Employment Agreement

Amendment 1 to Employment Agreement

LETTER REGARDING TERMINATION OF EMPLOYMENT AGREEMENT

 

 

EMPLOYMENT AGREEMENT - BRUCE A. WILLIAMSON
 
 
 
                                                                    Exhibit 10.4
 
                                October 18, 2002
 
Mr. Bruce A. Williamson
79 Wincrest Falls
Cypress, Texas 77429
 
 
Dear Bruce:
 
     Set forth below are the terms of your employment with Dynegy Inc.
(hereinafter referred to as the "Company").
 
     1. Title and Duties
 
     Your title shall be President and Chief Executive Officer of the Company,
and you will be elected to the Board of the Directors of the Company. You will
report to the Chairman of the Board of the Company. Your duties will include
such lawful duties as may be delegated from time to time by the Chairman. You
shall devote your full time, energy and skill to the performance of your duties
for the Company, and will exercise due diligence and reasonable care in the
performance of such duties. You will be employed at the Company's headquarters
in Houston, Texas.
 
     2. Term
 
     (a) Unless earlier terminated as provided for herein, the term of this
Agreement will be for three (3) years, beginning on the Effective Date and
ending on the third anniversary of the Effective Date (such period, and any
extension thereof pursuant to the next succeeding sentence, the "Term"). At the
time the Term would otherwise expire, the Term shall automatically be extended
for an additional one (1) year period unless either the Company or you provide
written notice not less than sixty (60) days prior to the date on which this
Agreement would otherwise be automatically extended that such party is electing
not to so extend the Term. The term "Effective Date" means October 23, 2002.
 
     (b) If your employment with Dynegy is terminated for "cause" or terminates
due to your voluntary resignation (other than pursuant to a voluntary
resignation resulting from a "constructive termination" as set forth in
Paragraph 2(d)), Dynegy shall have no further
 
 
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<PAGE>
 
obligation to you except for the payment of amounts due before the date of such
termination. You further agree that the benefits which you have received from
the execution of this Agreement through the date of such termination constitute
sufficient consideration for your obligations pursuant to Paragraph 4,
notwithstanding the fact that the Company has no further obligation to you
except for the payment of amounts due before the date of such termination.
 
     For purposes of this Agreement, you may be terminated for "cause" as a
result of (i) refusal to implement or adhere to lawful policies or lawful
directives of the Board of Directors; (ii) engaging in conduct which is
materially injurious (monetarily or otherwise) to the Company or any of its
affiliates (including, without limitation, misuse of the Company's or an
affiliate's funds or other property); (iii) misconduct or dishonesty directly
related to the performance of your duties for the Company or gross negligence in
the performance of your duties for the Company; (iv) conviction (or entering
into a plea bargain admitting criminal guilt) in any criminal proceeding
involving a felony or a crime of moral turpitude; (v) drug or alcohol abuse;
(vi) continued failure to perform your duties under this Agreement which is not
cured within 10 days after written notice is provided to you by the Company; or
(vii) any other material breach of this Agreement by you which is not cured
within 10 days after written notice is provided to you by the Company.
 
     (c) If your employment is terminated during the Term by the Company without
cause or by you due to a resignation following "constructive termination" (as
defined below), you shall receive the severance pay and other benefits for which
you are eligible under the Dynegy Inc. Executive Severance Pay Plan (effective
November 1, 2001) (the "Plan") in lieu of the payments and benefits described in
Paragraph 3 hereof. In addition to any severance pay and other benefits for
which you are eligible under the Plan, (i) a lump sum amount equal to the value
of the 401(k) Plan matching contribution and Portable Retirement Plan benefit
you otherwise would have received through the end of the Term of this Agreement;
and (ii) any employee stock options granted to you prior to or during the term
of this Agreement shall become vested as of your employment termination date,
and you shall have the right to exercise any such vested options through what
would have been the end of the Term of this Agreement, but in no event later
than the original term of the option.
 
