance With Your Questions. If you have any questions about the Plan,
you should contact the Plan Administrator. If you have any questions about this
statement or about your rights under ERISA, or if you need assistance in
obtaining documents from the Plan Administrator, you should contact the nearest
office of the Employee Benefits Security Administration, U.S. Department of
Labor, listed in your telephone directory or the Division of Technical
Assistance and Inquiries, Employee Benefits Security Administration, U.S.
Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You
may also obtain certain publications about your rights and responsibilities
under ERISA by calling the publications hotline of the Employee Benefits
Security Administration.
VII. IDENTIFYING DATA.
The Plan is a welfare benefit plan providing benefits from the general assets of
the Employer. Dynegy Inc. is the plan sponsor. The Plan Year is from January 1
to the following December 31 of each year. The plan sponsor has assigned plan
number 516 to the Plan. The Employer identification number for Dynegy Inc. is
20-5653152.

         
 
  A.   Plan Sponsor  
 
      Dynegy Inc.
 
      1000 Louisiana Street, Suite 5800
 
      Houston, Texas 77002
 
      (713) 507-6400

 

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  B.   Plan Administrator  
 
      Dynegy Inc. Benefit Plans Committee
 
      c/o Executive Vice President, Administration
 
      Dynegy Inc.
 
      1000 Louisiana Street, Suite 5800
 
      Houston, Texas 77002
 
      (713) 507-6400
 
       
 
  C.   Agent for Legal Service of Process  
 
      Dynegy Inc. Benefit Plans Committee
 
      c/o Executive Vice President, Administration
 
      Dynegy Inc.
 
      1000 Louisiana Street, Suite 5800
 
      Houston, Texas 77002

EXECUTED AND EFFECTIVE this 3rd day of April, 2008.

            DYNEGY INC.
      By:   /s/ J. Kevin Blodgett         J. Kevin Blodgett        Executive
Vice President, Administration   

 

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Attachment A
Subsidiaries Participating in the
Dynegy Inc. Change in Control Severance Pay Plan

1.  
Dynegy Marketing and Trade;
  2.  
Dynegy Midwest Generation, Inc.;
  3.  
Dynegy Northeast Generation, Inc;
  4.  
Dynegy Energy Services, Inc.;
  5.  
Dynegy Operating Company;
  6.  
Sithe Energies, Inc.;
  7.  
Sithe Energies Power Services, Inc.; and
  8.  
Dynegy Power Corp.