Document:

Exhibit 10.3

Exhibit 10.3

DYNEGY INC.

2009 PHANTOM STOCK PLAN

I. PURPOSE

The purpose of the DYNEGY INC. 2009 PHANTOM STOCK PLAN (the “Plan”) is to provide a means
through which DYNEGY INC., a Delaware corporation (the “Company”), and its Affiliates may attract
able persons to enter the employ of the Company and its Affiliates and to provide a means whereby
those individuals upon whom the responsibilities of the successful administration and management of
the Company and its Affiliates rest, and whose present and potential contributions to the Company
and its Affiliates are of importance, can be rewarded based on the Company’s performance, thereby
strengthening their concern for the profitable growth of the Company and its Affiliates.

II. DEFINITIONS

The following definitions shall be applicable throughout the Plan unless specifically modified
by any paragraph:

(a) “Affiliate” means any corporation, partnership, limited liability company or partnership,
association, trust or other organization which, directly or indirectly, controls, is controlled by,
or is under common control with, the Company.

(b) “Award” means a grant of Phantom Stock Units issued under this Plan.

(c) “Award Agreement” means a written agreement between the Company and a Participant with
respect to a grant of an Award.

(d) “Board” means the Board of Directors of the Company.

(e) “Code” means the Internal Revenue Code of 1986, as amended. Reference in the Plan to any
section of the Code shall be deemed to include any amendments or successor provisions to such
section and any regulations under such section.

(f) “Committee” means the Compensation and Human Resources Committee of the Company’s Board.

(g) “Common Stock” means the Class A common stock, $0.01 par value per share, of the Company,
or any security into which such common stock may be changed by reason of any transaction or event
of the type described in Article VII.

(h) “Company” means Dynegy Inc., a Delaware corporation.

 

 

 

(i) “Corporate Change” shall means the occurrence of any of the following events:

(1)  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, (i) 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 (ii) 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;

(2)  the dissolution or liquidation of the Company, but excluding a reorganization
pursuant to chapter 11 of Title 11, U.S. Code, as amended;

(3)  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, (i) if the Company has not engaged in a merger or
consolidation, the Company, or (ii) if the Company has engaged in a merger or consolidation,
the resulting entity;

(4) 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

(5) the Board (or the Committee) adopts a resolution declaring that a Corporate Change
has occurred.

For purposes of this definition, (i) “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 (i) subsequent to the consummation of a merger or consolidation that does
not constitute a Corporate Change, 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.

(j) “Director” means an individual who is a member of the Board.

(k) “Disability” has the meaning provided in the Dynegy Inc. Long Term Disability Plan.

(l) “Employee” means any person in an employment relationship with the Company or any
Affiliate.

 

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(m) “Fair Market Value” means, as of any specified date, the closing sales price of the Common
Stock reported on the stock exchange composite tape on that date (or such other reporting service
approved by the Committee), or, if no prices are reported on that date, on the
last preceding date on which such prices of the Common Stock are so reported. In the event
Common Stock is not publicly traded at the time a determination of its value is required to be made
hereunder, the determination of its fair market value shall be made by the Committee in such manner
as it deems appropriate, in accordance with Code Section 409A.

(n) “1934 Act” means the Securities Exchange Act of 1934, as amended.

(o) “Participant” means an Employee who has been granted an Award.

(p) “Phantom Stock Unit” means an Award granted under Article VI of the Plan.

(q) “Plan” means the Dynegy Inc. 2009 Phantom Stock Plan, as amended from time to time.

(r) “Rule 16b-3” means SEC Rule 16b-3 promulgated under the 1934 Act, as such may be amended
from time to time, and any successor rule, regulation or statute fulfilling the same or a similar
function.

III. EFFECTIVE DATE AND DURATION OF THE PLAN

The Plan shall become effective upon the date its adoption by the Committee. No further
Awards may be granted under the Plan after ten (10) years from the Plan’s adoption date.

