Under A Collective Bargaining Agreement

EXHIBIT 10.5


ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN FOR EMPLOYEES COVERED
UNDER A COLLECTIVE BARGAINING AGREEMENT


As Amended and Restated
Effective January 1, 2002


ILLINOIS POWER COMPANY
INCENTIVE SAVINGS PLAN FOR EMPLOYEES COVERED
UNDER A COLLECTIVE BARGAINING AGREEMENT


W I T N E S S E T H :


WHEREAS, DYNEGY INC., an Illinois corporation, has heretofore adopted the ILLINOIS POWER COMPANY INCENTIVE SAVINGS PLAN FOR EMPLOYEES COVERED UNDER A COLLECTIVE BARGAINING AGREEMENT (the "PLAN") for the benefit of the employees of certain of its affiliated entities; and


WHEREAS, the Company desires to amend the Plan in several respects and to restate the Plan, intending thereby to provide an uninterrupted and continuing program of benefits;


NOW THEREFORE, the Plan is hereby restated in its entirety as follows with no interruption in time, effective as of January 1, 2002, except as otherwise indicated herein:


TABLE OF CONTENTS


PAGE
---- I. DEFINITIONS AND CONSTRUCTION.......................................................................... 1
1.1 DEFINITIONS................................................................................... 1
(1) ACCOUNT(S)............................................................................. 1
(2) ACT.................................................................................... 1
(3) AFTER-TAX ACCOUNT...................................................................... 1
(4) AFTER-TAX CONTRIBUTIONS................................................................ 1
(5) BEFORE-TAX ACCOUNT..................................................................... 1
(6) BEFORE-TAX CONTRIBUTIONS............................................................... 1
(7) BENEFIT COMMENCEMENT DATE.............................................................. 1
(8) CODE................................................................................... 1
(9) COMMITTEE.............................................................................. 1
(10) COMPANY................................................................................ 1
(11) COMPANY STOCK.......................................................................... 1
(12) COMPENSATION........................................................................... 1
(13) CONTROLLED ENTITY...................................................................... 2
(14) DIRECT ROLLOVER........................................................................ 2
(15) DIRECTORS.............................................................................. 2
(16) DISTRIBUTEE............................................................................ 2
(17) EFFECTIVE DATE......................................................................... 2
(18) ELIGIBLE EMPLOYEE...................................................................... 2
(19) ELIGIBLE RETIREMENT PLAN............................................................... 3
(20) ELIGIBLE ROLLOVER DISTRIBUTION......................................................... 3
(21) EMPLOYEE............................................................................... 4
(22) EMPLOYER............................................................................... 4
(23) EMPLOYER CONTRIBUTION ACCOUNT.......................................................... 4
(24) EMPLOYER CONTRIBUTIONS................................................................. 5
(25) EMPLOYER DISCRETIONARY CONTRIBUTIONS................................................... 5
(26) EMPLOYER MATCHING CONTRIBUTIONS........................................................ 5
(27) EMPLOYER SAFE HARBOR CONTRIBUTIONS..................................................... 5
(28) ESOP................................................................................... 5
(29) ESOP SUBACCOUNT........................................................................ 5
(30) EXEMPT LOAN............................................................................ 5
(31) FINANCED STOCK......................................................................... 5
(32) HIGHLY COMPENSATED EMPLOYEE............................................................ 5
(33) INCENTIVE CONTRIBUTION SUBACCOUNT...................................................... 6
(34) INVESTMENT FUND........................................................................ 6
(35) LEASED EMPLOYEE........................................................................ 6
(36) NON-ESOP SUBACCOUNT.................................................................... 6
(37) NORMAL RETIREMENT DATE................................................................. 6
(38) PARTICIPANT............................................................................ 6
(39) PLAN................................................................................... 6
(40) PLAN YEAR.............................................................................. 6
(41) ROLLOVER CONTRIBUTION ACCOUNT.......................................................... 6


(i)


(42) ROLLOVER CONTRIBUTIONS................................................................. 6
(43) SALARIED PLAN.......................................................................... 7
(44) SUSPENSE ACCOUNT....................................................................... 7
(45) TOTAL AND PERMANENT DISABILITY......................................................... 7
(46) TRASOP................................................................................. 7
(47) TRASOP EMPLOYEE SUBACCOUNT............................................................. 7
(48) TRASOP EMPLOYER SUBACCOUNT............................................................. 7
(49) TRASOP TRANSFER ACCOUNT................................................................ 7
(50) TRUST.................................................................................. 7
(51) TRUST AGREEMENT........................................................................ 7
(52) TRUST FUND............................................................................. 7
(53) TRUSTEE................................................................................ 7
(54) VBO.................................................................................... 8
1.2 NUMBER AND GENDER............................................................................. 8
1.3 HEADINGS...................................................................................... 8
1.4 CONSTRUCTION.................................................................................. 8