     For purposes of this Agreement a "constructive termination" shall be deemed
to have occurred in the event that (i) your Base Salary as defined in Paragraph
3(a) is reduced; (ii) the Company materially breaches this Agreement; or (iii)
your position is relocated outside of the Houston, Texas metropolitan area. Any
resignation by you as a result of assertion of a constructive termination shall
be communicated by delivery to the Chairman of the Board of the Company by
written notice of not less than thirty (30) days, setting forth the grounds
therefore, during which period the Company shall be entitled to cure or remedy
the matters set forth in such notice to your reasonable satisfaction. Unless you
withdraw such notice prior to the expiration of this thirty (30) day period,
such resignation shall take effect upon the expiration of thirty (30) days from
the date of the delivery of the notice. Any other voluntary resignation by you
shall be communicated by thirty (30) days' advance written notice delivery to
the Chairman of the Board of the Company.
 
     (d) If your employment is terminated by the Company without cause, or by
you following a significant diminution in your responsibilities, authority or
duties, a reduction in
 
 
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<PAGE>
 
your Base Salary, relocation of your position outside the Houston, Texas
metropolitan area or a material breach of this Agreement by the Company, and
such termination occurs within one year after (i) the effective date of a
"change in control" (as defined below) or (ii) after the execution by the
Company of an agreement, the consummation of which will constitute a "change in
control," and before the effective date of a "change in control" or cancellation
of such agreement, then you shall receive the following items as your sole
compensation in lieu of the payments and benefits described in Paragraph 3
hereof: (i) a lump sum amount equal to 2.99 times the greater of (a) your
average annual Base Salary and annual cash bonus amount pursuant to the
Company's Incentive Compensation Plan as described in Paragraph 3(b) for the
three calendar years immediately prior to the calendar year of your employment
termination date or (b) your Base Salary and target annual cash bonus amount
under the Company's Incentive Compensation Plan as described in Paragraph 3(b)
for the year in which your employment is terminated; (ii) a lump sum amount
equal to the value of the 401(k) Plan matching contribution and Portable
Retirement Plan benefit you otherwise would have received through the end of
what would have been the Term of this Agreement absent such termination or
resignation; (iii) for a period of thirty-six (36) months from your employment
termination date, all medical, dental and vision benefits the Company was
maintaining for you and your family as of your employment termination date; and
(iv) any employee stock options granted to you prior to or during the Term of
this Agreement shall become vested as of your employment termination date, and
you shall have the right to exercise any such vested options through the end of
what would have been the Term of this Agreement absent such termination or
resignation, but no event later than the original term of the option. The
continued medical, dental and vision benefits referenced herein are contingent
upon the Company and your payment of its and your respective portion of the
premium required for each such benefit.
 
     For purposes of this Agreement, "change in control" shall mean (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 of the Company to another
entity if, in any such case, (A) the holders of equity securities of the Company
immediately prior to such transaction or event do not beneficially own
immediately after such transaction or event equity securities of the resulting
entity entitled to 60% or more of the votes then eligible to be cast in the
election of directors generally (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 transaction or event or (B)
the persons who were members of the Board immediately prior to such transaction
or event shall not constitute at least a majority of the board of directors of
the resulting entity immediately after such transaction or event, (2) the
dissolution or liquidation of the Company, (3) when 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 more than 20% (which percentage shall be increased to 40% in the case
of ownership or control by ChevronTexaco Corporation or a "group" of which
ChevronTexaco Corporation is a part) of the combined voting power of the
outstanding securities of, (A) if the Company has not engaged in a merger or
consolidation, the Company, or (B) if the Company has engaged in a merger or
consolidation, the resulting entity, or (4) 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. For purposes of the preceding sentence, (i) "resulting entity" in the
context of a transaction or event that is a merger, consolidation or sale of all
or substantially all assets shall mean the
 
 
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<PAGE>
 
surviving entity (or acquiring entity in the case of an asset 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 (ii) subsequent
to the consummation of a merger or consolidation that does not constitute a
Change in Control, the term "Company" shall refer to the resulting entity and
the term "Board" shall refer to the board of directors (or comparable governing
body) of the resulting entity.
 
     (e) If you die, or become disabled and cannot perform your duties, your
employment hereunder shall be terminated and you (or your estate) shall receive:
(i) your Base Salary for twelve (12) months following the month in which your
employment is terminated, and (ii) for a period of twelve (12) months from the
date your employment is terminated, all medical, dental and vision benefits that
the Company was maintaining for you and/or your family as of the date your
employment is terminated. In addition, any employee stock options granted to you
prior to or during the term of this Agreement shall become vested as of the date
of the termination of your employment due to death or disability, and you (or
your estate) shall have the right to exercise any such vested options for a
period of twelve (12) months from the date your employment is terminated. For
purposes of this Agreement, you shall be disabled as of the first date on which
you become eligible to receive disability benefits under the Company's long-term
disability plan (or Social Security disability benefits at a time when the
Company does not maintain a long-term disability plan or such plan is not
available to you).
 
