Exhibit 10.17

 

THE AES CORPORATION
SEVERANCE PLAN
(As Amended and Restated December 29, 2008)

 

--------------------------------------------------------------------------------

 

ARTICLE I
GENERAL PROVISIONS

 

1.1                                                                                
ESTABLISHMENT AND PURPOSE.

 

The purpose of the AES Corporation Severance Plan, as amended (the “Plan”) is to
provide eligible employees who are involuntarily terminated from employment in
certain limited circumstances with severance and welfare benefits as set forth
in this Plan.  Benefits payable under this Plan are not, and should not be
construed as vested benefits, and are generally intended for employees who are
involuntarily terminated without cause.  This Plan constitutes a welfare plan
under ERISA and will be interpreted in accordance with the terms of ERISA. This
Plan supersedes any prior severance plans, policies, guidelines, arrangements,
agreements, letters and/or other communication, whether formal or informal,
written or oral sponsored by the Employer and/or entered into by any
representative of the Employer.  The Plan was originally established June 1,
2006,

 

1.2                                                                                
DEFINITIONS.

 

Except as may otherwise be specified or as the context may otherwise require,
for purposes of the Plan, the following terms shall have the respective meaning
ascribed thereto.

 

“Administrator” means the Health and Welfare Benefits Plan LLC or such other
committee or persons designated by it to assume the duties of the Administrator.

 

“Affiliated Employer” mean any corporation which is a member of a controlled
group of corporations (as defined in Section 414(b) of the Code) which includes
the Company; any trade or business (whether or not incorporated) which is under
common control (as defined in Section 414(c) of the Code) with the Company; any
organization (whether or not incorporated) which is a member of an affiliated
service group (as defined in Section 414(m) of the Code) which includes the
Company; and any other entity required to be aggregated with the Company
pursuant to regulations under Section 414(o) of the Code.

 

“Annual Compensation” means (i) an Eligible Employee’s annualized base salary as
in effect as of the Eligible Employee’s Termination Date or (ii) in the event
that an Eligible Employee is an hourly employee, the person’s cumulative base
earnings (excluding bonuses) for the previous completed calendar year prior to
the Eligible Employee’s Terminate Date.  Unless otherwise provided on a Benefits
Schedule, Annual Compensation shall: (i) include pre-tax employee contributions
under any qualified defined contribution retirement plan, salary deferrals under
any unfunded nonqualified deferred compensation plan, and amounts deferred (to
include employee premiums) under a flexible spending account established
pursuant to section 125 of the Code; and (ii) exclude any amounts contributed by
the Employer to any plan established pursuant to section 125 of the Code,
overtime pay, bonuses, shift differential, annual incentive payments, long-term
incentive awards (including but not limited to stock options, restricted stock
and performance unit awards), and any other form of supplemental compensation.

 

1

--------------------------------------------------------------------------------

 

“Benefit Schedule” means any schedule attached to the Plan which sets forth the
benefits of specified groups of Eligible Employees, as approved by the Company
and updated by the Administrator from time to time.

 

“Board” means the Board of Directors of the Company.

 

“Bonus” means an Eligible Employee’s annual target bonus compensation as
established by the Employer and in effect on the Eligible Employee’s Termination
Date.

 

“Cause” means Separation from Service by action of the Employer, or resignation
in lieu of such Separation from Service, on account of the Eligible Employee’s
dishonesty; insubordination; continued and repeated failure to perform the
Eligible Employee’s assigned duties or willful misconduct in the performance of
such duties; intentionally engaging in unsatisfactory job performance; failing
to make a good faith effort to bring unsatisfactory job performance to an
acceptable level; violation of the Employer’s policies, procedures, work
rules or recognized standards of behavior; misconduct related to the Eligible
Employee’s employment; or a charge, indictment or conviction of, or a plea of
guilty or nolo contendere to, a felony, whether or not in connection with the
performance by the Eligible Employee of his or her duties or obligations to the
Employer.

 

“Change in Control”  means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets of
the Company to any Person or group (as that term is used in Section 13(d) (3) of
the Securities Exchange Act of 1934) of Persons, (ii) a Person or group (as so
defined) of Persons (other than management of the Company on the date of the
adoption of this Plan or their Affiliates) shall have become the beneficial
owner of more than 35% of the outstanding voting stock of the Company, or
(iii) during any one-year period, individuals who at the beginning of such
period constitute the Board of Directors (together with any new director whose
election or nomination was approved by a majority of the directors then in
office who were either directors at the beginning of such period or who were
previously so approved, but excluding under all circumstances any such new
director whose initial assumption of office occurs as a result of an actual or
threatened election contest or other actual or threatened solicitation of
proxies or consents by or on behalf of any individual, corporation, partnership
or other entity or group) cease to constitute a majority of the Board of
Directors.   For purposes of this definition, “Affiliate” means: (i) any
Subsidiary of the Company; (ii) any entity or Person or group of Persons that,
directly or through one or more intermediaries, is controlled by the Company;
and (iii) any entity or Person or group of Persons in which the Company has a
significant equity interest, as determined by the Company.

