Exhibit 10.5

 

EXECUTION VERSION

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (this “Agreement”), dated as of June 23, 2011, by and
between DYNEGY, INC., a Delaware corporation (the “Company”), and CLINT C.
FREELAND (the “Executive”).

 

W I T N E S S E T H :

 

WHEREAS, the Company desires to retain the services and employment of the
Executive, upon the terms and conditions hereinafter set forth; and

 

WHEREAS, the Executive desires to enter into such employment with the Company,
upon the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto, each intending to be legally bound hereby,
agree as follows:

 

1.             Employment.  On the terms and subject to the conditions set forth
herein, the Company hereby agrees to employ the Executive, and the Executive
hereby agrees to accept such employment, for the Employment Term (as defined
below).   During the Employment Term, the Executive shall serve as Chief
Financial Officer of the Company and shall report to the Chief Executive Officer
(the “CEO”), performing such duties and responsibilities as are customarily
attendant to such position with respect to the business of the Company and such
other duties and responsibilities as may from time to time be assigned to the
Executive by the CEO and the Board of Directors of the Company (the “Board”). 
During the Employment Term, to the extent requested by the Board, the Executive
shall also serve as a director or officer of any of the direct or indirect
subsidiaries of the Company, in each case without additional compensation.

 

2.             Performance.  The Executive shall serve the Company and its
subsidiaries and affiliates faithfully and to the best of his ability and shall
devote his full business time, energy, experience and talents to the business of
the Company and its subsidiaries and affiliates, as applicable, and will not
engage in any other employment activities for any direct or indirect
remuneration or otherwise, without the written approval of the Board; provided,
however, that it shall not be a violation of this Agreement for the Executive to
manage his personal investments or to engage in or serve such civic, community,
charitable, educational, or religious organizations as he may select, so long as
such service does not create a conflict of interest with, or interfere with the
performance of, the Executive’s duties hereunder or conflict with the
Executive’s covenants under Section 6 of this Agreement, in each case as
determined in the sole judgment of the Board.

 

3.             Employment Term.   Subject to earlier termination pursuant to
Section 7, the term of employment of the Executive hereunder shall begin on July
5, 2011 (the “Commencement Date”), and shall continue through December 31, 2014
(the “Initial Term”); provided, however, that beginning on the first day
immediately following the expiration date of the Initial Term, and on each
subsequent anniversary of such day, such term shall be automatically extended by
an additional one (1)-year period (each such period, an “Additional Term”,
unless, at least ninety (90) days before the end of the Initial Term or the
applicable Additional Term, the Company or the Executive shall have given notice
to the other party that it or he does not desire to extend the term of this
Agreement, in which case, the term of employment hereunder shall terminate as of
the end of the Initial Term or any Additional Term, as applicable,
(collectively, the “Employment Term”).

 

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4.             Principal Location. The Executive’s principal place of employment
shall be the Company’s offices located in Houston, Texas, or within fifty (50)
miles thereof, or such other location or locations as the Board may from time to
time designate, subject to required travel.

 

5.             Compensation and Benefits.

 

(a)           Base Salary.  As compensation for his services hereunder and in
consideration of the Executive’s other agreements hereunder, during the
Employment Term, the Company shall pay the Executive a base salary, payable in
equal installments in accordance with Company payroll procedures, at an annual
rate of FOUR HUNDRED FIFTY THOUSAND DOLLARS ($450,000) (the “Base Salary”),
subject to review by the Board from time to time for increase but not decrease;
provided, however, such Base Salary may be reduced in connection with a
broad-based reduction for employees of the Company.

 

(b)           Sign-on Bonus.   Upon the Commencement Date, the Executive shall
be entitled to receive a (i) one time, lump-sum cash payment in the amount of
one hundred fifty thousand dollars ($150,000) and (ii) shares of Company common
stock with an aggregate fair market value (as determined by the closing price of
such stock on the date hereof) equal to fifty thousand dollars ($50,000) (the
“Shares”), and such payment and shares shall be earned in full upon receipt.

 

(c)           Incentive Compensation Plan.  The Executive shall be eligible to
participate in the Dynegy Inc. Incentive Compensation Plan (the “Incentive
Compensation Plan”); provided, however, that the maximum Award (as defined in
the Incentive Compensation Plan) that the Executive may earn thereunder during
each Performance Period (as defined in the Incentive Compensation Plan) shall be
150% of his Base Salary (if 125% of the performance goals are attained), the
target Award is 75% of Base Salary (if 100% of the performance goals are
attained), and the minimum Award is 25% of Base Salary (if 80% of the
performance goals are attained).  For performance between any of such levels,
the Award will be determined by linear interpolation.  If the performance goals
are not attained at least at the 80% level, no Award is payable.

 

(d)           Long Term Incentive Plan.