     (f) Any termination of your employment after the expiration of the Term of
this Agreement shall be subject to the Company's practices and procedures,
including severance and other employee benefit plans.
 
     Unless otherwise specified herein, all payments under this Agreement shall
be paid in a lump sum, less applicable withholding taxes, within thirty (30)
days following your termination.
 
     3. Compensation
 
     (a) During the term of this Agreement, you will be paid a base annual
salary of $1,000,000, payable in accordance with the Company's payroll
guidelines. Your salary will be reviewed each year and may be increased, but not
decreased, in such amounts as may be determined by the Company. Increases may be
made to your Base Salary at the discretion of the Board of Directors based upon
your individual performance. There is no guarantee of a salary increase at any
time.
 
     (b) You shall participate in the Company's Incentive Compensation Plan. The
target bonus for your position is 100% of your base annual salary, dependent
upon certain financial or performance objectives, determined in accordance with
such program, and by the Board. Your bonus compensation can be within a range of
50% to 200% of your annual base salary. Incentive awards are paid to eligible
employees based on overall company, business unit, and individual performance
with emphasis placed on competitive market reward levels and with
differentiation made for stronger performers. Award ranges are subject to change
based on market competitive norms. In the sole discretion of the Board,
incentive awards in excess of the 200% target bonus range may be made in
non-cash equivalents including, but not limited to,
 
 
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<PAGE>
 
grants of options to purchase shares of Class A Common Stock of the Company or
grants of restricted shares of Class A Common Stock of the Company. There is no
guarantee of a bonus payment at any time. You must be an active employee on
payroll on the date the awards are distributed to receive an award.
 
     (c) You will receive, on the Effective Date, a grant of 2,000,000 fair
market value Non-Qualified Stock Options (the "Options") to purchase common
stock in Dynegy Inc. The Options will be priced as of the date of the public
announcement of your employment with the Company as President and Chief
Executive Officer, and will vest, in accordance with the applicable stock option
plan, in thirds on each anniversary of the option grant date until fully vested.
During the term of this Agreement, you will also be eligible to receive an
annual stock option award of Class A Common Stock of the Company, with a value
equal to a target range of 225% to 275% of your base annual salary. Such option
grants will be made dependent upon certain financial or performance objectives,
determined in accordance with such program, and by the Board. Option grant
ranges are subject to change based on market competitive norms, and the Company
may award options below the target range referenced above in its sole
discretion. There is no guarantee of a grant of options at any time, other than
the Options referenced above. Award ranges are subject to change based on market
competitive norms. Any options granted to you will have an exercise price equal
to the highest closing price reported on the NYSE for Class A Common Stock of
the Company on the date of grant in accordance with the requirements and
provisions of the Company's currently applicable option grant program. The
Options and any options granted during the term of this Agreement are subject to
the vesting, forfeiture and other terms and conditions of the option grant
program under which they were granted. You recognize that any value of an award
of "market" options is a projected value, which is subject to the future
performance of the Company stock, and that there is no guarantee that the actual
value of such options will achieve that value. The valuation method to determine
the actual number of stock options to be granted will be the Black-Scholes
valuation of the option on the date of grant, as approved by the Options
Committee of the Board of Directors of the Company.
 
     (d) You shall be eligible to participate in such other plans and receive
such other perquisites as are available to the members of executive management
of the Company and such that the Board of Directors of the Company in its sole
discretion determines, including, but not limited to, four (4) weeks of paid
vacation per annum.
 
     (e) On the Effective Date, the Company shall pay to you $2,250,000 as a
signing bonus for the execution of this Agreement.
 