II. PARTICIPATION......................................................................................... 8
2.1 ELIGIBILITY................................................................................... 8
2.2 TRANSFERRED EMPLOYEES......................................................................... 8


III. CONTRIBUTIONS......................................................................................... 9
3.1 BEFORE-TAX CONTRIBUTIONS...................................................................... 9
3.2 AFTER-TAX CONTRIBUTIONS.......................................................................10
3.3 EMPLOYER MATCHING CONTRIBUTIONS...............................................................11
3.4 EMPLOYER DISCRETIONARY CONTRIBUTIONS..........................................................12
3.5 EMPLOYER SAFE HARBOR CONTRIBUTIONS............................................................12
3.6 RESTRICTIONS ON EMPLOYER MATCHING CONTRIBUTIONS AND AFTER-TAX CONTRIBUTIONS...................12
3.7 RETURN OF CONTRIBUTIONS.......................................................................13
3.8 DISPOSITION OF EXCESS DEFERRALS AND EXCESS CONTRIBUTIONS......................................13
3.9 ROLLOVER CONTRIBUTIONS........................................................................15


IV. ALLOCATIONS AND LIMITATIONS...........................................................................15
4.1 ALLOCATION OF CONTRIBUTIONS TO ACCOUNTS.......................................................15
4.2 APPLICATION OF FORFEITURES....................................................................17
4.3 VALUATION OF ACCOUNTS.........................................................................17
4.4 LIMITATIONS AND CORRECTIONS...................................................................17


V. INVESTMENT OF ACCOUNTS................................................................................21
5.1 INVESTMENT OF ESOP SUBACCOUNTS................................................................21
5.2 INVESTMENT OF CERTAIN EMPLOYER CONTRIBUTIONS..................................................21
5.3 INVESTMENT OF ACCOUNTS........................................................................21
5.4 VBO INVESTMENTS...............................................................................21
5.5 PASS-THROUGH VOTING AND OTHER RIGHTS WITH RESPECT TO COMPANY STOCK............................22
5.6 STOCK SPLITS AND STOCK DIVIDENDS..............................................................22


(ii)


5.7 RESTRICTION ON ACQUISITION OF COMPANY STOCK...................................................22


VI. ESOP AND ESOP ALLOCATIONS.............................................................................22
6.1 ARTICLE CONTROLS..............................................................................22
6.2 PURPOSE OF ESOP...............................................................................23
6.3 NATURE OF THE ESOP............................................................................23
6.4 REQUIREMENTS AS TO EXEMPT LOAN................................................................23
6.5 USE OF EXEMPT LOAN PROCEEDS...................................................................24
6.6 LOAN REPAYMENT CONTRIBUTIONS..................................................................25
6.7 RELEASE AND ALLOCATION OF FINANCED STOCK......................................................25
6.8 INVESTMENT OF ACCOUNTS........................................................................25
6.9 DIVIDENDS.....................................................................................26
6.10 "PUT" OPTION..................................................................................26
6.11 RIGHT OF FIRST REFUSAL........................................................................27
6.12 INVESTMENT OF TRUST FUND IN COMPANY STOCK.....................................................28
6.13 COMPANY STOCK VALUATION.......................................................................28


VII. TERMINATION BENEFITS..................................................................................29
7.1 NO BENEFITS UNLESS HEREIN SET FORTH...........................................................29
7.2 TERMINATION BENEFIT...........................................................................29
7.3 VESTING OF ACCOUNTS...........................................................................29


VIII. DEATH BENEFITS........................................................................................29
8.1 DEATH BENEFITS................................................................................29
8.2 DESIGNATION OF BENEFICIARIES..................................................................29


IX. TIME AND FORM OF PAYMENT OF BENEFITS..................................................................30
9.1 DETERMINATION OF BENEFIT COMMENCEMENT DATE....................................................30
9.2 FORM OF PAYMENT AND PAYEE.....................................................................32
9.3 DIRECT ROLLOVER ELECTION......................................................................32
9.4 TRANSFERS TO SALARIED PLAN....................................................................33
9.5 UNCLAIMED BENEFITS............................................................................33
9.6 CLAIMS REVIEW.................................................................................33


X. IN-SERVICE WITHDRAWALS................................................................................37
10.1 IN-SERVICE WITHDRAWALS........................................................................37
10.2 RESTRICTION ON IN-SERVICE WITHDRAWALS.........................................................39