IV. ADMINISTRATION

(a) Powers. Subject to the express provisions of the Plan, the Committee shall have
authority, in its discretion, to determine which Employees shall receive an Award, the time or
times when such Award shall be made, and the value of each such Award. In making such
determinations, the Committee shall take into account the nature of the services rendered by the
respective Employees, their present and potential contribution to the Company’s success and such
other factors as the Committee in its sole discretion shall deem relevant.

(b) Additional Powers. The Committee shall have such additional powers as are
delegated to it by the other provisions of the Plan. Subject to the express provisions of the
Plan, this shall include the power to construe the Plan and the respective agreements executed
hereunder, to prescribe rules and regulations relating to the Plan, and to determine the terms,
restrictions and provisions of the agreement relating to each Award, and to make all other
determinations necessary or advisable for administering the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in any agreement
relating to an Award in the manner and to the extent it shall deem expedient to carry it into
effect. The determinations of the Committee on the matters referred to in this Article IV shall be
conclusive.

 

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V. PLAN LIMIT

Subject to adjustment as provided in Article VII, the aggregate number of Phantom Stock Units
that may be issued under the Plan shall not exceed 25,000,000. Phantom Stock Units shall be deemed
to have been issued on the date an Award is granted under the terms of an Award
Agreement and, when vested, are settled in cash. To the extent that an Award lapses or the rights
of its holder terminate, any Phantom Stock Units subject to such Award shall not be available for
the grant of additional Awards under the Plan. Notwithstanding any provision of this Plan, no
shares of Common Stock will be issued upon settlement of an Award.

VI. PHANTOM STOCK UNITS

(a) Phantom Stock Unit Awards. A “Phantom Stock Unit” is the grant of a right to
receive a cash payment in an amount equal to the Fair Market Value of a share of Common Stock on
its vesting date. The Committee may, subject to the limitations of the Plan, grant Phantom Stock
Units to eligible individuals upon such terms and conditions as it may determine to the extent such
terms and conditions are consistent with Section 6(c) below.

(b) Eligibility for Awards. Awards may be granted only to persons who, at the time of
grant, are Employees. An Award may be granted on more than one occasion to the same person,
subject to the limitations set forth in the Plan. In determining the number of Phantom Stock Units
to be granted to a Participant, the Committee shall take into account a Participant’s
responsibility level, performance, potential, other Awards, and such other considerations as it
deems appropriate.

(c) Terms and Conditions of Awards. For each Participant, the Committee will
determine the timing of awards; the number of Phantom Stock Units awarded, any performance measures
or service requirements used for determining whether the Phantom Stock Units are earned, and
whether dividend equivalents will be paid on Phantom Stock Units, either currently or on a deferred
basis.

(d) Payment. Payment for Phantom Stock Units earned under an Award shall be made in
cash within thirty (30) days after the date a Phantom Stock Unit becomes vested (or such other time
as the applicable Phantom Stock Unit Award Agreement may provide). In the event that payment is
not made at the time vesting occurs, the Award Agreement for such Phantom Stock Unit shall contain
provisions that comply with the requirements of Code Section 409A.

(e) Termination of Award. An Award of Phantom Stock Units shall terminate if the
Participant does not remain continuously in the employ of the Company and its Affiliates at all
times during the applicable vesting period, except as may be otherwise determined by the Committee.
At the time of the Award is issued, the Committee may, in its sole discretion, prescribe
additional terms, conditions or restrictions relating to the such Phantom Stock Units, including,
but not limited to, rules pertaining to the termination of employment (by retirement, Disability,
death or otherwise) of a Participant prior to the Award’s vesting date. Such additional terms,
conditions or restrictions shall be set forth in a Phantom Stock Unit Award Agreement issued in
conjunction with the Award.

(f) Phantom Stock Award Agreements. At the time an Award is issued under this Article
VI, the Company and the Participant shall enter into a Phantom Stock Unit Award Agreement setting
forth each of the matters contemplated hereby, and such additional matters as
the Committee may determine to be appropriate. The terms and provisions of the respective
Phantom Stock Unit Award Agreements need not be identical.