 

“COBRA Coverage” means medical, dental and vision coverage which is required to
be offered to terminated employees under section 4980B of the Code and
section 606 of ERISA; provided, however, that no provision of this Plan shall be
construed to require the Employer to contribute on behalf of an Eligible
Employee towards continuation coverage for a health spending account.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

2

--------------------------------------------------------------------------------

 

“Company” (or “AES”) means The AES Corporation, a Delaware corporation.

 

“Disability Termination” means a Separation from Service: (a) on account of the
Eligible Employee’s failure to return to full-time employment following
exhaustion of short-term disability benefits provided by the Employer;
(b) following the date the Eligible Employee is determined to be eligible for:
(i) long-term disability benefits under any long-term disability insurance
policy or plan maintained by the Employer; or (ii) disability pension or
retirement benefits under any qualified retirement plan maintained by the
Employer; or (c) due to a physical or mental condition that substantially
restricts the Eligible Employee’s ability to perform his or her usual duties, as
determined by the Employer.

 

“Eligible Employee” means any Employee of the Employer who: (i) is not an
Ineligible Employee (within the meaning of Section 2.2); and (ii) who has
completed one Year-of-Service as a full-time Employee.

 

“Employee” means any person who is listed as an employee on the payroll records
of the Employer as a full-time employee.  Any person hired by the Employer as a
consultant or independent contractor and any other individual whom the Employer
does not treat as its employee for federal income tax purposes shall not be an
Employee for purposes of this Plan, even if it is subsequently determined by a
Court or administrative agency that such individual should be, or should have
been, properly classified as a common law employee of the Employer.

 

“Employer” means the Company and any Affiliated Employer that participates in
the Plan with the consent of the Company.  The Administrator shall maintain a
list of participating Employers.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Ineligible Termination” means an Eligible Employee’s Separation from Service on
account of:

 

·                                          The Eligible Employee’s voluntary
resignation, including but not limited to the Eligible Employee’s unilateral
Separation from Service at any time prior to the Termination Date established by
the Employer;

 

·                                          Any Separation from Service that the
Employer determines (either before or after the Separation from Service and
whether or not any notice is given to the employee) the payment of benefits
under the Plan in connection with such Separation from Service would be
inconsistent with the intent and purpose of the Plan;

 

·                                          A Separation from Service in
connection with an Eligible Employee’s failure to return to work immediately
following the conclusion of an approved leave-of-absence.

 

·                                          A Separation from Service for, or on
account of, Cause;

 

3

--------------------------------------------------------------------------------

 

·                                          A Disability Termination;

 

·                                          The Eligible Employee’s death;

 

·                                          The Eligible Employee declines to
accept a New Job Position offered by the Employer that is located within 50
miles of the Eligible Employee’s then assigned work site of the Employer;

 

·                                          The Sale of Business Rule set forth
in Section 2.4 herein; or

 

·                                          The voluntary transfer of employment
from Eligible Employee’s Employer to another AES related entity, irrespective
whether the Eligible Employee is required to relocate or whether the AES related
entity qualifies as an Affiliated Employer.

 

“Involuntary Termination” means an Eligible Employee’s involuntary Separation
from Service that is (i) not an Ineligible Termination and (ii) by action of the
Employer on account of:

 

·                                          Permanent Layoff;

 

·                                          Reduction-in-force;

 

·                                          Permanent job elimination;

 

·                                          The restructuring or reorganization
of a business unit, division, department or other segment;

 

·                                          Termination by Mutual Consent; or

 

·                                          Eligible Employee declines to accept
a New Job Position offered by the Employer that requires the Eligible Employee
to relocate to a work site location that is located greater than 50 miles from
the Employee’s then assigned work site of the Employer; provided, however, that
except as provided in Section 2.4 or in connection with a Separation from
Service following a Change in Control, an Eligible Employee who functions at or
above a Group Manager position (or its equivalent) shall not incur an
Involuntary Termination if such Eligible Employee declines a New Job Position
(regardless of its location) at a time when the Eligible Employee’s existing job
position is being eliminated.

 

“Layoff” means a special program of workforce reduction approved in advance in
writing by the Employer and that is designated as a “Layoff” for purposes of
this Plan.  Notwithstanding the foregoing, a Layoff must result in a permanent
elimination of a job resulting from an internal reorganization of the Employer.

 

4

--------------------------------------------------------------------------------

 

“New Job Position” means: (i) with respect to an Eligible Employee who has
demonstrated inadequate or unsatisfactory performance, as determined by the
Employer, any job position offered by the Employer; or (ii) with respect to all
other Eligible Employees, a full-time job position offered by the Employer that
does not result in a reduction of the Employee’s Annual Compensation.

 

“Participant” has the meaning set forth in Section 2.1.

 

“Person” means any individual, corporation, joint venture, association, joint
stock company, trust, unincorporated organization or government or any agency or
political subdivision thereof.

 

“Section 409A” shall mean Section 409A of the Code, the regulations and other
binding guidance promulgated thereunder.