     4. Confidentiality, Non-Competition and Non-Solicitation.
 
     You recognize and acknowledge that:
 
     (a) You will have access to certain information concerning the Company that
is confidential and proprietary and constitutes valuable and unique property of
the Company. You agree that you will not at any time, either during or after
your employment, disclose to others, use, copy or permit to be copied, except
pursuant to your duties on behalf of the Company or its successors, assigns or
nominees, any secret or confidential information of the Company (whether or not
developed by you) without the prior written consent of the Board of
 
 
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<PAGE>
 
Directors of the Company. The term "secret or confidential information of the
Company" (sometimes referred to herein as "Confidential Information") shall
include, without limitation, the Company's plans; strategies; potential
acquisitions; costs; prices; systems for buying, selling, and/or trading natural
gas, natural gas liquids, crude oil, coal, electricity, bandwidth and
communications services; client lists; pricing policies; financial information;
the names of and pertinent information regarding suppliers; computer programs;
policy or procedure manuals; training and recruiting procedures; accounting
procedures; the status and content of the Company's contracts with its suppliers
or clients; or servicing methods and techniques at any time used, developed, or
investigated by the Company; before or during your tenure of employment to the
extent any of the foregoing are (i) not generally available to the public and
(ii) maintained as confidential by the Company. You further agree to maintain in
confidence any confidential information of third parties received as a result of
your employment and duties with the Company.
 
     (b) At the termination of your employment you will deliver to the Company,
as determined appropriate by the Company, all correspondence, memoranda, notes,
records, client lists, computer systems, programs, or other documents and all
copies thereof made, composed or received by you, solely or jointly with others,
and which are in your possession, custody, or control at such date and which are
related in any manner to the past, present, or anticipated business of the
Company.
 
     (c) To protect and safeguard the Company's trade secrets and Confidential
Information and also the Company's goodwill with its suppliers and clients, for
a period of twelve (12) months following the termination of your employment for
any reason you will not, within a 50 mile radius of the Company's principal
office, without the prior written consent of the Board of Directors of the
Company, directly or indirectly, engage in (as owner, partner, shareholder,
employee, director, agent, consultant or otherwise) any business which is a
competitor of the Company, as hereinafter defined. The restrictions contained in
the preceding paragraph shall not apply in the event the Company repudiates this
Agreement or if you have not received all compensation for which you are
eligible in Paragraph 3 herein. For purposes of this Agreement, a "competitor of
the Company" is any entity, including without limitation a corporation, sole
proprietorship, partnership, joint venture, syndicate, trust or any other form
of organization or a parent, subsidiary or division of any of the foregoing,
which, during such period or the immediately preceding fiscal year of such
entity, was engaged in the unregulated marketing, gathering, transportation or
processing of natural gas or derivatives of natural gas or other hydrocarbons or
electricity. For purposes of this paragraph, the following entities shall not be
deemed to be competitors of the Company: (i) a Local Distribution Company; (ii)
a company which is predominantly an oil or natural gas producer; (iii) a natural
gas pipeline company in the jurisdictional aspects of its business, or (iv) an
integrated regulated electric and/or gas utility, as long as the utility does
not engage in the unregulated marketing of its generation or power trading other
than that related to the generation and power marketing allocated to its own
service areas. The terms of this Paragraph 4(c) shall not apply to your present
or future investments in the securities of companies listed on a national
securities exchange or traded on the over-the-counter market to the extent such
investments do not exceed one percent (1%) of the total outstanding shares of
such company.
 
 
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<PAGE>
 
     (d) For a period of two (2) years after the expiration or termination of
your employment for whatever reason, you shall not, either on your own behalf or
on behalf of your new employer (either directly or indirectly via a corporate
recruiter or headhunter) induce or otherwise entice any employee of the Company
to leave the Company, nor shall you attempt to hire any of the Company's
employees.
 
     (e) You agree that the foregoing restrictions contain reasonable
limitations as to the time, geographical area, and scope of activity to be
restrained and that these restrictions do not impose any greater restraint than
is necessary to protect the goodwill and other legitimate business interests of
the Company, including but not limited to the protection of Confidential
Information. You also agree that the general public shall not be harmed by
enforcement of this Paragraph 4. Should any provision in this Paragraph 4 be
held unreasonably broad with respect to the restrictions as to time,
geographical area, or scope of activity to be restrained, any such restriction
shall be construed by limiting and reducing it to the extent necessary to render
it reasonable, and as so construed, such provision shall be enforced.
 
     Accordingly, you consent and agree that if you violate any of the
provisions of this Paragraph 4, the Company and its subsidiaries and affiliated
companies would sustain irreparable harm and, therefore, in addition to any
other remedies which the Company may have under this Agreement or otherwise, the
Company shall be entitled to an injunction from any court of competent
jurisdiction restraining you from committing or continuing any such violation of
this Paragraph. You acknowledge that damages at law would not be an adequate
remedy for violation of this Paragraph 4, and you therefore agree that the
provisions of this Paragraph 4 may be specifically enforced against you in any
court of competent jurisdiction. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies available to the
Company for such breach or threatened breach, including the recovery of damages
from you.
 