 

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VII. RECAPITALIZATION OR REORGANIZATION

(a) No Effect on Right or Power. The existence of the Plan and the Awards granted
hereunder shall not affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or other change in
the Company’s or any Affiliate’s capital structure or its business, any merger or consolidation of
the Company or any Affiliate, any issue of debt or equity securities ahead of or affecting Common
Stock or the rights thereof, the dissolution or liquidation of the Company or any Affiliate or any
sale, lease, exchange or other disposition of all or any part of its assets or business or any
other corporate act or proceeding.

(b) Adjustment upon a Change in Capitalization

(1) Subdivision or Consolidation of Shares; Stock Dividends. The shares with
respect to which the value of an Award is determined are shares of Common Stock as presently
constituted, but if, and whenever, prior to the expiration of an Award theretofore granted,
the Company shall effect a subdivision or consolidation of shares of Common Stock or the
payment of a stock dividend on Common Stock without receipt of consideration by the Company,
the number of shares of Common Stock with respect to which such Award may thereafter be
satisfied, as applicable (i) in the event of an increase in the number of outstanding shares
shall be proportionately increased, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced. Any fractional share resulting from
such adjustment shall be rounded down to the next whole share.

(2) Recapitalizations. If the Company recapitalizes, reclassifies its capital
stock, or otherwise changes its capital structure (a “recapitalization”), the number and
class of shares of Common Stock used to determine the value of an Award theretofore granted
shall be adjusted so that the value of such Award shall thereafter be determined by
reference to the number and class of shares of stock and securities to which the Participant
would have been entitled pursuant to the terms of the recapitalization if, immediately prior
to the recapitalization, the Participant had been the holder of record of the number of
 shares of Common Stock used to determine the value of such Award.

(c) Adjustment upon a Corporate Change. If a Corporate Change occurs, no later than
(x) ten (10) days after the approval by the stockholders of the Company of the merger,
consolidation, reorganization, sale, lease or exchange of assets or dissolution or such election of
Directors or (y) thirty (30) days after a Corporate Change of the type described in Section
2(i)(3), the Committee, acting in its sole discretion without the consent or approval of any
Participant, shall effect one or more of the following alternatives, which alternatives may vary
among individual Participants and which may vary among Awards held by any individual Participant:

(1) require the mandatory surrender to the Company by selected Participants of some or
all of the outstanding Awards held by such Participants as of a date, before or
after such Corporate Change, specified by the Committee, in which event the Committee
shall thereupon cancel such Awards and the Company shall pay (or cause to be paid) to each
Participant an amount of cash equal to the Fair Market Value of the Award as calculated in
Subsection (d) below (the “Change of Control Value”), or

 

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(2) make such adjustments to the Award as the Committee deems appropriate to reflect
such Corporate Change (provided, however, that the Committee may determine in its sole
discretion that no adjustment is necessary to an Award), including, without limitation,
adjusting the Award to provide that the number and class of shares of Common Stock used to
determine the value of the Award shall be adjusted so that such Award shall thereafter cover
securities of the surviving or acquiring corporation or other property (including, without
limitation, cash) as determined by the Committee in its sole discretion.

Unless otherwise provided in an Award Agreement, and notwithstanding the foregoing, upon the
occurrence of a Corporate Change, the Committee, acting in its sole discretion without the consent
or approval of any Participant, may require the mandatory surrender to the Company by selected
Participants of some or all of the outstanding Phantom Stock Units as of a designated date, before
or after such Corporate Change, specified by the Committee, in which event the Committee shall
thereupon cancel such Phantom Stock Units and the Company shall pay (or cause to be paid) to each
Participant an amount of cash equal to the maximum value of such Phantom Stock Units which, in the
event the applicable vesting period set forth in such Phantom Stock Unit Award has not been
completed, shall be multiplied by a fraction, the numerator of which is the number of days during
the period beginning on the first day of the applicable vesting period and ending on the date of
the surrender, and the denominator of which is the aggregate number of days in the applicable
vesting period.