 

“Separation From Service” shall mean an Eligible Employee’s termination of
employment with the Company and all of its controlled group members within the
meaning of Section 409A of the Code.  For purposes hereof, the determination of
controlled group members shall be made pursuant to the provisions of
Section 414(b) and 414(c) of the Code; provided that the language “at least 50
percent” shall be used instead of “at least 80 percent” in each place it appears
in Section 1563(a)(1),(2) and (3) of the Code and Treas. Reg. § 1.414(c)-2;
provided, further, where legitimate business reasons exist (within the meaning
of Treas. Reg. § 1.409A-1(h)(3)), the language “at least 20 percent” shall be
used instead of “at least 80 percent” in each place it appears.  Whether an
Employee has a Separation from Service will be determined based on all of the
facts and circumstances and in accordance with the guidance issued under
Section 409A.

 

“Specified Employee” means a key employee (as defined in Section 416(i) of the
Code without regard to paragraph (5) thereof) of the Company as determined in
accordance with the regulations issued under Code Section 409A and the
procedures established by the Company.

 

“Subsidiary” means any entity in which the Company owns or otherwise controls,
directly or indirectly, stock or other ownership interests having the voting
power to elect a majority of the board of directors, or other governing group
having functions similar to a board of directors, as determined by the Company.

 

“Termination by Mutual Consent” means an involuntary Separation from Service
pursuant to which the Company agrees, in its sole discretion, that benefits are
payable under this Plan.

 

“Termination Date” means the date of the Eligible Employee’s Separation of
Service (or scheduled date of Separation from Service, as applicable).

 

“Week’s Compensation” means one fifty-second (1/52) of an Eligible Employee’s
Annual Compensation.

 

“Year-of-Service” means each twelve-month period measured from the Eligible
Employee’s first day of employment with an Employer, as reduced to reflect
breaks in service

 

5

--------------------------------------------------------------------------------

 

and/or services performed during such period the Eligible Employee was otherwise
ineligible to participate in the Plan, as determined under the rules promulgated
by the Administrator.  Service with a predecessor employer (that was not an
Affiliated Employer) shall be recognized to the extent such service is
recognized under The AES Corporation Retirement Savings Plan. Service shall also
include services performed prior to the effective date of the Plan.  In the
event an Eligible Employee’s Separation from Service and the Eligible Employee
is subsequently reemployed by the Employer, the Eligible Employee’s service for
calculation of any severance benefits under Article IV of the Plan shall be
based on only upon the Eligible Employee’s service credited since the most
recent date of employment with the Employer.

 

ARTICLE II
PARTICIPATION

 

2.1                                                                                
ELIGIBILITY.

 

Except as otherwise provided in this Article II or a Benefit Schedule, an
Eligible Employee shall, upon execution of the Release in the form specified in
Article III of this Plan in the time and manner prescribed by the Administrator,
be eligible for the severance benefits provided under Article IV of this Plan if
the Eligible Employee’s Separation from Service is by reason of an Involuntary
Termination.  An Eligible Employee who fails to execute the Release in the time
and manner prescribed by the Administrator or who subsequently revokes execution
of the Release in accordance with its terms shall not be entitled to receive
benefits under this Plan.  An Eligible Employee who satisfies all of the terms
and conditions specified in this Plan and who becomes entitled to receive
benefits hereunder shall be referred to herein as a “Participant.”

 

2.2                                                                                
Ineligible Employees. Notwithstanding any provision of this Plan to the
contrary, the following Employees (“Ineligible Employees”) are not eligible to
participate in the Plan:

 

·                                          Any Employee who has been hired to
work on a part-time, seasonal or temporary basis or who is classified as a
part-time, seasonal or temporary Employee, or a student intern on the Employer’s
records;

 

·                                          Any Employee who has been hired by
the Employer to work in a job share position (provided that such Employee is not
otherwise employed on a full-time basis);

 

·                                          An Employee who is member of a
collective bargaining unit to which this Plan has not been specifically extended
by a collective bargaining agreement;

 

·                                          An Employee entitled to a severance
type payment pursuant to any other plan, policy, arrangement, agreement, letter
or other communication sponsored by, or entered into with, or maintained by the
Employer, including but not limited to an employment agreement;

 

·                                          Leased employees, including those
within the meaning of section 414(n) of the Code;

 

6

--------------------------------------------------------------------------------

 

 

·                                          Nonresident aliens (other than those
nonresident aliens to whom the Employer has extended participation in the Plan
with the written consent of the Company);

 

·                                          Any individual who has agreed in
writing that he or she waives his or her eligibility to receive benefits under
the Plan; and

 

·                                          Any Employee who has an enforceable
right to resume employment or to be recalled to employment with the Employer.

 

2.3                                                                                
TRANSFER OF EMPLOYMENT.

 

If an Eligible Employee transfers to a location of AES to which this Plan has
not been extended, such Employee shall cease to be eligible to participate in
this Plan unless the Eligible Employee’s prior Employer has agreed in writing to
continue to extend participation in the Plan to the Employee with the consent of
the Company.

