Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.3

DYNEGY INC.

CHANGE IN CONTROL SEVERANCE PAY PLAN

(Effective April 3, 2008)

 

 

 

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;

 

1

 

(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.

 

2

 

(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.

 

3

 

(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.

 

4

 

(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;

 

5

 

(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.

 

6

 

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.

 

7

 

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.

 

8

 

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.

 

9

 

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.

 

10

 

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.

 

11

 

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

 

	•	 	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.

 

13

 

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.

 

14

 

(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.

 

15

 

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

 

16

 

	 	 	 	 	 
	 

	 	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 	 

 

17

 

	 	 	 	 	 

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.Filed by Bowne Pure Compliance

 

Exhibit 10.5

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

THIS NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (this “Agreement”) is made as of the 6th day of March, 2008,
between DYNEGY INC., a Delaware corporation (“Dynegy”), and all of its Affiliates (collectively, the “Company”), and
Bruce A. Williamson (“Employee”). A copy of the Dynegy Inc. 2000 Long Term Incentive Plan (the “Plan”) is annexed to
this Agreement and shall be deemed a part of this Agreement as if fully set forth herein. Unless the context otherwise
requires, all terms that are not defined herein but which are defined in the Plan shall have the same meaning given to
them in the Plan when used herein.

1. The Grant. The Compensation and Human Resources Committee of the Board of Directors (the “Committee”)
granted to Employee on March 6, 2008 (“Effective Date”), as a matter of separate inducement and not in lieu of any
salary or other compensation for Employee’s services, the right and option to purchase (the “Option”), in accordance
with the terms and conditions set forth in the Plan and in this Agreement, an aggregate number of 440,772 shares (the
“Shares”) of Class A common stock of Dynegy, $0.01 par value per share (the “Common Stock”), at a price of $7.48 per
share (the “Exercise Price”). Employee acknowledges receipt of a copy of the Plan, and agrees that the Option shall be
subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the
terms thereof, and to all of the terms and conditions of this Agreement. The Option shall not be treated as an
incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).
The Exercise Price is, in the judgment of the Committee, not less than one hundred percent (100%) of the Fair Market
Value of a share of the Common Stock on the Effective Date. If it is subsequently determined by the Committee, in its
sole discretion, that the terms and conditions of this Agreement and/or the Plan are not compliant with Code Section
409A, or any Treasury regulations or Internal Revenue Service guidance promulgated thereunder, this Agreement and/or
the Plan may be amended accordingly.

2. Exercise. Subject to the provisions, limitations and other relevant provisions of the Plan and of this
Agreement, and the earlier expiration of the Option as herein provided, Employee may exercise the Option to purchase
some or all of the Shares as follows:

(a) The Option shall become exercisable in three cumulative equal annual installments as follows:

(i) on the first anniversary of the Effective Date, the right to purchase one-third of the
aggregate number of Shares shall become exercisable without further action by the Committee;

(ii) on the second anniversary of the Effective Date, the right to purchase an additional
one-third of the aggregate number of Shares shall become exercisable without further action by the
Committee; and

(iii) on the third anniversary of the Effective Date, the right to purchase the remaining
one-third of the aggregate number of Shares shall become exercisable without further action by the
Committee.

 

1

 

(b) Notwithstanding any other provision of this Agreement, the unexercised portion of the Option, if any,
will automatically and without notice terminate and become null and void upon the expiration of ten (10) years
from the Effective Date of the Option.

(c) Any exercise by Employee of the Option, or portion thereof, shall be conducted by delivery of an
irrevocable notice of exercise to the Company or its designee as provided in the Plan. In no event shall
Employee be entitled to exercise the Option for less than a whole Share.