(d) Change of Control Value. For the purposes of clause (1) in Subsection (c) above,
the “Change of Control Value” shall equal the amount determined in clause (i), (ii) or (iii),
whichever is applicable, as follows; (i) the per share price offered to stockholders of the Company
in any such merger, consolidation, sale of assets or dissolution transaction, (ii) the price per
share offered to stockholders of the Company in any tender offer or exchange offer whereby a
Corporate Change takes place, or (iii) if such Corporate Change occurs other than pursuant to a
tender or exchange offer, the fair market value per share of the shares into which the Company’s
Common Stock is converted, as determined by the Committee as of the date determined by the
Committee to be the date of cancellation and surrender of such Awards. In the event that the
consideration offered to stockholders of the Company in any transaction described in this
Subsection (d) or Subsection (c) above consists of anything other than cash, the Committee shall
determine the fair cash equivalent of the portion of the consideration offered which is other than
cash.

(e) Other Changes in the Common Stock. In the event of changes in the outstanding
Common Stock by reason of recapitalizations, reorganizations, mergers, consolidations,
combinations, split-ups, split-offs, spin-offs, exchanges or other relevant changes in
capitalization or distributions to the holders of Common Stock occurring after the date of the
grant of any Award and not otherwise provided for by this Article VII, such Award and any agreement
evidencing such Award shall be subject to adjustment by the Committee at its sole
discretion as to the number shares of Common Stock used to determine the value of the Award.
In the event of any such change in the outstanding Common Stock or distribution to the holders of
Common Stock, or upon the occurrence of any other event described in this Article VII, the
aggregate number of Phantom Stock Units available for grant under the Plan shall be appropriately
adjusted as determined by the Committee, whose determination shall be conclusive.

 

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(f) No Adjustments unless Otherwise Provided. Except as hereinbefore expressly
provided, the issuance by the Company of shares of stock of any class or securities convertible
into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon
the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other securities, and in any case
whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number of shares of Common Stock subject to Awards theretofore granted or the
purchase price per share, if applicable.

VIII. AMENDMENT AND TERMINATION OF THE PLAN

The Company, through action by the Board or the Committee, shall have the right to alter or
amend the Plan or any part thereof from time to time; provided that no change in the Plan may be
made that would impair the rights of a Participant with respect to an Award theretofore granted
without the consent of the Participant. The Company, through discretionary action of the Board or
the Committee, may terminate the Plan at any time, provided such termination shall not result in
the termination of the unvested portion of any outstanding Award.

IX. MISCELLANEOUS

(a) No Right To An Award. Neither the adoption of the Plan nor any action of the
Board or of the Committee shall be deemed to give any individual any right to be granted an Award
under this Plan’s terms, except as may be evidenced by an Award Agreement duly executed on behalf
of the Company, and then only to the extent and on the terms and conditions expressly set forth
therein. The Plan shall be unfunded. The Company shall not be required to establish any special
or separate fund or to make any other segregation of funds or assets to assure the performance of
its obligations under any Award.

(b) No Employment/Membership Rights Conferred. Nothing contained in the Plan shall
(i) confer upon any Employee any right with respect to continuation of employment or of a
consulting or advisory relationship with the Company or any Affiliate or (ii) interfere in any way
with the right of the Company or any Affiliate to terminate his or her employment or consulting or
advisory relationship at any time.

(c) Withholding. The Company shall have the right to deduct in connection with all
Awards any taxes required by law to be withheld and to require any payments required to enable it
to satisfy its withholding obligations.

(d) No Restriction on Corporate Action. Nothing contained in the Plan shall be
construed to prevent the Company or any Affiliate from taking any action which is deemed by the
Company or such Affiliate to be appropriate or in its best interest, whether or not such action
would have an adverse effect on the Plan or any Award made under the Plan. No Participant,
beneficiary or other person shall have any claim against the Company or any Affiliate as a result
of any such action.