 

2.4                                                                                
SALE OF BUSINESS RULE.

 

An Eligible Employee shall not be eligible to benefits under the Plan if the
Eligible Employee’s Separation from Service is in connection with the sale of
the stock or other ownership interests of the Employer or other related entity,
or the sale, lease, or other transfer of the assets, products, services or
operations of the Employer or other related entity to another organization if
either of the following occurs:

 

·                                          The Eligible Employee is employed by
the new organization immediately following the sale, transfer or lease or is so
employed within a time period specified in an agreement between the Employer and
the new organizations; or

 

·                                          The Employer terminates the
employment of an Eligible Employee who did not accept an offer of employment
from the new organization when the new organization offered a compensation and
benefits package that was, in the aggregate, generally comparable to the
compensation and benefits provided by the Employer; provided that such Eligible
Employee  was not required to relocate to a work site location that is located
greater than 50 miles from the Employee’s then assigned work site of the
Employer.

 

Notwithstanding the foregoing, this section 2.4 shall not apply if an Eligible
Employee’s Separation from Service occurs in connection with a Change of Control
and, as such, any such Separation from Service will not be an Ineligible
Termination solely on the basis of the Sale of Business Rule.

 

7

--------------------------------------------------------------------------------

 

ARTICLE III
RELEASES

 

3.1                                                                                
RELEASE.

 

Notwithstanding anything in this Plan to the contrary, no benefits of any sort
or nature (other than as provided in section 3.3) shall be due or paid under
this Plan to any Eligible Employee unless the Eligible Employee executes a
written release and covenant not to sue, in form and substance satisfactory to
the Employer, in its sole discretion, within the time stated in the release;
provided, however, that in all cases such release must become final, binding and
irrevocable within sixty (60) days following the Eligible Employee’s Termination
Date.  The written release shall waive any and all claims against the Employer
and all related parties including, but not limited to, claims arising out of the
Eligible Employee’s employment by the Employer, the Eligible Employee’s
Separation from Service and claims relating to the benefits paid under this
Plan.  At the sole discretion of the Employer, the release shall also include
such noncompetition, nonsolicitation and nondisclosure provisions as the
Employer considers necessary or appropriate.

 

3.2                                                                                
REVOCATION.

 

The release described in Section 3.1 must be executed and binding on the
Eligible Employee within the timeframe specified by the Company before benefits
are due or paid.  An Eligible Employee who revokes execution of the release in
accordance with the terms of the release shall not be entitled to receive
benefits under the Plan.

 

3.3                                                                                
OUTPLACEMENT SERVICES.

 

Notwithstanding the foregoing provisions of this Article III, the Outplacement
Services set forth under Section 4.3 herein may or may not be provided, at the
discretion of the Employer, to an Eligible Employee prior to the execution of a
release under this Plan.

 

ARTICLE IV
SEVERANCE BENEFITS

 

4.1                                                                                
SEPARATION PAYMENT.

 

4.1.1                        A PARTICIPANT SHALL BE ENTITLED TO RECEIVE A
SEPARATION PAYMENT AS SET FORTH ON THE APPLICABLE BENEFIT SCHEDULE.  THE
SEPARATION PAYMENT WILL BE PAID AT LEAST MONTHLY IN SUBSTANTIALLY EQUAL
INSTALLMENTS AS SALARY CONTINUATION IN ACCORDANCE WITH THE EMPLOYER’S
ESTABLISHED PAYROLL POLICIES AND PRACTICES OVER THE SAME TIME PERIOD UPON WHICH
THE SEPARATION PAYMENT IS BASED.

 

4.1.2                        THE SEPARATION PAYMENTS WILL COMMENCE ON THE
EMPLOYER’S NEXT NORMAL PAY DATE OCCURRING AFTER THE DATE THE ELIGIBLE EMPLOYEE’S
RELEASE BECOMES FINAL, BINDING AND IRREVOCABLE.

 

8

--------------------------------------------------------------------------------

 

4.1.3                        FOR PURPOSES OF SECTION 409A: (I) THE RIGHT TO
SALARY CONTINUATION INSTALLMENT PAYMENTS SHALL BE TREATED AS THE RIGHT TO A
SERIES OF SEPARATE PAYMENTS; AND (II) A PAYMENT SHALL BE TREATED AS MADE ON THE
SCHEDULED PAYMENT DATE IF SUCH PAYMENT IS MADE AT SUCH DATE OR A LATER DATE IN
THE SAME CALENDAR YEAR OR, IF LATER, BY THE 15TH DAY OF THE THIRD CALENDAR MONTH
FOLLOWING THE SCHEDULED PAYMENT DATE.  A PARTICIPANT SHALL HAVE NO RIGHT TO
DESIGNATE THE DATE OF ANY PAYMENT UNDER THE PLAN.  FOR PURPOSES OF THE PLAN,
EACH SALARY CONTINUATION INSTALLMENT PAYMENT IS INTENDED TO BE EXCEPTED FROM
SECTION 409A TO THE MAXIMUM EXTENT PROVIDED UNDER SECTION 409A AS FOLLOWS:
(I) EACH SALARY CONTINUATION INSTALLMENT PAYMENT THAT IS SCHEDULED TO BE MADE ON
OR BEFORE MARCH 15TH OF THE CALENDAR YEAR FOLLOWING THE CALENDAR YEAR CONTAINING
THE TERMINATION DATE IS INTENDED TO BE EXCEPTED UNDER THE SHORT-TERM DEFERRAL
EXCEPTION AS SPECIFIED IN TREAS. REG. § 1.409A-1(B)(4); AND (II) EACH SALARY
CONTINUATION INSTALLMENT PAYMENT THAT IS NOT OTHERWISE EXCEPTED UNDER THE
SHORT-TERM DEFERRAL EXCEPTION IS INTENDED TO BE EXCEPTED UNDER THE INVOLUNTARY
PAY EXCEPTION AS SPECIFIED IN TREAS. REG. § 1.409A-1(B)(9)(III).