     5. Arbitration
 
     The parties hereto may attempt to resolve any dispute hereunder informally
via mediation or other means. Otherwise, any controversy or claim arising out of
or relating to this Agreement, or any breach thereof, shall, except as provided
in Paragraph 4, be adjusted only by arbitration in accordance with the rules of
the American Arbitration Association, and judgment upon such award rendered by
the arbitrator may be entered in any court having jurisdiction thereof. The
arbitration shall be held in the City of Houston, Texas, or such other place as
may be agreed upon at the time by the parties to the arbitration. The
arbitrator(s) shall, in their award, allocate between the parties the costs of
arbitration, which shall include reasonable attorneys' fees of the parties, as
well as the arbitrator's fees and expenses, in such proportions as the
arbitrator deems just.
 
     6. Indemnification
 
     If, at any time during or after the Term of this Agreement, you are made a
party to, or are threatened to be made a party in, any civil, criminal or
administrative action, suit or proceeding by reason of the fact that you are or
were a director, officer, employee, or agent of the Company, or of any other
corporation or any partnership, joint venture, trust or other enterprise for
which you served as such at the request of the Company, then you shall be
 
 
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<PAGE>
 
 
indemnified by the Company, to the fullest extent permitted under applicable
law, against expenses actually and reasonably incurred by you or imposed on you
in connection with, or resulting from, the defense of such action, suit or
proceeding, or in connection with, or resulting from, any appeal therein if you
acted in good faith and in a manner you reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe your conduct was
unlawful. The foregoing indemnification provision shall apply regardless of
whether you are alleged to have engaged in any wrongdoing including intentional,
willful, negligent of grossly negligent conduct, but shall not apply if it is
adjudged that you are liable to the Company or to any other corporation,
partnership, joint venture, trust, enterprise or third party individual for
gross negligence or willful misconduct in the performance of your duties.
However, in no event shall you ever be required to reimburse the Company for any
fees and/or payments that have been made on your behalf as part of any
indemnification. As used herein, the term "expenses" shall include all
obligations actually and reasonably incurred by you for the payment of money,
including, without limitation, attorneys' fees, judgments, awards, fines,
penalties and amounts paid in satisfaction of a judgment or in settlement of any
such action, suit or proceeding, except amounts paid to the Company or such
other corporation, partnership, joint venture, trust or other enterprise by you.
The foregoing indemnification provisions shall be in addition to any other
rights to indemnification to which you may be entitled.
 
     7. Other Provisions
 
     (a) THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW,
RULE OR PRINCIPLE THAT MIGHT OTHERWISE REFER TO THE SUBSTANTIVE LAW OF ANOTHER
JURISDICTION.
 
     (b) Except as otherwise indicated, this Agreement is not assignable without
the written authorization of both parties; except that the Company may assign
this Agreement to any entity to which the Company transfers substantially all of
its assets or to any entity which is a successor to the Company by
reorganization, incorporation, merger or similar business combination.
 
     (c) Except as otherwise provided herein, the provisions of Paragraphs 4, 5,
6 and 7 of this Agreement shall survive the termination of this Agreement.
 
     (d) This Agreement supersedes all previous employment agreements, whether
written or oral, between the Company and you. This Agreement may be amended only
by written amendment duly executed by both parties and their legal
representatives and authorized by action of the Board. Except as otherwise
specifically provided in this Agreement, no waiver by either party hereto of any
breach by the other party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of a subsequent
breach of such condition or provision or a waiver of a similar or dissimilar
provision or condition at the same or at any prior or subsequent time.
 