 

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(e) Restrictions on Transfer. Awards granted under this Plan shall not be
transferable otherwise than by will or the laws of descent and distribution.

(f) Termination of Awards or Disgorgement of Funds Triggered By Material Restatement of
the Company’s Financial Results. In accordance with Section 16 of the Company’s March 6, 2008
Amended and Restated Corporate Governance Guidelines, in the event of a material restatement of the
Company’s financial results, the Committee shall have the authority to review the Awards granted to
the Company’s “Executive Officers,” as defined under the 1934 Act and the rules and regulations
promulgated thereunder, or earned during the period for which such financial results are or will be
restated and to take any appropriate action, as determined by the Committee (including, but not
limited to, termination of Awards or repayment of Award proceeds to the Company), with respect to
any such Awards.

(g) Right of Offset. The Company will have the right to offset against its obligation
to deliver shares of Common Stock under the Plan or any Award Agreement any outstanding amounts
(including, without limitation, travel and entertainment or advance account balances, loans,
repayment obligations under any Awards, or amounts repayable to the Company pursuant to tax
equalization, housing, automobile or other employee programs) that the Participant then owes to the
Company and any amounts the Committee otherwise deems appropriate pursuant to any tax equalization
policy or agreement; provided, however, that no such offset shall be permitted if it would
constitute an “acceleration” of a payment hereunder within the meaning of Code Section 409A. This
right of offset shall not be an exclusive remedy and the Company’s election not to exercise the
right of offset with respect to any amount payable to a Participant shall not constitute a waiver
of this right of offset with respect to any other amount payable to the Participant or any other
remedy.

(h) Code Section 409A. It is the intention of the Company that no Award shall be
“deferred compensation” subject to Code Section 409A unless and to the extent that the Committee
specifically determines otherwise, and the Plan and the terms and conditions of all Awards shall be
interpreted accordingly. The terms and conditions governing any Awards that the Committee
determines will be subject to Code Section 409A, including any rules for elective or mandatory
deferral of the delivery of cash or shares of Common stock pursuant thereto, shall be set forth in
the applicable Award Agreement, and shall comply in all respects with Code Section 409A.
Notwithstanding any provision herein to the contrary, any Award issued under the Plan that
constitutes a deferral of compensation under a “nonqualified deferred compensation plan” as defined
under Code Section 409A(d)(1) and is not specifically designated as such by the Committee shall be
modified or cancelled to comply with the requirements of Code Section 409A, including any rules for
elective or mandatory deferral of the delivery of cash or Shares pursuant thereto. Unless expressly
permitted by the Committee in an Award Agreement, a Participant does not have any right to make any
election regarding the time or form of any payment pursuant to an Award.

 

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(i) Governing Law. The Plan shall be governed by, and construed in accordance with,
the laws of the State of Delaware, without regard to conflicts of laws principles thereof.

IN WITNESS WHEREOF, the undersigned has caused these presents to be executed this
4th day of
March, 2009.

	 	 	 	 	 
	 	DYNEGY INC.

 	 
	 	By:  	/s/ Julius Cox	 
	 	 	Name:  	Julius Cox	 
	 	 	Title:  	Vice President of Human Resources	 
	 

 

- 9 -Exhibit 10.4

Exhibit 10.4

PHANTOM STOCK UNIT AWARD AGREEMENT

THIS PHANTOM STOCK UNIT AWARD AGREEMENT (this “Agreement”) is made as of the 4th day of March,
2009, between DYNEGY INC., a Delaware corporation (“Dynegy”), and all of its Affiliates
(collectively, the “Company”), and the named employee (the “Employee”). A copy of the Dynegy Inc.
2009 Phantom Stock Plan (the “Plan”) is annexed to this Agreement and shall be deemed a part hereof
as if fully set forth herein. Unless the context otherwise requires, all terms that are not
defined in this Agreement 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 4, 2009 (the “Grant Date”), as a matter of
separate inducement and not in lieu of any salary or other compensation for Employee’s services,
                                         phantom stock units (the “Phantom Stock Units”), subject to the acceptance
by the Employee of the terms and conditions of this Agreement. The Employee acknowledges receipt
of a copy of the Plan, and agrees that this award of Phantom Stock Units 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. 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 Section 409A of Internal Revenue Code of 1986, as
amended, or any Treasury regulations or Internal Revenue Service guidance promulgated thereunder,
this Agreement and/or the Plan may be amended accordingly.