 

4.2                                                                                
CONTINUATION OF CERTAIN WELFARE BENEFITS.

 

4.2.1                        MEDICAL/DENTAL/VISION.  FOR THE PERIOD SET FORTH
BELOW IN SECTION 4.2.3 AND BEGINNING IN THE CALENDAR MONTH FOLLOWING THE
CALENDAR MONTH IN WHICH THE TERMINATION DATE OCCURS, THE PARTICIPANT SHALL BE
ELIGIBLE TO PARTICIPATE IN THE EMPLOYER’S MEDICAL, DENTAL AND VISION EMPLOYEE
WELFARE BENEFIT PLANS APPLICABLE TO THE PARTICIPANT ON HIS TERMINATION DATE.  TO
RECEIVE SUCH BENEFITS, THE PARTICIPANT MUST PROPERLY ENROLL IN COBRA COVERAGE,
AND MUST ALSO PAY SUCH PREMIUMS AND OTHER COSTS FOR SUCH COVERAGE AS GENERALLY
APPLICABLE TO THE EMPLOYER’S ACTIVE EMPLOYEES.  THE EMPLOYER WILL CONTINUE TO
PAY ITS SHARE OF THE APPLICABLE PREMIUMS UNDER THE MEDICAL, DENTAL AND VISION
PLANS FOR THE SAME LEVEL AND TYPE OF COVERAGE IN WHICH THE PARTICIPANT IS
ENROLLED AS OF THE TERMINATION DATE.

 

If a Participant has elected the “no benefit coverage” option under the medical,
dental or vision plans as of his actual Termination Date, the Participant shall
not be entitled to continuation coverage or cash in lieu thereof.  Following
expiration of coverage under this Section 4.2.1, a Participant may, to the
extent eligible, continue to participate in such plans for the remainder of the
COBRA continuation period, if any.

 

4.2.2                  CONCURRENT COBRA PERIOD.  THE CONTINUATION PERIOD FOR
MEDICAL, DENTAL AND VISION COVERAGE UNDER THIS PLAN SHALL BE DEEMED TO RUN
CONCURRENT WITH THE CONTINUATION PERIOD FEDERALLY MANDATED BY COBRA (GENERALLY
18 MONTHS), OR ANY OTHER LEGALLY MANDATED AND APPLICABLE FEDERAL, STATE, OR
LOCAL COVERAGE PERIOD FOR BENEFITS PROVIDED TO TERMINATED EMPLOYEES UNDER THE
HEALTH CARE PLAN.  THE CONTINUATION PERIOD WILL BE DEEMED TO COMMENCE ON THE
FIRST DAY OF THE CALENDAR MONTH FOLLOWING THE MONTH IN WHICH THE TERMINATION
DATE FALLS.  NOTWITHSTANDING THE FOREGOING, COBRA COVERAGE WILL ONLY BE
AVAILABLE IF THE PARTICIPANT IS ELIGIBLE FOR AND TIMELY ELECTS COBRA COVERAGE,
AND TIMELY REMITS PAYMENT OF THE PREMIUMS FOR COBRA COVERAGE.

 

4.2.3                  LENGTH OF BENEFITS.  BENEFITS UNDER THIS SECTION 4.2
SHALL BE FOR THE SAME TIME PERIOD UPON WHICH THE SEPARATION PAYMENT WAS BASED;
PROVIDED, HOWEVER THAT IN NO EVENT WILL THE TIME PERIOD EXCEED 18 MONTHS.
POST-TERMINATION MEDICAL BENEFITS ARE INTENDED TO BE EXCEPTED FROM SECTION 409A
UNDER THE MEDICAL BENEFITS EXCEPTIONS AS SPECIFIED IN TREAS. REG.
§ 1.409A-1(B)(9)(V)(B).

 

9

--------------------------------------------------------------------------------

 

4.3                                                                               
OUTPLACEMENT SERVICES.

 

As set forth on the applicable Benefit Schedule, a Participant shall be eligible
for such outplacement services typically provided to employees of the same job
classification or level.  Outplacement services may be provided by an
independent agency or by the Employer.  Notwithstanding the foregoing, the
availability, duration, and appropriateness of outplacement services shall be
determined by the Administrator in its sole discretion; provided, however, that
outplacement expenses must be reasonable, must be actually incurred by the
Participant and may not extend beyond the December 31 of the second calendar
year following the calendar year in which the Termination Date occurred (or such
shorter period as specified by the Employer).  Any such reimbursement shall be
as soon as administratively feasible, but in no event later than December 31st
of the third calendar year following the calendar year in which the Termination
Date occurred. Post-termination outplacement benefits are intended to be
excepted from Section 409A under the separation payment benefits exceptions as
specified in Treas. Reg. § 1.409A-1(b)(9)(v)(A).