XI. LOANS.................................................................................................40
11.1 ELIGIBILITY FOR LOAN..........................................................................40
11.2 MAXIMUM LOAN..................................................................................40
11.3 MINIMUM LOAN..................................................................................40
11.4 INTEREST AND SECURITY.........................................................................40
11.5 REPAYMENT TERMS OF LOAN.......................................................................41
11.6 OPERATION OF ARTICLE..........................................................................42


XII. ADMINISTRATION OF THE PLAN............................................................................42


(iii)


12.1 GENERAL ADMINISTRATION OF THE PLAN............................................................42
12.2 RECORDS AND PROCEDURES........................................................................42
12.3 MEETINGS......................................................................................42
12.4 SELF-INTEREST OF MEMBERS......................................................................42
12.5 COMPENSATION AND BONDING......................................................................43
12.6 COMMITTEE POWERS AND DUTIES...................................................................43
12.7 EMPLOYER TO SUPPLY INFORMATION................................................................44
12.8 TEMPORARY RESTRICTIONS........................................................................44
12.9 INDEMNIFICATION...............................................................................44
12.10 QUIET PERIOD..................................................................................45


XIII. TRUSTEE AND ADMINISTRATION OF TRUST FUND..............................................................45
13.1 TRUST AGREEMENT...............................................................................45
13.2 PAYMENT OF EXPENSES...........................................................................46
13.3 TRUST FUND PROPERTY...........................................................................46
13.4 DISTRIBUTIONS FROM PARTICIPANTS' ACCOUNTS.....................................................46
13.5 PAYMENTS SOLELY FROM TRUST FUND...............................................................46
13.6 NO BENEFITS TO COMPANY/EMPLOYER...............................................................46


XIV. FIDUCIARY PROVISIONS..................................................................................47
14.1 ARTICLE CONTROLS..............................................................................47
14.2 GENERAL ALLOCATION OF FIDUCIARY DUTIES........................................................47
14.3 FIDUCIARY DUTY................................................................................47
14.4 DELEGATION OF FIDUCIARY DUTIES................................................................47
14.5 INVESTMENT MANAGER............................................................................48


XV. AMENDMENTS............................................................................................48
15.1 RIGHT TO AMEND................................................................................48
15.2 LIMITATION ON AMENDMENTS......................................................................48


XVI. DISCONTINUANCE OF CONTRIBUTIONS, TERMINATION, PARTIAL TERMINATION, AND MERGER OR CONSOLIDATION........49
16.1 RIGHT TO DISCONTINUE CONTRIBUTIONS, TERMINATE, OR PARTIALLY TERMINATE.........................49
16.2 PROCEDURE IN THE EVENT OF DISCONTINUANCE OF CONTRIBUTIONS, TERMINATION, OR PARTIAL
TERMINATION...................................................................................49
16.3 MERGER, CONSOLIDATION, OR TRANSFER............................................................49


XVII. PARTICIPATING EMPLOYERS...............................................................................50
17.1 DESIGNATION OF OTHER EMPLOYERS................................................................50
17.2 SINGLE PLAN...................................................................................50


XVIII. MISCELLANEOUS PROVISIONS..............................................................................51
18.1 NOT CONTRACT OF EMPLOYMENT....................................................................51
18.2 ALIENATION OF INTEREST FORBIDDEN..............................................................51
18.3 UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT REQUIREMENTS........................51


(iv)


18.4 PAYMENTS TO MINORS AND INCOMPETENTS...........................................................51
18.5 ACQUISITION AND HOLDING OF COMPANY STOCK......................................................51
18.6 POWER OF ATTORNEY DESIGNATIONS................................................................51
18.7 PARTICIPANT'S AND BENEFICIARY'S ADDRESSES.....................................................52
18.8 INCORRECT INFORMATION, FRAUD, CONCEALMENT, OR ERROR...........................................52
18.9 SEVERABILITY..................................................................................52
18.10 JURISDICTION..................................................................................52


(v)


I. DEFINITIONS AND CONSTRUCTION


1.1 DEFINITIONS. Where the following words and phrases appear in the Plan, they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary.


(1) ACCOUNT(S): A Participant's Before-Tax Account, Employer Contribution
Account, After-Tax Account, Rollover Contribution Account, and/or
TRASOP Transfer Account, including the amounts credited thereto.


(2) ACT: The Employee Retirement Income Security Act of 1974, as amended.


(3) AFTER-TAX ACCOUNT: An individual account for each Participant, which is
credited with (A) his After-Tax Contributions and (B) as of the
Effective Date, the balance of his "Voluntary Contribution Account" (as
defined in the Plan prior to this restatement thereof) under the Plan
immediately prior to the Effective Date. Such Account shall also be
adjusted to reflect changes in value as provided in Section 4.3.