2. Phantom Stock Units. The Employee hereby accepts the Phantom Stock Units when
issued and agrees with respect thereto as follows:

(a) Payment and Determination of Value. Dynegy shall pay to the Employee the
value of a Phantom Stock Unit in cash not later than the second payroll day immediately
following the date such unit is scheduled to become vested under Section 2(b) below and such
Phantom Stock Unit shall thereafter be treated as redeemed for purposes of this Agreement.
Each Phantom Stock Unit shall have a value equal to one share of Dynegy’s Class A common
stock, $0.01 par value per share, on its vesting date.

(b) Vesting. An Employee’s Phantom Stock Units shall be 100% vested on the
third anniversary of the Grant Date. Except as otherwise provided in Section 2(c) below,
any portion of the Phantom Stock Units that does not become vested in accordance with this
Section 2(b) shall be forfeited to the Company for no consideration as of the date of the
termination of the Employee’s employment with the Company.

 

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(c) Accelerated Vesting and Payment. Notwithstanding the provisions of
Sections 2(a) and 2(b) above, the vesting and payment for some or all of the Employee’s
Phantom Stock Units shall be accelerated as follows:

(i) if the Employee is determined to be disabled (as defined in the Company’s
long term disability program or plan in which the Employee is a participant or, if
the 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) or in the
event of the death of the Employee, all of the Employee’s then outstanding Phantom
Stock Units shall become vested as of the date of such determination or death, as
applicable, and the Employee shall receive payment for such Phantom Stock Units on
that date; and

(ii) if the Employee’s employment with the Company terminates by reason of
Involuntary Termination, then 100% of the Phantom Stock Units awarded to the
Employee hereunder shall become vested as of the date of such termination of
employment and the Employee shall receive payment for such Phantom Stock Units
within thirty days following that date; and

(iii) if the Employee’s employment with the Company terminates as a result of a
Change in Control Termination occurring in connection with, but in no event earlier
than sixty (60) days prior to, a Change in Control, then 100% of the Phantom Stock
Units awarded to the Employee hereunder shall become vested as of the date of such
Change in Control and the Employee shall receive payment for such Phantom Stock
Units on that date; and

(iv) if the Employee is employed by the Company (or a successor thereto) on the
date of a Change in Control, then 100% of the Phantom Stock Units awarded to the
Employee hereunder shall become vested as of the date of such Change in Control and
the Employee shall receive payment for such Phantom Stock Units on that date.

In addition, the provisions of Section 2(h) shall apply to any Employee who terminates by
reason of retirement 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. If
the Employee’s employment with the Company terminates by reason of resignation by the
Employee (except as otherwise provided in Sections 2(c)(ii) or 2(iii) above) or dismissal by
the Company for Cause, then the Employee’s Phantom Stock Units shall be forfeited to the
Company for no consideration as of the date of the termination of the Employee’s employment
with the Company.

(d) Transfer Restrictions. The Phantom Stock Units may not be sold, assigned,
pledged, exchanged, hypothecated or otherwise transferred, encumbered or otherwise disposed
of by the Employee.

 

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(e) Definitions. For purposes of this Agreement, the following terms shall
have the meanings indicated below:

(i) “Cause” shall mean, and hence arise where, as determined by the Committee
in its sole discretion, the Employee (A) has been convicted of a misdemeanor
involving moral turpitude or a felony; (B) has failed to substantially perform the
duties of such Employee to the Company (other than such failure resulting from the
Employee’s incapacity due to physical or mental condition) which results in a
materially adverse effect upon the Company, financial or otherwise; (C) has refused
without proper legal reason to perform the Employee’s duties and responsibilities to
the Company; or (D) has breached any material corporate policy maintained and
established by the Company that is applicable to the Employee, provided such breach
results in a materially adverse effect upon the Company, financial or otherwise.

