**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 herebyadopt the Dynegy Inc. Change in Control Severance Pay Plan (the “Plan”). The Plan replaces theFirst Supplemental Plan to the Dynegy Inc. Severance Pay Plan, which terminated by its terms onApril 2, 2008, and provides severance benefits to certain eligible Employees whose employment isterminated under certain circumstances during specified periods before, on or after a Change inControl of the Company.**II.****DEFINITIONS**.**2.1****Definitions**. Where the following words and phrases appear in the Plan, they shallhave 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 Employerbased upon a determination by the Plan Administrator that the Participant (1) has beenconvicted of a misdemeanor involving moral turpitude or a felony; (2) has failed tosubstantially perform the duties of such Participant to the Employer (other than suchfailure 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 andresponsibilities to the Employer; or (4) has breached any material corporate policymaintained and established by the Employer that is applicable to the Participant, providedsuch breach results in a materially adverse effect upon the Employer, financial orotherwise. Notwithstanding the foregoing, nothing contained in this definition or the Planis intended or shall be construed to alter a Participant’s at-will (or, only in the case ofa Participant who is a party to a written employment contract with the Employer signed bythe Company’s Chief Executive Officer, contractual) employment relationship between aParticipant and his Employing Company.(c) **“Change in Control”**shall mean the occurrence of any of the following events: (i) amerger of the Company with another entity, a consolidation involving the Company, or thesale of all or substantially all of the assets or equity interests of the Company to anotherentity if, in any such case, (A) the holders of equity securities of the Company immediatelyprior to such event do not beneficially own immediately after such event equity securitiesof the resulting entity entitled to fifty-one percent (51%) or more of the votes theneligible to be cast in the election of directors (or comparable governing body) of theresulting entity in substantially the same proportions that they owned the equity securitiesof the Company immediately prior to such event or (B) the persons who were members of theBoard immediately prior to such event do not constitute at least a majority of the board ofdirectors of the resulting entity immediately after such event; (ii) the dissolution orliquidation of the Company, but excluding a reorganization pursuant to chapter 11 of Title11, 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 ownershipor control (including, without limitation, power to vote) offifty percent (50%) or more of the combined voting power of the outstanding securitiesof, (A) if the Company has not engaged in a merger or consolidation, the Company, or (B) ifthe Company has engaged in a merger or consolidation, the resulting entity;
 
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(iv) circumstances where, as a result of or in connection with, a contested election ofdirectors, the persons who were members of the Board immediately before such election shallcease to constitute a majority of the Board; or (v) the Board (or the CompensationCommittee) adopts a resolution declaring that a Change in Control has occurred. Forpurposes of the “Change in Control” definition, (1) “resulting entity” in the context of anevent that is a merger, consolidation or sale of all or substantially all of the subjectassets or equity interests shall mean the surviving entity (or acquiring entity in the caseof an asset or equity interest sale), unless the surviving entity (or acquiring entity inthe case of an asset sale) is a subsidiary of another entity and the holders of common stockof the Company receive capital stock of such other entity in such transaction or event, inwhich event the resulting entity shall be such other entity, and (2) subsequent to theconsummation of a merger or consolidation that does not constitute a Change in Control, theterm “Company” shall refer to the resulting entity and the term “Board” shall refer to theboard of directors (or comparable governing body) of the resulting entity.(d) **“COBRA”**shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, asamended.(e) **“Code”**shall mean the Internal Revenue Code of 1986, as amended.(f) **“Company”**shall mean Dynegy Inc., a Delaware corporation, and any successorthereto.(g) **“Compensation Committee”**shall mean the Compensation and Human Resources Committeeof the Board unless and until the Board designates another committee of the Board to servein such capacity.(h) **“Contract Employees”**shall mean persons whom the Employer regards as ContractEmployees. Contract Employees are not eligible to participate in this Plan.(i) **“Contractor’s Employees”**shall mean persons working for a company providing goodsor services (including temporary employee services) to the Employer whom the Employer doesnot regard to be its common law employees, as evidenced by the Employer’s failure towithhold taxes from their compensation, even if the persons are determined to be theEmployer’s common law employees. Contractor’s Employees are not eligible to participate inthis Plan.(j) **“Disability”**shall mean that the Participant is determined under the long-termdisability plan sponsored by the Company that covers the Participant to have a disabilitythat entitles him or her to benefits under that plan.(k) **“Effective Date”**shall mean April 3, 2008; provided, that if a subsidiarysubsequently adopts the Plan, the Effective Date for such subsidiary and its Participantsshall be the date specified in the document by which the subsidiary adopts the Plan.
 