     (e) Any notice or other communication required or permitted pursuant to the
terms of this Agreement shall be in writing and shall be deemed to have been
duly given when
 
 
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<PAGE>
 
hand delivered or mailed by United States mail, first class, postage prepaid and
registered with return receipt requested, addressed to the intended recipient at
his or its address set forth below and, in the case of a notice or other
communication to the Company, directed to the attention of the Board of
Directors with a copy to the Secretary of the Company, or to such other address
as the intended recipient may have theretofore furnished to the sender in
writing in accordance herewith, except that until any notice of change of
address is received, notices shall be sent to the following addresses:
 
              If to you:                         If to the Company:
 
              Bruce A. Williamson                Chairman of the Board
              79 Wincrest Falls                  Dynegy Inc.
              Cypress, Texas 77429               1000 Louisiana, Suite 5800
                                                 Houston, TX  77002
 
     (f) If any one or more of the provisions or parts of a provision contained
in this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity or unenforceability shall not
affect any other provision or part of a provision of this Agreement, but this
Agreement shall be reformed and construed as if such invalid or illegal or
unenforceable provision or part of a provision had never been contained herein
and such provisions or part thereof shall be reformed so that it would be valid,
legal and enforceable to the maximum extent permitted by law.
 
     (g) You shall not be required to mitigate damages (or the amount of any
compensation provided under this Agreement to be paid) following your
termination of employment, by seeking employment or otherwise.
 
     (h) Neither you nor the Company will make or authorize any public statement
disparaging the other in its or his business interests and affairs.
Notwithstanding the foregoing, neither party shall be (i) required to make any
statement which it or he believes to be false or inaccurate, or (ii) restricted
in connection with any litigation, arbitration or similar proceeding or with
respect to its response to any legal process.
 
     (i) The waiver by the Company of breach of any provision of this Agreement
by you shall not operate or be construed as a waiver of any subsequent breach by
you. The waiver by you of a breach of any provision of this Agreement by the
Company shall not operate or be construed as a waiver of any subsequent breach
by the Company.
 
     (j) The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
 
     (k) This Agreement may be executed in one or more counterparts, which
shall, collectively and separately, constitute one agreement.
 
     (l) Notwithstanding anything to the contrary set forth in this Agreement,
the Company may cause any of its subsidiaries for which you render services to
pay or otherwise satisfy, in whole or in part, some or all of the Company's
obligations hereunder.
 
 
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<PAGE>
 
     If the foregoing reflects your understanding of the terms of your
employment with the Company, please execute each copy of this letter in the
space provided below.
 
                                    DYNEGY INC.
 
                                    By: /s/ Dan L. Dienstbier
                                        ----------------------------------------
                                        Dan L. Dienstbier
                                        Chairman
                                        Board of Directors
 
 
AGREED AND ACCEPTED this 18th day of October 2002.
 
 
/s/ Bruce A. Williamson
---------------------------------
Bruce A. Williamson

 

AMENDMENT TO EMPLOYEE AGREEMENT

August 23, 2007

 

 

Mr. Bruce A. Williamson

79 Wincrest Falls

Cypress, Texas 77429

RE: Fourth Amendment to October 18, 2002 Employment Agreement

Dear Bruce:

Reference is made to your October 18, 2002 Employment Agreement (the "Original Agreement") with Dynegy Inc. (the "Company") as amended effective August 17, 2005, September 15, 2005 and March 16, 2006 (as amended, the "Prior Agreement"). This letter sets forth the Company's agreement with you with respect to amending the Prior Agreement as set forth in this Fourth Amendment to the Original Agreement (the "Fourth Amendment").

In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, you and the Company agree to amend the Prior Agreement as provided herein.

Paragraph 2(a) of the Prior Agreement is hereby amended and restated in its entirety as follows:

"(a) Unless earlier terminated as provided for herein, the term of this Agreement commenced on the date of execution of the Second Amendment to the Original Agreement and shall end on December 31, 2007 (such period, and any extensions thereof pursuant to the next succeeding sentence, the 'Term'). At the time the Term would otherwise expire, the Term shall automatically be extended for an additional one (1) year period unless either the Company or you provide written notice not less than thirty (30) days prior to the date on which this Agreement would otherwise be automatically extended that such party is electing not to so extend the Term."

The provisions of this Fourth Amendment, when executed, shall constitute an agreement supplemental to and in amendment of the Prior Agreement, and shall be construed with and as a part of the Prior Agreement. Except as modified and expressly amended by this Fourth Amendment, the Prior Agreement is in all respects ratified and confirmed, and all of the terms, provisions and conditions thereof shall be and remain in full force and effect.

If the foregoing reflects your understanding of the terms amending your Prior Agreement with the Company, please execute this Fourth Amendment in the space provided below and return a copy to me.

 

DYNEGY INC.