(ii) “Change in Control” shall mean the occurrence of any of the following
events: (A) 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, (I) 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 (II) 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; (B) the dissolution or liquidation of
Dynegy, but excluding a reorganization pursuant to chapter 11 of Title 11, U.S.
Code, as amended; (C) 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, (I) if Dynegy
has not engaged in a merger or consolidation, Dynegy, or (II) if Dynegy has engaged
in a merger or consolidation, the resulting entity; (D) 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 (E) 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.

 

3

 

(iii) “Change in Control Termination” shall mean the Employee’s employment is
terminated by the Company (or a successor thereto) without Cause, or by the Employee
following: (A) a significant diminution in the Employee’s responsibilities,
authority or duties; (B) a material reduction in the Employee’s Base Salary; or (C)
relocation of the Employee’s principal place of employment by 50 miles or more, all
as determined by the Committee in its sole discretion.

(iv) “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).

(f) Shareholder Rights. The Employee shall not have any of the rights of a
shareholder of the Company with respect to the Phantom Stock Units.

(g) Corporate Acts. The existence of the Phantom Stock Units shall not affect
in any way the right or power of the Board of Directors of the Company or the shareholders
of the Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company’s capital structure or its business, any merger or consolidation
of the Company, any issue of debt or equity securities, the dissolution or liquidation of
the Company or any sale, lease, exchange or other disposition of all or any part of its
assets or business or any other corporate act or proceeding.

(h) Retirement Provisions. The provisions of this Section 2(h) shall apply to
any Employee who satisfies the following requirements on the Grant Date: (I) the Employee
has reached sixty (60) years of age, and (II) the Employee has completed at least ten (10)
years of service as an employee of the Company. If an Employee does not satisfy the
requirements in the preceding sentence on the Grant Date but subsequently satisfies those
requirements during the term of this Agreement, then the provisions of this Section 2(h)
shall apply to such Employee on a prospective basis:

(i) if the Employee’s employment with the Company terminates by reason of
retirement by the Employee, then the Employee shall become vested in all of his or
her then outstanding Phantom Stock Units as of the date of such termination and the
Employee shall receive payment for such Phantom Stock Units within thirty days
following that date; and

 

4

 

(ii) notwithstanding any provision of this Agreement or the Plan, if a “Change
in Control,” as defined in Section 2(e)(ii) above, or a “Corporate Change”, as
defined in Section II of the Plan, occurs, then the Employee shall not receive an
accelerated payment of the value of his or her Phantom Stock Units unless such
Change in Control or Corporate Change, as applicable, is determined
by the Company to qualify as a change in control event under Code Section
409A(a)(2)(A)(v). If such event does not so qualify, then (I) the Employee shall be
fully vested in his or her rights under the Phantom Stock Units, (II) the value of
the Phantom Stock Units shall be fixed as of the date the Change in Control or
Corporate Change occurred, and (III) payment of such amount shall be made to the
Employee on the earliest date permitted under Sections 2(a) or 2(c) above.

3. Withholding of Tax. The Company is authorized and directed to withhold from any
cash payment made to the Employee under this Agreement any tax required to be withheld by reason of
such resulting compensation income. To the extent that any portion of the Phantom Stock Units is
treated as includible in the Employee’s income prior to the date a cash payment is made to the
Employee under this Agreement, the Company is hereby authorized and directed to either (i) require
the Employee to make payment of such taxes to the Company through delivery of cash or a cashier’s
check within five (5) calendar days after the Company is required to remit such taxes to the
Internal Revenue Service, or (ii) withhold from the Employee’s regular wages or bonus payments the
amount of any tax required to be withheld.