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(l) **“Employee”**shall mean any Full-time and active employee employed by the EmployingCompany 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 orafter the effective date of the particular Change in Control. Temporary or Part-TimeEmployees, Foreign Employees, independent contractors, Contract Employees, Contractors’Employees, Project Employees, and Leased Employees are not “Employees” under thePlan. Employees covered by a collective bargaining agreement are not “Employees” unless anagreement has been negotiated with the bargaining representative for coverage under thePlan.(m) **“Employer”**or **“Employing Company”**shall mean the Employee’s direct employer, theCompany and such other of the subsidiaries of the Company as have adopted the Plan and havebeen admitted to participation by the Plan Administrator (and any successors). Thesubsidiaries 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 theCompany 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 toregularly work 40 or more hours per week.(r) **“Good Reason”**shall mean the occurrence, without the Participant’s express writtenconsent, within sixty (60) days before the date upon which a Change in Control occurs orwithin 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 employmentby 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 anEmploying Company that provides a materially lower base salary.(s) **“Involuntary Termination”**shall mean any termination of a Participant’s employmentwith the Employers which:(1) does not result from a voluntary resignation by such Participant (otherthan 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 terminationfor Cause or any termination as a result of such Participant’s death or Disability.
 
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(t) **“Leased Employees”**shall mean persons who are the Company or Employers’ leasedemployees, within the meaning of Code Section 414(n). Leased Employees are not eligible toparticipate in this Plan.(u) **“Notice of Termination for Good Reason”**shall mean a notice from a Participant tothe Company that shall indicate the specific termination provision or provisions of the Planrelied upon and shall set forth in reasonable detail the facts and circumstances claimed toprovide a basis for Termination for Good Reason. The failure of a Participant to set forthin the Notice of Termination for Good Reason any facts or circumstances which contribute tothe showing of Good Reason shall not waive any right hereunder or preclude asserting suchfact or circumstance in enforcing his or her rights hereunder. The Notice of Terminationfor Good Reason shall provide for a date of termination not less than thirty (30) nor morethan sixty (60) days after the date such Notice of Termination for Good Reason is deliveredto and acknowledged by the General Counsel of the Company.(v) **“Participant”**shall mean each Employee other than an Employee who is a participantin the Dynegy Inc. Executive Severance Pay Plan, the Dynegy Inc. Executive Change in ControlSeverance Pay Plan, or any other severance benefit plan or arrangement (other than theDynegy 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 areemployed to regularly work less than 40 hours per week. Part-Time Employees are noteligible to participate in this Plan.(x) **“Plan”**shall mean the Dynegy Inc. Change in Control Severance Pay Plan, as amendedfrom 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 January1st.(aa) **“Project Employees”**shall mean persons employed to work on discrete projects orcreative matters. Project Employees are not eligible to participate in this Plan, except tothe extent the Company, by written notice, elects to extend Plan participation to theindividual.(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 theEmployer’s short term annual bonus plans in existence on the EffectiveDate or any additional or successor plans, including, but not limited to, the DynegyInc. Incentive Compensation Plan.
 