 

4.4                                                                               
BONUS COMPENSATION.

 

As set forth on the applicable Benefits Schedule and subject to any deferral
election that the Participant has made with respect to such amounts, a
Participant will be eligible for (i) a prorated Bonus; and (ii) any accrued but
unpaid bonus compensation for completed performance periods.  The prorated Bonus
specified in Section 4.4(i) will be prorated based on the amount of time the
Participant was actively at work on a full-time basis in the calendar year in
which the Participant’s Termination Date falls, and will be paid within the
applicable 2½ month period specified in Treas. Reg. § 1.409A-1(b)(4).  The bonus
compensation specified in Section 4.4(ii) shall be paid no later than the time
that such amounts are paid to similarly situated employees in accordance with
the applicable plan terms. .  Notwithstanding the foregoing, with respect to
bonuses paid in accordance with the terms of The AES Corporation Performance
Incentive Plan (or any successor plan, the “Performance Incentive Plan”), any
such bonus compensation shall be paid only to the extent earned in accordance
with the terms of the Performance Incentive Plan and on the payment date
specified therein.

 

4.5                                                                               
ENHANCED BENEFITS.

 

To the extent provided under the Benefits Schedule, in the event the Participant
was Involuntarily Terminated within two years following a Change in Control, or
in the event the Participant was Involuntarily Terminated under circumstances
that constitute a Layoff, the separation payment under Section 4.1 will be
multiplied by 2.0.  In addition, the length of time for which benefits under
Section 4.2 will be provided will also be multiplied by 2.0; provided, however,
that this time period will never exceed 18 months as set forth in section 4.2.3.

 

4.6                                                                               
DELAY IN PAYMENT.

 

Notwithstanding any provision of this Plan to the contrary, to the extent that a
payment hereunder is subject to Section 409A (and not excepted therefrom), such
payment shall be delayed for a period of six months after the Termination Date
(or, if earlier, the death of the Participant) for any Participant that is a
Specified Employee.  Any payment that would otherwise

 

10

--------------------------------------------------------------------------------

 

have been due or owing during such six-month period will be paid on the first
business day of the seventh month following the date of Termination Date.

 

ARTICLE V

PLAN ADMINISTRATION

 

5.1                                                                               
OPERATION OF THE PLAN.

 

The Administrator shall be the named fiduciary responsible for carrying out the
provisions of the Plan.  The Administrator may delegate any and all of its
powers and responsibilities hereunder or appoint agents to carry out such
responsibilities, and any such delegation or appointment may be rescinded at any
time.  The Administrator shall establish the terms and conditions under which
any such agents serve.  The Administrator shall have the full and absolute
authority to employ and rely on such legal counsel, actuaries and accountants
(which may also be those of the Employer) as it may deem advisable to assist in
the administration of the Plan.

 

5.2                                                                               
ADMINISTRATION OF THE PLAN.

 

To the extent that the Administrator in its sole discretion deems necessary or
desirable, the Administrator may establish rules for the administration of the
Plan, prescribe appropriate forms, and adopt procedures for handling claims and
the denial of claims.  The Administrator shall have the exclusive authority and
discretion to interpret, construe, and administer the provisions of the Plan and
to decide all questions concerning the Plan and its administration.  Without
limiting the foregoing, the Administrator shall have the authority to determine
the level of an Employee, to determine eligibility for and the amount of any
benefits due in accordance with the attached Benefit Schedule, to make factual
determinations, to correct deficiencies, and to supply omissions, including
resolving any ambiguity or uncertainty arising under or existing in the terms
and provisions of the Plan or any Benefits Schedule.  Any and all such
determinations of the Administrator shall be final, conclusive, and binding on
the Employer, the Employee and any and all interested parties.

 

5.3                                                                               
FUNDING.

 

The Plan shall be unfunded and all payments hereunder and expenses incurred in
connection with this Plan shall be from the general assets of the Employer.
Benefits will be paid directly by the Employer employing the Participant, and no
other Employer or Affiliated Employer will be responsible for any benefits
hereunder.

 

5.4                                                                               
CODE SECTION 409A.

 

Notwithstanding any provision of the Plan to the contrary, if any benefit
provided under this Plan is subject to the provisions of Section 409A of the
Code and the regulations issued thereunder, the provisions of the Plan will be
administered, interpreted and construed in a manner necessary to comply with
Section 409A or an exception thereto (or disregarded to the extent such
provision cannot be so administered, interpreted, or construed).  With respect
to payments subject to Section 409A of the Code: (i) it is intended that
distribution events

 

11

--------------------------------------------------------------------------------

 

authorized under the Plan qualify as permissible distribution events for
purposes of Section 409A of the Code; and (ii) the Company and each Employer
reserve the right to accelerate and/or defer any payment to the extent permitted
and consistent with Section 409A.  Notwithstanding any provision of the Plan to
the contrary, in no event shall the Administrator, the Company, an Affiliated
Employer or Subsidiary (or their employees, officers, directors or affiliates)
have any liability to any Participant (or any other person) due to the failure
of the Plan to satisfy the requirements of Section 409A or any other applicable
law.