4. Code Section 409A. If and to the extent any portion of any payment provided to the
Employee under this Agreement in connection with the Employee’s separation from service (as defined
in Section 409A of Internal Revenue Code of 1986, as amended (“Code Section 409A”) is determined to
constitute “nonqualified deferred compensation” within the meaning of Code Section 409A and the
Employee is a specified employee as defined in Code Section 409A(a)(2)(B)(i), as determined by the
Company in accordance with the procedures separately adopted by the Company for this purpose, by
which determination the Employee, as a condition to accepting benefits under this Agreement and the
Plan, agrees that he or she is bound, such portion of the payment, compensation or other benefit
shall not be paid before the earlier of (i) the day that is six months plus one day after the date
of separation from service (as determined under Code Section 409A) or (ii) the tenth 10th day after
the date of the Employee’s death (as applicable, the “New Payment Date”). The aggregate of any
payments that otherwise would have been paid to the Employee during the period between the date of
separation from service and the New Payment Date shall be paid to the Employee in a lump sum on
such New Payment Date, and any remaining payments will be paid on their original schedule. Neither
the Company nor the Employee shall have the right to accelerate or defer the delivery of any such
payments or benefits except to the extent specifically permitted or required by Code Section 409A.
This Agreement is intended to comply with the provisions of Code Section 409A and this Agreement
and the Plan shall, to the extent practicable, be construed in accordance therewith. Terms defined
in this Agreement and the Plan shall have the meanings given such terms under Code Section 409A if
and to the extent required to comply with Code Section 409A. In any event, the Company makes no
representations or warranty and shall have no liability to the Employee or any other person if any
provisions of or payments under this Agreement are determined to constitute deferred compensation
subject to Code Section 409A but not to satisfy the conditions of that section.

 

5

 

5. Employment Relationship. For purposes of this Agreement, the Employee shall be
considered to be in the employment of the Company as long as the Employee remains an employee of
either the Company or an Affiliate (as such term is defined in the Plan). Nothing in
the adoption of the Plan or the award of the Phantom Stock Units thereunder pursuant to this
Agreement shall confer upon the Employee the right to continued employment by the Company or affect
in any way the right of the Company to terminate such employment at any time. Unless otherwise
provided in a written employment agreement or by applicable law, the Employee’s employment by the
Company shall be on an at-will basis, and the employment relationship may be terminated at any time
by either the Employee or the Company for any reason whatsoever, with or without cause. 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, and its determination shall be final.

6. Notices. Any notices or other communications provided for in this Agreement shall
be sufficient if in writing. In the case of the Employee, such notices or communications shall be
effectively delivered when hand delivered to the Employee at his or her principal place of
employment or when sent by registered or certified mail to the Employee at the last address the
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.

7. Entire Agreement; Amendment. This Agreement replaces and merges all previous
agreements and discussions relating to the same or similar subject matters between the Employee and
the Company and constitutes the entire agreement between the Employee and the Company with respect
to the subject matter of this Agreement. This Agreement may not be modified in any respect by any
verbal statement, representation or agreement made by any employee, officer, or representative of
the Company or by any written agreement unless signed by an officer of the Company who is expressly
authorized by the Company to execute such document.

8. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
any successors to the Company and all persons lawfully claiming under the Employee.

9. Miscellaneous. In the event of any conflict or inconsistency between the terms of
this Agreement 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 of this Agreement and the terms of the Dynegy
Inc. Executive Severance Pay Plan, including any amendments or supplements thereto, the terms of
this Agreement shall be controlling.

[Remainder of page intentionally left blank]

 

6

 

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

	 	 	 	 	 	 	 
	 	 	DYNEGY INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ J. Kevin Blodgett 

Name: J. Kevin Blodgett
	 	 
	 

	 	 	 	Title: General Counsel & EVP,
Administration	 	 

	 	 	 
	*	 	Employee has agreed to and accepted the terms of this Agreement utilizing online grant acceptance
capabilities with E*Trade Financial, the Company’s equity plan administrator.

 

7

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