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(dd) **“Specified Employee”**shall mean a Participant who is a specified employee withinthe meaning of Treasury Regulation Section 1.409A-1(i).(ee) **“Specified Employee Effective Date”**shall mean the April 1st nextfollowing a Specified Employee Identification Date.(ff) **“Specified Employee Identification Date”**shall mean December 31st ofeach Plan Year.(gg) **“Termination For Good Reason”**shall mean a resignation of employment by theParticipant by a written Notice of Termination for Good Reason given to the General Counselof the Company within ninety (90) days after the occurrence of the Good Reason event, unlesssuch circumstances are substantially corrected prior to the date of termination specified inthe Notice of Termination for Good Reason.(hh) **“Vice President of Human Resources”**means the individual who, at the time inquestion, holds a title of Vice President or above and/or is the highest ranking officer inthe Human Resources Department of the Company.(ii) **“Week of Pay”**shall mean the Participant’s base weekly rate of pay, excludingovertime, bonuses, commissions, premium pay, shift differentials, employee benefits, expensereimbursements, and similar amounts. However, the fact that amounts are withheld from theParticipant’s pay for taxes, employee benefits, or other reasons will be disregarded incalculating 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 ratemultiplied by the Participant’s scheduled hours per week (*e.g.*, forty (40) hours per weekfor Full-time Employees). The Participant’s base weekly rate of pay shall be determined bythe Plan Administrator in its sole discretion.(jj) **“Year of Service”**shall mean each continuous year (365 days) of service with anEmployer without a break in service.**III.****SEVERANCE BENEFITS****.****3.1****Severance Benefits**. Subject to the terms and conditions hereof, if aParticipant’s employment with the Employer or a successor thereto is terminated as a result of anInvoluntary Termination occurring (1) in connection with, but in no event earlier than 60 daysprior to, a Change in Control, or (2) on or within one (1) year after the date upon which a Changein Control occurs, such Participant (a “Severed Participant”) shall be entitled to receive thefollowing severance benefits (subject to any deductions and other conditions otherwise describedherein):(a) A lump sum cash payment in an amount equal to two (2) Weeks of Pay for each Year ofService with the Employer and a pro-rated amount for any fraction thereof. The minimum lumpsum cash payment payable to a Severed Participant under thisSection 3.1(a) is an amount equal to twenty-four (24) Weeks of Pay. The maximum lumpsum cash payment payable to a Severed Participant under this Section 3.1(a) is an amountequal to fifty-two (52) Weeks of Pay;
 
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(b) A lump sum cash payment in an amount equal to the sum of (1) (A) the aggregateannual target opportunity under all applicable Short Term Incentive Compensation Plans orArrangements that could have been earned by the Severed Participant for the fiscal year ofthe Employer during which such Involuntary Termination occurs (determined as if allapplicable goals and targets had been satisfied in full), multiplied by (B) a fraction, thenumerator of which is the number of days during the period beginning on the first day ofsuch fiscal year and ending an the date of such Involuntary Termination, and the denominatorof which is three hundred sixty-five (365), and (2) the aggregate annual target opportunityunder all applicable Short Term Incentive Compensation Plans or Arrangements earned by theSevered 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, tocontinue to participate for up to three (3) months following the Severed Participant’stermination of employment in the Company’s group health care plan that provides medical anddental coverage that the Severed Participant was participating in immediately prior to suchtermination of employment; provided, however, that (1) Severed Participant must continue topay the premiums for such coverage based on the premiums paid by active employees of theCompany for similar coverage, (2) the availability and terms of such coverage, and therequired premium payments, shall adjust as such availability, terms and premiums areadjusted for active employees, and (3) such coverage shall immediately end upon the SeveredParticipant obtaining new employment and eligibility for similar coverage (and the SeveredParticipant is obligated hereunder to promptly report such eligibility to the Company). TheSevered Participant’s election of this extended coverage shall not adversely affect in anyway Severed Participant’s right to health care continuation coverage as required under Part6 of Title I of ERISA, except that the period of such health care continuation coverageunder the Company’s group health care plan shall be reduced by the period of SeveredParticipant’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 formas is determined by the Plan Administrator in its sole discretion, but in no event will suchbenefits be provided beyond the end of the second calendar year following the calendar yearin which the Severed Participant’s employment was terminated. The Plan Administrator’sdeterminations pursuant to this Section 3.1(d) shall be made on a case-by-case basis withrespect to any individual Severed Participant or group of Severed Participants, and the PlanAdministrator shall consider such factors as it deems relevant. Outplacement assistancebenefits hereunder may vary among individual Severed Participants. The value of suchoutplacement 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 outplacementassistance provider. The Company may, in its sole discretion, provide outplacementassistance benefits to the Severed Participant prior to the Severed Participant’s executionof the Release (as defined in the following paragraph) or the expiration of any revocationperiod described in the Release.
 