 

ARTICLE VI

CLAIMS

 

6.1                                                                               
GENERAL.

 

If an Employee believes that he or she is eligible for benefits under the Plan
and has not been so notified, an Employee should submit a written request for
benefits to the Administrator.  Any claim for benefits must be made within six
months of an Employee’s Termination Date, or the Employee will be forever barred
from pursuing a claim.  For purposes of this Article VI, an Employee making a
claim for benefits under the Plan shall be referred to as a “claimant”.  The
claimant shall file the claim with and in the manner prescribed by the
Administrator.  The Administrator shall make the initial determination
concerning rights to and amount of benefits payable under this Plan.

 

6.2                                                                               
CLAIM EVALUATION.

 

A properly filed claim will be evaluated and the claimant will be notified of
the approval or the denial of the claim within ninety (90) days after the
receipt of the claim, unless special circumstances require an extension of time
for processing.  Written notice of the extension will be furnished to the
claimant prior to the expiration of the initial ninety-day (90-day) period, and
will specify the special circumstances requiring an extension and the date by
which a decision will be reached (provided the claim evaluation will be
completed within one hundred and twenty (180) days after the date the claim was
filed).

 

6.3                                                                               
NOTICE OF DISPOSITION.

 

A claimant will be given a written notice in which the claimant will be advised
as to whether the claim is granted or denied, in whole or in part.  If a claim
is denied, in whole or in part the notice will contain: (i) the specific reasons
for the denial; (ii) references to pertinent Plan provisions upon which the
denial is based; (iii) a description of any additional material or information
necessary to perfect the claim and an explanation of why such material or
information is necessary; and (iv) the claimant’s rights to seek review of the
denial.

 

6.4                                                                               
APPEALS.

 

If a claim is denied, in whole or in part, the claimant, or his duly authorized
representative, has the right to (i) request that the Administrator review the
denial, (ii) review pertinent documents, and (iii) submit issues and comments in
writing, provided that the claimant files a written appeal with the
Administrator within sixty (60) days after the date the claimant

 

12

--------------------------------------------------------------------------------

 

received written notice of the denial.  Within sixty (60) days after an appeal
is received, the review will be made and the claimant will be advised in writing
of the decision, unless special circumstances require an extension of time for
reviewing the appeal, in which case the claimant will be given written notice
within the initial sixty-day (60-day) period specifying the reasons for the
extension and when the review will be completed (provided the review will be
completed within one hundred and twenty (120) days after the date the appeal was
filed).  The decision on appeal will be forwarded to the claimant in writing and
will include specific reasons for the decision and references to the Plan
provisions upon which the decision is based.  A decision on appeal will be final
and binding on all persons for all purposes.  If a claimant’s claim for benefits
is denied in whole or in part, the claimant may file suit in a state or federal
court. Notwithstanding the aforementioned, before the claimant may file suit in
a state or federal court, the claimant must exhaust the Plan’s administrative
claims procedure set forth in this Article VI.  If any such state or federal
judicial or administrative proceeding is undertaken, the evidence presented will
be strictly limited to the evidence timely presented to the Administrator.  In
addition, any such state or federal judicial or administrative proceeding must
be filed within six (6) months after the Administrator’s final decision. Any
such state or federal judicial or administrative proceeding relating to this
Plan shall only be brought in the Circuit Court for Arlington County, Virginia
or in the United States District Court for the Eastern District of Virginia,
Alexandria Division.  If any such action or proceeding is brought in any other
location, then the filing party expressly consents to the transfer of such
action to the Circuit Court for Arlington County, Virginia or the United States
District Court for the Eastern District of Virginia, Alexandria Division. 
Nothing in this clause shall be deemed to prevent any party from removing an
action or proceeding to enforce or interpret this Plan from the Circuit Court
for Arlington County, Virginia to the United States District Court for the
Eastern District of Virginia, Alexandria Division.

 

ARTICLE VII

PLAN AMENDMENTS

 

7.1                                                                               
AMENDMENT AUTHORITY.

 

The Board may, at any time and in its sole discretion, amend, modify or
terminate the Plan, including any Benefit Schedule, as the Board, in its
judgment shall deem necessary or advisable.  The Board may delegate its
amendment authority to the Administrator or such other persons as the Board
considers appropriate.  Notwithstanding the foregoing or any provision of the
Plan to the contrary, the Board (or its designee) may at any time (in its sole
discretion and without the consent of any Participant) modify, amend or
terminate any or all of the provisions of this Plan or take any other action, to
the extent necessary or advisable to conform the provisions of the Plan with
Section 409A of the Code, the regulations issued thereunder or an exception
thereto, regardless of whether such modification, amendment or termination of
this Plan or other action shall adversely affect the rights of an Eligible
Employee or Participant under the Plan. Termination of this Plan  shall not be a
distribution event under the Plan unless otherwise permitted under Section 409A.