(4) AFTER-TAX CONTRIBUTIONS: Contributions made to the Plan by a
Participant in accordance with Section 3.2.


(5) BEFORE-TAX ACCOUNT: An individual account for each Participant, which
is credited with (A) the Before-Tax Contributions made by the Employer
on such Participant's behalf, (B) the Employer Safe Harbor
Contributions, if any, made on such Participant's behalf pursuant to
Section 3.5 to satisfy the restrictions set forth in Section 3.1(e),
and (C) as of the Effective Date, the balance of his "Salary Deferral
Contribution Account" (as defined in the Plan prior to this restatement
thereof) under the Plan immediately prior to the Effective Date. Such
Account shall also be adjusted to reflect changes in value as provided
in Section 4.3.


(6) BEFORE-TAX CONTRIBUTIONS: Contributions made to the Plan by the
Employer on a Participant's behalf in accordance with the Participant's
elections to defer Compensation under the Plan's qualified cash or
deferred arrangement as described in Section 3.1.


(7) BENEFIT COMMENCEMENT DATE: With respect to each Participant or
beneficiary, the date such Participant's or beneficiary's benefit is
paid to him from the Trust Fund as determined in accordance with
Section 9.1.


(8) CODE: The Internal Revenue Code of 1986, as amended.


(9) COMMITTEE: The Dynegy Inc. Benefit Plans Committee.


(10) COMPANY: Dynegy Inc., an Illinois corporation.


(11) COMPANY STOCK: The Class A common stock, without par value, of the
Company.


(12) COMPENSATION: A Participant's regular basic compensation from the
Employer paid while a Participant for services rendered, including (A)
any amounts subject to a deferral


1


election pursuant to Section 3.1, (B) elective contributions made on
a Participant's behalf by the Employer that are not includible in
income under Section 125 of the Code, and (C) any amounts that are
not includible in the gross income of a Participant under a salary
reduction agreement by reason of the application of Section 132(f) of
the Code, but excluding any other contributions or benefits under
this Plan or any other pension, profit sharing, insurance,
hospitalization or other plan or policy maintained by an Employer for
the benefit of such Participant, bonuses, overtime, commissions, and
all other extraordinary and unusual payments; provided, however, that
for purposes of the provisions of Section 3.2 (other than Section
3.2(a)), Compensation shall include bonuses, overtime and
commissions. Notwithstanding the foregoing, the Compensation of any
Participant taken into account for purposes of the Plan shall be
limited to $200,000 for any Plan Year with such limitation to be (i)
adjusted automatically to reflect any amendments to Section
401(a)(17) of the Code and any cost-of-living increases authorized by
Section 401(a)(17) of the Code and (ii) prorated for a Plan Year of
less than twelve months and to the extent otherwise required by
applicable law.


(13) CONTROLLED ENTITY: Each corporation that is a member of a controlled
group of corporations, within the meaning of Section 414(b) of the
Code, of which the Company or the Employer is a member, each trade or
business (whether or not incorporated) with which the Company or the
Employer is under common control, within the meaning of Section 414(c)
of the Code, and each member of an affiliated service group, within the
meaning of Section 414(m) of the Code, of which the Company or the
Employer is a member.


(14) DIRECT ROLLOVER: A payment by the Plan to an Eligible Retirement Plan
designated by a Distributee.


(15) DIRECTORS: The Board of Directors of the Company.


(16) DISTRIBUTEE: Each (A) Participant entitled to an Eligible Rollover
Distribution, (B) Participant's surviving spouse with respect to the
interest of such surviving spouse in an Eligible Rollover Distribution,
and (C) former spouse of a Participant who is an alternate payee under
a qualified domestic relations order, as defined in Section 414(p) of
the Code, with regard to the interest of such former spouse in an
Eligible Rollover Distribution.


(17) EFFECTIVE DATE: January 1, 2002, as to this restatement of the Plan,
except (A) as otherwise indicated in specific provisions of the Plan,
and (B) that provisions of the Plan required to have an earlier
effective date by applicable statute and/or regulation shall be
effective as of the required effective date in such statute and/or
regulation and shall apply, as of such required effective date, to any
plan merged into this Plan. The original effective date of the Plan was
January 1, 1987.


(18) ELIGIBLE EMPLOYEE: Each Employee employed as a member of a group to
whom the Plan has been and continues to be extended through a currently
effective collective bargaining agreement between his Employer and the
collective bargaining representative of the group of employees of which
he is a member; provided, however, that the term "Eligible


2


Employee" shall not include (A) a nonresident alien who receives no
earned income from the Employer that constitutes income from sources
within th ...