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If the Severed Participant is provided such outplacement assistance benefits prior toexecution of the Release or the expiration of any revocation period described in theRelease, 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 excessof those that the Plan Administrator had already determined would be provided to suchSevered Participant. Failure to execute the Release within the specified time period or therevocation 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 anAgreement and Release (the “Release”) in the form customarily provided by the Company acknowledginghis or her agreement to the terms and conditions of this Plan, the receipt of the severance paymentand other benefits and releasing the Company, the Employers and other persons and entitiesdesignated by the Company or Employers from any liability arising from his or her employment ortermination. The Release shall be furnished to the Severed Participant as soon as practical afterthe date on which the Company or the Severed Participant receives the notice of termination, but inno event later than the latest date that will insure that the applicable revocation period for theRelease will expire not later than March 1 of the year following the year in which the SeveredParticipant’s employment is terminated.The Severance pay provided in Subsections 3.1(a) and (b) will be paid to the eligible SeveredParticipant in one lump sum within fourteen (14) days after the Severed Participant executes theRelease and the expiration of any revocation period described in the Release in accordance with theterms and conditions of this Plan but no later than March 15th of the calendar year following theyear of the Severed Participant’s termination. All severance pay benefits will be subject towithholding for applicable employment and income taxes. The Severed Participant is responsible forinforming the Plan Administrator of any change in the Severed Participant’s mailing address bywritten letter delivered to the Vice President of Human Resources until the Severed Participant’sseverance benefits have been paid in full.In the event that a Severed Participant dies after the termination of his or her employmentand before having received the full amount of the severance benefits for which he or she wasqualified, benefits provided by the Plan will be paid to the legal representative of the SeveredParticipant’s estate unless the Severed Participant notifies the Plan Administrator in writing thathe or she specifically designates a different beneficiary. Benefits will be paid as soon aspracticable after receipt of notice of proof of such death; provided, however, that if the SeveredParticipant had not signed the Release prior to his or her death, then a condition to the receiptof benefits will be the execution of the Release by the executor or other authorized representativeof the Severed Participant’s estate.Each of the payments of severance, continued medical and outplacement benefits stated aboveare designated as separate payments for purposes of the short-term deferral rules under TreasuryRegulation Section 1.409A-1(b)(4)(i)(F), the exemption for involuntary terminations underseparation pay plans under Treasury Regulation Section 1.409A-1(b)(9)(iii), the exemption formedical expense reimbursements under Treasury Regulation Section 1.409A-1(b)(9)(v)(B) and theexemption for in-kind benefits under Treasury Regulation Section 1.409A-1(b)(9)(v)(C). As aresult, (1) payments that are made on or before the 15th day of the third month of the calendaryear following the applicable year of termination, and (2) any additional payments thatare made on or before the last day of the second calendar year following the year of theSevered Participant’s termination and do not exceed the lesser of two times the SeveredParticipant’s base salary in the year prior to his or her termination or two times the limit underCode Section 401(a)(17) then in effect, are exempt from the requirements of Code Section 409A.
 
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Notwithstanding any provision in the Plan to the contrary, severance benefits, in excess ofthose described in the preceding paragraph or that are otherwise subject to the six (6)-monthpayment delay requirements of Code Section 409A, to a Specified Employee, shall not commence untilat least six (6) months after the date the Specified Employee terminates employment. Whether aParticipant is a Specified Employee shall be determined annually by the Plan Administrator, as ofeach Specified Employee Identification Date. Any Participant so identified shall be a SpecifiedEmployee for the entire twelve (12)-month period beginning on the following Specified EmployeeEffective Date. To the extent the payments to be made during the first six (6)-month periodfollowing a Specified Employee’s termination of employment exceed such exempt amounts described inthe preceding paragraph or are otherwise subject to the six (6)-month payment delay requirements ofCode Section 409A, those payments shall be withheld and the amount of the payments withheld willbe 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 theSevered 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 mayonly be offset for such non-exempt severance pay where the amount does not exceed $5,000 in anyPlan Year, the debt is incurred in the ordinary course of the Participant’s employmentrelationship, and the reduction is made at the same time and in the same amount as the debtotherwise would have been due and collected from the Severed Participant. The determination ofwhat amounts are owed by the Severed Participant will be made in the sole discretion of the PlanAdministrator. Any such offset to the severance amount for which the Severed Participant iseligible will be made in conformance with applicable state law that is not otherwise preempted byERISA.**3.2****Mitigation: Benefits Under Employment Agreement**. Except as provided in Section3.1(c), a Participant shall not be required to mitigate the amount of any payment or benefitprovided for in this Article III by seeking other employment or otherwise, nor shall the amount ofany payment or benefit provided for in this Article III be reduced by any compensation or benefitearned by the Participant as the result of employment by another employer or by retirementbenefits. The benefits under the Plan are in addition to any other benefits to which a Participantis otherwise entitled; provided, however, that (a) the benefits under the Plan are not intended toduplicate the benefits to which Participant is entitled under an employment agreement or aseverance agreement between such Participant and the Employer, and if a Participant is entitled toa severance payment under such agreement, then the Participant shall not be entitled to benefitsunder the Plan, and (b) a Participant who is entitled to receive benefits under the Plan shall notbe eligible to receive any other benefits under any other severance plan, any other supplementthereto, 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 tocertain information concerning the Company that is confidential and proprietary andconstitutes valuable and unique property of the Company. By accepting severance benefits under thePlan, the Participant agrees that he or she will not, at any time after his or her employmentterminates, disclose to others, use, copy, or permit to be copied, except pursuant to his or herduties on behalf of the Company or its successors, assigns, or nominees, any “ConfidentialInformation” (defined below) of the Company (whether or not developed by the Participant) withoutthe prior written consent of the General Counsel of the Company.
 