 

13

--------------------------------------------------------------------------------

 

ARTICLE VIII

MISCELLANEOUS

 

8.1                                                                               
SUMMARY PLAN DESCRIPTION.

 

To the extent the summary plan description or any other writing communication to
an Employee conflicts with this Plan, the Plan document shall control.

 

8.2                                                                               
IMPACT ON OTHER BENEFITS.

 

Except as otherwise provided herein, any amounts paid to a Participant under
this Plan shall have no effect on the Participant’s rights or benefits under any
other employee benefit plan sponsored by the Employer; provided, however, that
in no event shall any Participant be entitled to any payment or benefit under
the Plan which duplicates a payment or benefit received or receivable by the
Participant under any severance plan, policy, guideline, arrangement, agreement,
letter and/or other communication, whether formal or informal, written or oral
sponsored by the Employer or an affiliate thereof and/or entered into by any
representative of the Employer and/or any affiliate thereof.  Further, any such
amounts shall not be used to determine eligibility for or the amount of any
benefit under any employee benefit plan, policy, or arrangement sponsored by the
Employer or any affiliate thereof.

 

8.3                                                                               
TAX WITHHOLDING.

 

The Employer shall have the right to withhold from any benefits payable under
the Plan or any other wages payable to a Participant an amount sufficient to
satisfy federal, state and local tax withholding requirements, if any, arising
from or in connection with the Participant’s receipt of benefits under the Plan.

 

8.4                                                                               
NO EMPLOYMENT OR SERVICE RIGHTS.

 

Nothing contained in the Plan shall confer upon any Employee any right with
respect to continued employment with the Employer, nor shall the Plan interfere
in any way with the right of the Employer to at any time reassign an Employee to
a different job, change the compensation of the Employee or terminate the
Employee’s employment for any reason.

 

8.5                                                                               
NONTRANSFERABILITY.

 

Notwithstanding any other provision of this Plan to the contrary, the benefits
payable under the Plan may not be subject to voluntary or involuntary
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment or garnishment by creditors of the Participant or such other person,
other than pursuant to the laws of descent and distribution, without the consent
of the Company.

 

8.6                                                                               
SUCCESSORS.

 

The Company and its affiliates shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the

 

14

--------------------------------------------------------------------------------

 

business or assets of the Company and its affiliates (taken as a whole)
expressly to assume and agree to perform under the terms of the Plan in the same
manner and to the same extent that the Company and its affiliates would be
required to perform it if no such succession had taken place (provided that such
a requirement to perform which arises by operation of law shall be deemed to
satisfy the requirements for such an express assumption and agreement), and in
such event the Company and its affiliates (as constituted prior to such
succession) shall have no further obligation under or with respect to the Plan.

 

8.7                                                                               
GOVERNING LAW.

 

Except as otherwise preempted by the laws of the United States, this Plan shall
be governed by and construed in accordance with the laws of the State of
Delaware, without giving effect to its conflict of law provisions.  If any
provision of this Plan shall be held illegal or invalid for any reason, such
determination shall not affect the remaining provisions of this Plan.

 

This amendment and restatement of The AES Corporation Severance Plan has been
duly executed by the undersigned and is effective this 29 day of December 2008.

 

 

 

The AES Corporation

 

 

 

 

 

By:

/s/ Jay L. Kloosterboer

 

 

Jay L. Kloosterboer, Executive Vice

 

 

President, Business Excellence

 

15

--------------------------------------------------------------------------------

 

BENEFITS SCHEDULE

 

Title/Grade Classification

 

Severance Benefits
(Min. 1 Year-of-Service for Eligibility)

 

 

 

Executive Officers (CEO, CFO, COO excluded because of contracts)

 

One (1) times (Annual Compensation + Bonus) (Section 4.1)

Health Benefits (Section 4.2)

Outplacement Benefits (Section 4.3)

Prorated Bonus (Section 4.4)

Special Enhanced Benefits (Section 4.5)

Excise Tax Reimbursement (Appendix A)

 

 

 

Grades 24 -27

 

One (1) times (Annual Compensation) (Section 4.1)

Health Benefits (Section 4.2)

Outplacement Benefits (Section 4.3)

Prorated Bonus (Section 4.4)

Special Enhanced Benefits (Section 4.5)

 

 

 

Grades 19 -23

 

Three (3) months prorated Annual Compensation plus two (2) Weeks’ Compensation
for each Year-of-Service up to a maximum of thirty-nine (39) Week’s Compensation
(Section 4.1)

Health Benefits (Section 4.2)

 

 

 

Grades 18 and below

 

Two (2) months prorated Annual Compensation plus two (2) Weeks’ Compensation for
each Year-of-Service up to a maximum of twenty-six (26) Week’s Compensation
(Section 4.1)

Health Benefits (Section 4.2)

 

1

--------------------------------------------------------------------------------

 

THE AES CORPORATION SEVERANCE PLAN

List of Participating Employers

 

[The Administrator is required to maintain a list of Participating Employers]*

 

--------------------------------------------------------------------------------

*(i) Individuals employed by Indianapolis Power & Light Company and its
subsidiaries and (ii) Ineligible Employees shall not be eligible to participate
in the Plan.

 

1

--------------------------------------------------------------------------------