 

By: /s/ J. Kevin Blodgett

J. Kevin Blodgett

General Counsel and

Executive Vice President, Administration

 

 

AGREED AND ACCEPTED this 23rd day

of August, 2007

 

/s/ Bruce A. Williamson

Bruce A. Williamson

Chairman and Chief Executive Officer

 

Exhibit 10.1

November 28, 2007

Mr. Bruce A. Williamson

79 Wincrest Falls

Cypress, Texas 77429

 

 

Re:

Termination of Employment Agreement and Supplemental Benefits Agreement

Dear Bruce:

This letter is written to document certain agreements between Dynegy Inc. (“Dynegy”) and you regarding your employment agreement with Dynegy, dated October 18, 2002, and as subsequently amended (the “Employment Agreement”), and your eligibility to receive certain benefits, as discussed below.

I. Employment Agreement

Both Dynegy and you have determined that continued maintenance of your Employment Agreement after the expiration of its current Term (as defined in the Employment Agreement) on December 31, 2007, is no longer required with respect to your employment with Dynegy or one of its subsidiaries or affiliates (collectively, the “Company”). Accordingly, this letter serves as formal written notice by Dynegy and you, pursuant to Paragraph 2(a) of the Employment Agreement, that both parties have hereby elected to not extend the Term of the Employment Agreement. As a result, the Employment Agreement will terminate effective December 31, 2007.

II. Supplemental Benefits

In addition to the other Company benefits that are otherwise available for officers of the Company, effective January 1, 2008, you will be eligible to receive the following benefits in accordance with the terms and conditions of this agreement or the particular plan or policy, as applicable:

A. Change in Control Severance Benefits

For the period of time that the Second Supplement to the Dynegy Inc. Executive Severance Pay Plan, as currently amended and as the same may be further amended or supplemented from time to time (the “Second Supplement”), remains in effect, and assuming your continued employment with the Company, you will be eligible to receive, pursuant to this agreement, the severance benefits of a Level One Covered Individual (as defined in the Second Supplement) under the Second Supplement in accordance with the terms and conditions of the Second Supplement, which are incorporated herein by reference except as such terms and conditions are otherwise modified herein, provided you agree to all such terms and conditions. (In the event the Second Supplement is replaced by a successor change in control severance plan, you will be eligible to participate in such successor plan.)


Mr. Bruce A. Williamson

November 28, 2007

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You hereby agree to all terms and conditions of the Second Supplement, including but not limited to, the provisions of Section1 3.5 (Confidentiality/Noncompete/Nonsolicitation), with the following modifications for purposes of this agreement:

1. Section 2.1(c)(2) is hereby modified to require a material diminution in your annual base salary from the annual base salary provided to you immediately prior to the date on which a Change in Control (as defined in the Second Supplement) occurs;

2. By your execution of this agreement, you are eligible to receive the same severance benefits hereunder as a Level One Covered Individual under the Second Supplement who signed the letter described in Section 2.1(h) on or before April 1, 2007;

3. Upon your entitlement to receive severance benefits hereunder, the lump sum payments described in Subsections 3.1(a) and (b) shall be paid to you in accordance with the terms and conditions hereof no later than March 15th of the calendar year following the year in which your Involuntary Termination (as defined in the Second Supplement) occurs;

4. Outplacement services and benefits under Section 3.1(e) will be provided in accordance with Internal Revenue Code Section 409A and the regulations and guidance issued thereunder (“Code Section 409A”); and

5. You are not entitled to receive a Gross-up Payment (as defined in the Second Supplement) under Section 3.4 (you will be covered under a separate excise tax reimbursement policy of the Company).

Each of the payments of severance, continued medical and outplacement benefits provided herein are designated as separate payments for purposes of the short-term deferral rules under Treasury Regulation Section 1.409A-1(b)(4)(i)(F), the exemption for involuntary terminations under separation pay plans under Treasury Regulation Section 1.409A-1(b)(9)(iii), the exemption for medical expense reimbursements under Treasury Regulation Section 1.409A-1(b)(9)(v)(B), and the exemption for in-kind benefits under Treasury Regulation Section 1.409A-1(b)(9)(v)(C). As a result, (A) payments that are made on or before the 15th day of the third month of the calendar year following the applicable year of termination, and (B) any additional payments that are made on or before the last day of the second calendar year following the year of your termination and do not exceed the lesser of two times your base salary in the year prior to your termination or two times the limit under Code Section 401(a)(17) then in effect, are exempt from the requirements of Code Section 409A. All amounts paid to you for reimbursement of any

 


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All Section references herein shall refer to Sections of the Second Supplement.