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By accepting severance benefits under the Plan, the Participant understands and agrees thatall “Records” (defined below) also constitute Confidential Information of the Company and that theParticipant’s obligations continue at all times after his or her employment. These records do notbecome any less confidential or proprietary to the Company because the Participant may commit someof it to memory or because the Participant may otherwise maintain it outside of the Company’soffices.By accepting severance benefits under the Plan, the Participant agrees that he or she willnever take any Company property for the Participant’s own use or benefit. On or before the date ofthe Participant’s Involuntary Termination, the Participant will deliver to the Company, asdetermined 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 bythe 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, oranticipated 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 canobtain economic value from its disclosure or use, and (2) is the subject of efforts that arereasonable under the circumstances to maintain its secrecy. “Confidential Information” alsoincludes any information or knowledge pertaining to the operation of the Company’s business that isnot generally available to the public and maintained as confidential by the Company, including butnot 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 (orother similar commodities); client lists; pricing policies; financial information; the names of andpertinent information regarding suppliers; computer programs; policy or procedure manuals; trainingand recruiting procedures; accounting procedures; the status and content of the Company’s contractswith its suppliers or clients; and servicing methods and techniques at any time used, developed, orinvestigated by the Company before or during the Participant’s tenure of employment. By acceptingseverance benefits under the Plan, the Participant further agrees to maintain in confidence anyconfidential information of third parties received as a result of the Participant’s employment andduties 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 theParticipant by the Company, or by any institution acquired by the Company, or compiled by theParticipant in any form or manner including information in documents or electronic devices, such assoftware, flow charts, graphs, spreadsheets, resource materials, video tapes, calendars,day timers, planners, rolodexes, or telephone directories maintained in personal computers,laptop computers, personal digital assistants or any other device.
 
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These are examples of the types of information the Company considers Confidential Information.All of this information is important because, among other things, it is unknown to the Company’scompetitors, thus they are unable to use it to compete with the Company. Accordingly, thisinformation 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 breachof the requirements and agreements contained herein and that money damages would be inadequatecompensation to the Company, the Participant agrees that any breach of the non-disclosurerequirements and agreements contained herein by the Participant should be the proper subject forimmediate injunctive relief, specific performance and other equitable relief to the Company.Nothing herein shall be construed as prohibiting the Company from pursuing any other remediesavailable to the Company for such breach or threatened breach, including the recovery of damagesfrom the Participant. Each Participant further agrees to communicate the contents of this Section3.3 to any prospective employer or associate.Neither any Participant nor the Company shall make or authorize any public statement, oral orwritten, disparaging the other in their respective business interests and affairs. Notwithstandingthe foregoing, neither party shall be (1) required to make any statement which it or he or shebelieves 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 legalprocess.**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 conductresulted in a termination for Cause, shall not be entitled to receive benefits under the Plan. Ifthe Plan Administrator determines that a Participant engaged in conduct described in Section2.1(b), the Plan Administrator shall be entitled to recover, in any manner the Plan Administratorin its discretion deems necessary or appropriate for such recovery, from such Participant anypayment or benefit provided pursuant to this Article III and any and all expenses incidental to ornecessary for such recovery.**3.5****Effect of Plan on other Company Benefits**. A Participant eligible for benefitsunder the Plan may be eligible to continue participation in certain other Company benefits and/orbenefit plans. However, continuation in various Company plans is subject to the terms andconditions of the applicable plan documents or insurance contracts in effect on the date of theParticipant’s termination. A Participant’s rights under the other plans, documents or insurancecontracts 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 Companyseverance plan or agreement upon such termination.
 