(d) Notwithstanding any other provision of this Agreement, upon the occurrence of a Change in Control,
the Option shall become fully vested and immediately exercisable in full on the date of the Change in Control.
For purposes hereof, “Change in Control” shall mean the occurrence of any of the following events: (i) a
merger of Dynegy with another entity, a consolidation involving Dynegy, or the sale of all or substantially
all of the assets or equity interests of Dynegy to another entity if, in any such case, (A) the holders of
equity securities of Dynegy immediately prior to such event do not beneficially own immediately after such
event equity securities of the resulting entity entitled to fifty-one percent (51%) or more of the votes then
eligible to be cast in the election of directors (or comparable governing body) of the resulting entity in
substantially the same proportions that they owned the equity securities of Dynegy immediately prior to such
event or (B) the persons who were members of the Board immediately prior to such event do not constitute at
least a majority of the board of directors of the resulting entity immediately after such event; (ii) the
dissolution or liquidation of Dynegy, 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 Dynegy has not engaged in a merger or consolidation, Dynegy, or (B) if Dynegy has engaged in a merger
or consolidation, the resulting entity; (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 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 Dynegy receive capital stock of
such other entity in such transaction or event, in which event the resulting entity shall be such other
entity, and (2) subsequent to the consummation of a merger or consolidation that does not constitute a Change
in Control, the term “Dynegy” shall refer to the resulting entity and the term “Board” shall refer to the
board of directors (or comparable governing body) of the resulting entity.

2

 

2

 

3. Termination of Employment. The Option may be exercised only while Employee remains an employee of the
Company and will terminate and cease to be exercisable upon Employee’s termination of employment with the Company,
except that:

(a) if Employee shall die while in the employ of the Company, the Option awarded hereunder shall
immediately vest with respect to all of the remaining Shares and become fully exercisable without further
action by the Committee, and Employee’s legal representative, or the person, if any, who acquired the Option
by bequest or inheritance or by reason of the death of Employee, may exercise the Option, to the extent not
previously exercised, in respect of any or all such Shares at any time up to and including the date three (3)
years after the date of death, after which date the Option will automatically and without notice terminate and
become null and void; and

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

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

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

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

3

 

3

 

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

(g) if Employee’s employment with the Company is terminated as a result of a Change in Control
Termination, as such term is defined below, occurring within sixty (60) days before or within one year after
the effective date of a Change in Control, the Option shall become fully vested and immediately exercisable in
full on the effective date of the Change of Control, and such Option shall remain exercisable from such date
for the lesser of: (i) five (5) years from the effective date of such Change in Control; (ii) the remaining
period of time for exercise of the Option hereunder (irrespective of any mandatory exercise period specified
herein that would otherwise be triggered by the termination of employment of such Employee); or (iii) such
period of time (which period of time may end as early as the consummation of a “Corporate Change,” as such
term is defined in the Plan) as the Committee may determine in connection with or in contemplation of a
Corporate Change in the exercise of its discretion under the Plan, with respect to which the Committee has the
discretion to, among other things, require the surrender of stock options (which surrender may be in exchange
for a cash payment, if applicable) and to cancel such stock options upon the consummation of a Corporate
Change as further described in the Plan.

(h) For purposes of this Agreement:

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

“Cause” shall mean, and hence arise as a result of, as determined by the Committee in its sole
discretion, Employee’s (i) refusal to implement or adhere to lawful policies or lawful directives of the Board
of Directors; (ii) engaging in conduct which is materially injurious (monetarily or otherwise) to the Company
(including, without limitation, misuse of the Company’s funds or other property); (iii) misconduct or
dishonesty directly related to the performance of Employee’s duties for the Company or gross negligence in the
performance of Employee’s duties for the Company; (iv) conviction (or entering into a plea bargain admitting
criminal guilt) in any criminal proceeding involving a felony or a crime of moral turpitude; (v) drug or
alcohol abuse; or (vi) continued failure to perform Employee’s duties which is not cured within 10 days after
written notice is provided to Employee by the Company.

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

4

 

4

 

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

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

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

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

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

5

 

5

 

7. Miscellaneous.

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

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

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

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

(e) This Agreement may not be amended except by an agreement in writing signed by each of the Company and
Employee consenting to such amendment.

[Remainder of page intentionally left blank]

6

 

6

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly
authorized, and Employee has agreed to and accepted the terms of this Agreement, all as of the date first above
written.

DYNEGY INC.

By:                                                                          

Name: J. Kevin Blodgett

Title: General Counsel & EVP, Administration

Accepted By:

                                                                               

Bruce A. Williamson                             Date

7

 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}]]