 

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Mr. Bruce A. Williamson

November 28, 2007

Page 3

medical expense will be paid to you not later than the last day of the calendar year following the year in which you incur such medical expense. Since you are a “specified employee” within the meaning of Code Section 409A, to the extent the payments to be made during the first six (6)-month period following your termination of employment exceed such exempt amounts or are otherwise subject to the six (6)-month payment delay requirements of Code Section 409A, those payments shall be withheld and the amount of the payments withheld will be paid in a lump sum, without interest, during the seventh month after your termination.

B. Death Benefits

In addition to the death benefits provided by the Company to you, which currently comprise life insurance coverage in the amount of one times your annual base salary, during your employment with the Company, the Company will reimburse you for the annual premium cost associated with an individual term life policy on your life, with a coverage amount not to exceed One Million Dollars ($1,000,000.00), which policy shall be purchased and owned by you (or a trust that you may select to own such policy). All premium reimbursement amounts will be paid to you as soon as administratively reasonable but in no event later than the last day of the calendar year following the year in which you incur such premium cost.

In the event of your death, for a period of twelve (12) months from the date of your death, your family shall be eligible to receive all medical, dental and vision benefits that the Company was maintaining for you and/or your family as of the date of your death, at the same contribution and premium rates as may be charged to active employees during such period. Such twelve (12)-month period shall run concurrently with the applicable COBRA period.

C. Disability Benefits

In addition to the long-term disability benefits provided by the Company to you, which currently comprise salary continuation of up to 60% of your monthly base salary (subject to a monthly maximum of $25,000 pursuant to the terms and subject to the conditions of the Company’s long-term disability plan, in the event you become Disabled (as defined below) during your employment with the Company, you will receive a lump sum payment equal to twelve (12) months of your Base Salary (as defined below). Such payment will be paid to you as soon as administratively reasonable but in no event later than the 15th day of the third month of the calendar year following the year that you are determined to be Disabled. In addition, to the extent that such payment to you results or will result in an offset of any long-term disability payments that are otherwise payable to you under a long-term disability plan maintained by the Company, the Company shall make an additional lump sum payment to you that is equal to the amount of such offset payments, as soon as administratively reasonable but in no event later than the 15th day of the third month of the calendar year following the year that you are determined to be Disabled. For purposes of this Paragraph C, “Disabled” means that a determination has been made that you are disabled for purposes of being eligible to receive disability benefits under the Company’s long-term disability plan (or Social Security disability benefits at a time when the

 

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Mr. Bruce A. Williamson

November 28, 2007

Page 4

Company does not maintain a long-term disability plan or such plan is not available to you). For purposes of this Paragraph C, “Base Salary” means your regular base salary on the date you are determined to be Disabled but excluding all bonuses, expense reimbursements, benefits paid under any plan maintained by the Company and all equity awards of any type.

D. Vacation Benefits

You are entitled to receive four (4) weeks of paid vacation per annum.

E. Tax Withholding

Any benefits paid or provided pursuant to this agreement will be subject to the required tax withholding.

F. Section 409A

It is the parties’ intention that this agreement will not result in unfavorable tax consequences to you under Code Section 409A. Accordingly, you consent to any amendment of this agreement as Dynegy may reasonably make in furtherance of such intention, and Dynegy shall promptly provide you with a copy of such amendment. Any such amendments shall be made in a manner that preserves to the maximum extent possible the intended benefits to you. This paragraph does not create an obligation on the part of Dynegy to modify this agreement and does not guarantee that the amounts or benefits owed under this agreement will not be subject to interest and penalties under Code Section 409A.

This agreement shall supercede any and all existing oral or written agreements, representations or warranties between Dynegy and you regarding the subject matter hereof. Except as otherwise provided herein, this agreement may not be amended except by written agreement of both parties.

 

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Mr. Bruce A. Williamson

November 28, 2007

Page 5

This agreement is executed as of the date first set forth above and effective as set forth herein.

 

 

 

 

Dynegy Inc.

 

 

By:

 

/s/ J. Kevin Blodgett

 

 

J. Kevin Blodgett

 

 

General Counsel and Executive

Vice President, Administration

 

 

Agreed and Accepted:

 

/s/ Bruce A. Williamson

Bruce A. Williamson

 

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