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**IV. ****GENERAL PROVISIONS**.**4.1****Termination Status**. For purposes of severance benefits under the Plan that areexempt from the provisions of Code Section 409A, an eligible Participant shall terminate employmenton the date he or she ceases to be categorized as an employee on the payroll systemof the Employer. For purposes of severance benefits under the Plan that are not exempt fromthe provisions of Code Section 409A, an eligible Participant shall terminate employment on the datehe or she ceases to perform services for the Employer, or such services decrease to a level that is50 percent or less of the average level of services performed by the eligible Participant over theimmediately preceding 36-month period. The last day of an eligible Participant’s active employmentwith the Employer shall be considered such Participant’s termination date for purposes of theEmployer’s employee benefit plans, unless provided otherwise pursuant to such plan. For purposesof a Participant’s eligibility for continued health benefits under COBRA, the COBRA eligibilityperiod shall run from the Participant’s termination date.**4.2****Other Participating Employers**. The provisions of the Plan shall be applicablewith respect to each Employer separately, and amounts payable hereunder shall be paid solely by theEmployer which employs the particular Participant; provided, however, that the determination ofwhether a Change in Control has occurred shall be made based solely on the application of that termto the Company.**4.3****Amendment and Termination**.(a) The Plan may be amended, terminated or discontinued in whole or in part, at anytime and from time to time at the discretion of the Company; provided, however, that thePlan may not be amended, terminated or discontinued within one (1) year following a Changein Control (except for an amendment to the administrative provisions of the Plan that isconsidered by counsel to be required pursuant to applicable law). Any Plan amendment mustbe signed by the Executive Vice President, Administration of the Company or the individualwho, at the time in question, is the highest ranking officer over administration in theCompany, to be effective. The Plan shall automatically terminate one (1) year after theoccurrence of a Change in Control; provided, however, that if prior to such termination datea Severed Participant has terminated employment with the Employer as a result of anInvoluntary Termination or a Participant has been subject to a Good Reason event, then thePlan shall remain in effect with respect to such Severed Participant or Participant inaccordance with its terms.(b) For purposes of this Section 4.3, the termination of an Employer’s participation inthe Plan shall be deemed to be an amendment to the Plan, but the commencement ofparticipation 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 shallremain 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 deemedto be a contract of employment between the Employer and any person or to be consideration for theemployment of any person. Nothing herein contained shall be deemed to (a) give any person the rightto be retained in the employ of the Employer, (b) restrict the right of the Employer to dischargeany person at any time, (c) give the Employer the right to require any person to remain in theemploy of the Employer, or (d) restrict any person’s right to terminate his employment at any time.
 
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**4.5****Obligations Unfunded**. All benefits due to a Participant under the Plan areunfunded and unsecured and are payable out of the general funds of the Employer. One or moreEmployers 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 insuch trust.**4.6****Withholding**. Any benefits paid or provided pursuant to the Plan shall be subjectto any required tax withholding.**4.7****Severability**. Any provision in the Plan that is prohibited or unenforceable inany jurisdiction by reason of applicable law shall, as to such jurisdiction, be ineffective only tothe extent of such prohibition or unenforceability without invalidating or affecting the remainingprovisions hereof, and any such prohibition or unenforceability in any jurisdiction shall notinvalidate or render unenforceable such provision in any other jurisdiction.**4.8****The Plan’s Relation to other Descriptive Matter**. The Plan shall contain no termsor provisions except those set forth herein, or as hereafter amended in accordance with theprovisions of Section 4.3 of the Plan. If any description made in any other document is deemed tobe 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 subjectto anticipation, alienation, sale, transfer, assignment, pledge or other encumbrance, and anyattempt to do so shall be void.**4.10****Governing Law**. The provisions of the Plan shall be construed, administered andenforced 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 effecton the rights of any participant under any other employee benefit plan or policy sponsored by theCompany 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 aregoverned solely by their terms.**4.12****Miscellaneous**. Where the context so indicates, the singular will include theplural and vice versa. Titles are provided herein for convenience only and are not to serve as abasis for interpretation or construction of the Plan. Unless the context clearly indicates to thecontrary, a reference to a statute or document shall be construed as referring to any subsequentlyenacted, adopted, or executed counterpart.**4.13****Plan Administration**. The administration and operation of the Plan is directed bythe Plan Administrator who is appointed by the Compensation Committee (or their delegates). ThePlan Administrator will have full power to administer the Plan in all of its details. The PlanAdministrator’s power and authority will include, but will not be limited to, the sole discretionto:**•** make and enforce such rules and regulations as it deems necessary orproper for the efficient administration of the Plan or as are requiredto comply with applicable law;
 
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**•** interpret the Plan and authorize the payment of any benefits under it,its interpretation thereof to be final and conclusive regarding anyemployee, former employee, Participant, former Participant and/orbeneficiary; **•** decide all questions concerning the Plan and the eligibility of anyindividual to participate in the Plan; **•** compute the amount of benefits which will be payable to anyParticipant, former Participant or beneficiary in accordance with theprovisions of the Plan, and to determine the person or persons to whomsuch 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 andregulations; **•** appoint such agents, counsel, accountants and consultants as may berequired to assist in administering the Plan; and **•** by written instrument, allocate and delegate its fiduciaryresponsibilities in accordance with Section 405 of ERISA.All such rules, regulations, determinations, constructions, decisions and interpretations madeby the Plan Administrator will be final and binding, except as otherwise required by law. To theextent the Plan Administrator has been granted discretionary authority under the Plan, the PlanAdministrator’s prior exercise of such authority shall not obligate it to exercise its authority ina like fashion thereafter.**4.14****Compliance with Code Section 409A**. Notwithstanding anything in the Plan to thecontrary, if any Plan provision or benefits under the Plan would result in the imposition of anadditional tax under Code Section 409A and related Treasury Department regulations andpronouncements (“Section 409A”), that Plan provision or benefit will be reformed (without theconsent of Participants) to avoid imposition of the applicable tax and no action to comply withSection 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 andauthority to establish written procedures for processing claims for Plan benefits and reviews ofPlan benefit claims which have been denied or modified. Such procedures may be amended andmodified from time to time in the discretion of the Plan Administrator. The procedures as adoptedand amended and modified from time to time by the Plan Administrator are hereby incorporated byreference as a part of the Plan.
 
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**5.2****Summary of Claims Procedures**. In order to file a claim for benefits under thePlan, you must submit to the Vice President of Human Resources (the “Benefits Administrator”) awritten claim for Plan benefits containing a description of (a) an alleged failure to receive abenefit payable under the Plan or (b) an alleged discrepancy between the amount of a benefit owedand the amount of the benefit you received under the Plan. In connection with the submission of aclaim, you may examine the Plan and any other relevant documents relating to the claim, and you maysubmit written comments relating to such claim to the BenefitsAdministrator. If you need additional information regarding your claim for benefits, then youcan submit a written request to the Benefits Administrator for such information. Failure tofurnish a written claim description or to otherwise comply with the claim submission procedure willinvalidate your claim unless the Benefits Administrator determines that it was not reasonablypossible to comply with such procedure.(a) Upon the filing of a claim for benefits, the Benefits Administrator will determineif the request is clear, and if so, will proceed with the processing of the claim. If theBenefits Administrator determines that the claim is not clear, then the claim will bereferred to the Plan Administrator for review.(b) Within 90 days from the date a completed claim for benefits is filed (or suchlonger period as may be necessary due to unusual circumstances, but in any event no longerthan the time period described in the next paragraph), the Plan Administrator will make adecision as to whether the claim is to be approved, modified, or denied. If the PlanAdministrator approves the claim, then the Benefits Administrator will process the claim assoon as administratively practicable.(c) In the event of an “Adverse Benefit Determination” (which includes a denial ormodification of your claim, or an invalidation for failing to follow the Plan’s claimsubmission procedures), you will be notified in writing not later than 90 days following thedate the claim was filed (or within 180 days under special circumstances, in which case youwill be informed of the extension and the circumstances requiring the extension in writingprior to its commencement) of the following: **•** The specific reason or reasons for the Adverse BenefitDetermination;  **•** The Plan provisions upon which the Adverse BenefitDetermination is based;  **•** Any additional material or information necessary to perfect theclaim 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 ERISAwith respect to the Adverse Benefit Determination upon completion of the Plan’sclaims procedures.(d) Within 60 days following receipt of an Adverse Benefit Determination, you maysubmit a written request to the Plan Administrator for review of such determination. Duringthis review process, you will have the opportunity to submit written comments and otherinformation relating to the claim and you will have reasonable access to, and copies of, alldocuments and other information related to the claim free of charge. Any items you submitto the Plan Administrator will be considered without regard to whether such items wereconsidered in the initial benefit determination.
 
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(e) Within 60 days following a request for review (or within 120 days under specialcircumstances, in which case you will receive written notice of the extension and thecircumstances requiring the extension prior to its commencement), the Plan Administratormust, after providing you with a full and fair review, render its final decision in writing(or electronically). However, the review process may be delayed ifyou fail to provide information that is requested by the Plan Administrator. If thePlan Administrator approves the claim on review, then the Benefits Administrator willprocess the claim as soon as administratively practicable. In the event of an AdverseBenefit Determination on review, the Plan Administrator’s final decision will include: **•** The specific reason or reasons for the Adverse BenefitDetermination;  **•** The Plan provisions upon which the Adverse BenefitDetermination is based;  **•** A statement that you are entitled to reasonable access to, andcopies of, all documents and other information related to the claim free ofcharge; and  **•** A description of your right to bring a civil action under ERISAwith respect to the Adverse Benefit Determination.(f) You may, by submitting a written statement to the Plan Administrator, authorize anindividual or entity to pursue your claim for benefits under the Plan and/or your requestfor 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 acondition precedent to the commencement of any legal or equitable action in connection witha claim for benefits under the Plan by a claimant or by any other person claiming rightsindividually 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 specifiedlocations, such as worksites and union halls, all documents governing the Plan, includinginsurance contracts and collective bargaining agreements, and a copy of the latest annualreport (Form 5500 Series) filed by the Plan with the U.S. Department of Labor and availableat the Public Disclosure Room of the Employee Benefits Security Administration.(b) Obtain, upon written request to the Plan Administrator, copies of documentsgoverning the operation of the Plan, including insurance contracts and collective bargainingagreements, and copies of the latest annual report (Form 5500 Series) and updated summaryplan 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 Planparticipants, ERISA imposes obligations upon the people who are responsible for the operation ofemployee benefit plans. The people who operate the Plan, called “fiduciaries” of the Plan, have aduty 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 otherwisediscriminate against you in any way to prevent you from obtaining a welfare benefit orexercising your rights under ERISA.
 
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**6.3****Enforce Your Rights**. If your claim for a benefit is denied or ignored,in whole or in part, you have a right to know why this was done, to obtain copies of documentsrelating to the decision without charge, and to appeal any denial, all within certain timeschedules. 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 notreceive them within 30 days, you may file suit in a Federal court. In such a case, the court mayrequire the Plan Administrator to provide the materials and pay you up to $110 a day until youreceive the materials, unless the materials were not sent because of reasons beyond the control ofthe administrator. If you have a claim for benefits that is denied or ignored, in whole or inpart, you may file suit in a state or Federal court. In addition, if you disagree with the Plan’sdecision or lack thereof concerning the qualified status of a domestic relations order, you mayfile suit in Federal court. If it should happen that Plan fiduciaries misuse the Plan’s money, orif 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 paycourt costs and legal fees. If you are successful, the court may order the person you have sued topay these costs and fees. If you lose, the court may order you to pay these costs and fees (forexample, if it finds that your claim is frivolous).**6.4****Assistance With Your Questions**. If you have any questions about the Plan, youshould contact the Plan Administrator. If you have any questions about this statement or aboutyour rights under ERISA, or if you need assistance in obtaining documents from the PlanAdministrator, you should contact the nearest office of the Employee Benefits SecurityAdministration, U.S. Department of Labor, listed in your telephone directory or the Division ofTechnical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department ofLabor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certainpublications about your rights and responsibilities under ERISA by calling the publications hotlineof 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 ofeach year. The plan sponsor has assigned plan number 516 to the Plan. The Employer identificationnumber for Dynegy Inc. is 20-5653152.       **A.** **Plan Sponsor**     Dynegy Inc.    1000 Louisiana Street, Suite 5800    Houston, Texas 77002    (713) 507-6400
 
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       **B.** **Plan Administrator**     Dynegy Inc. Benefit Plans Committee    c/o Executive Vice President, Administration    Dynegy Inc.    1000 Louisiana Street, Suite 5800    Houston, Texas 77002    (713) 507-6400       **C.** **Agent for Legal Service of Process**     Dynegy Inc. Benefit Plans Committee    c/o Executive Vice President, Administration    Dynegy Inc.    1000 Louisiana Street, Suite 5800    Houston, Texas 77002EXECUTED AND EFFECTIVE this 3rd day of April, 2008.      DYNEGY INC.