 

(i)            Initial Stock Option Grant.  On the Commencement Date, in
consideration of the Executive’s entering into this Agreement and as an
inducement to join the Company, the Executive shall be granted, under the Dynegy
Inc. 2010 Long Term Incentive Plan, as amended or modified from time to time
(the “LTIP”), a non-qualified stock option to purchase the following number of
shares of the Company’s common stock (the “Option”), subject to the approval of
the Board or committee thereof, at the following corresponding per share
exercise prices:  50,000 shares at fair market value (as determined in
accordance with the LTIP) on the Option grant date; 62,500 shares at $6.50 per
share; 75,000 shares at $8.00 per share; and 100,000 shares at $10.00 per share;
provided that in no event will the exercise price be less than the fair market
value of the Company’s common stock on the Option grant date.  Such award shall
be governed by the LTIP and a stock option award agreement between the Executive
and the Company.  Subject to the terms of the LTIP and the Option award
agreement, and provided the Executive remains in active working status at such
time, the Option shall become exercisable in equal installments on each of the
first four (4) anniversaries of the Commencement Date; provided, however, that
if the Executive’s employment is terminated for any reason other than by the
Company for Cause or by the Executive without Good Reason (each as defined in
the Dynegy Inc. Executive Severance Pay Plan (the “Severance Plan”)), the Option
shall immediately vest in full and thereafter be exercisable in accordance with
the terms of the Option award agreement.

 

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(ii)  Participation in LTIP.  During the Employment Term, the Executive shall be
eligible to receive an additional annual equity award grant pursuant to the
LTIP, as determined by the Board or a committee thereof, in consultation with
the Executive.

 

(e)           Benefits.  During the Employment Term, the Executive shall,
subject to and in accordance with the terms and conditions of the applicable
plan documents and all applicable laws, be eligible to participate in all of the
employee benefit, fringe and perquisite plans, practices, policies and
arrangements the Company makes available from time to time to its similarly
situated executive officers generally.

 

(f)            Vacation.  The Executive shall be entitled to paid vacation in
accordance with the Company’s policies and practices with respect to its
employees generally.

 

(g)           Business Expenses.  The Executive shall be reimbursed by the
Company for all reasonable and necessary business expenses actually incurred by
him in performing his duties hereunder.  All payments under this paragraph (g)
of this Section 5 will be made in accordance with policies established by the
Company from time to time and subject to receipt by the Company of appropriate
documentation.

 

(h)           Relocation Expenses.  The Executive shall be reimbursed by the
Company for reasonable direct out-of-pocket moving and relocation expenses
actually incurred by the Executive to relocate his principal residence from the
New York, New York metropolitan area to the Houston, Texas area, including but
not limited to (i) closing costs actually incurred by the Executive in
connection with the sale and purchase of the Executive’s previous principal
residence in New York and his new principal residence in Texas, excluding points
or other costs related to financing, and (ii) the excess, if any, of the
Executive’s purchase price for his principal residence in New York over the sale
price of such residence, up to a maximum reimbursement amount of $100,000,
provided that such expenses are not reimbursed by another party, in accordance
with the policies established by the Company from time to time and upon receipt
by the Company of appropriate documentation.

 

(i)            Financial Planning and Tax Advice.  During the Employment Term,
the Company shall reimburse the Executive annually for the reasonable costs
actually incurred by the Executive for individual tax and financial planning
advice in an amount not to exceed $10,000 per year.

 

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(j)            Indemnification; Directors’ and Officers’ Liability Insurance. 
The Company shall indemnify the Executive for actions taken by the Executive as
an officer or director of the Company pursuant to the governing documents of the
Company; provided, however, that the Company shall not indemnify the Executive
for any losses incurred by the Executive as a result of acts or omissions that
shall constitute Cause, or pursuant to a cause of action by Executive against
the Company or its directors, officers, agents, representatives or employees. 
The Company will promptly advance to the Executive expenses incurred or to be
incurred by him, including reasonable attorneys’ fees, to defend any
indemnification-eligible proceeding prior to its final disposition, after
receipt by the Company of a written request from the Executive for such advance,
together with documentation reasonably acceptable to the Board, subject to an
undertaking by the Executive to pay back any advanced amounts for which it is
determined that the Executive was not entitled to indemnification; provided,
however, that the Company may decline to advance expenses to the Executive in
connection with any claim or proceeding between the Executive and the Company or
its subsidiaries or affiliates.  If the Executive has any knowledge of any
actual or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative, as to which the Executive may request indemnity
under this provision, the Executive shall give the Company prompt written notice
thereof.  The Company shall be entitled to assume the defense of any such
proceeding, and the Executive shall cooperate with such defense.  During the
Employment Term and thereafter, the Company shall cover the Executive under its
directors’ and officers’ liability insurance policy to the extent it covers its
other officers and directors.

 

6.             Covenants of the Executive.  The Executive acknowledges and the
Company promises that in the course of his employment with the Company,
Executive will become familiar with the Company’s and its subsidiaries’ and
affiliates’ trade secrets and with other confidential and proprietary
information concerning the Company and its subsidiaries and affiliates, and that
his services are of special, unique and extraordinary value to the Company and
its subsidiaries and affiliates.  Therefore, the Company and the Executive
mutually agree that it is in the interest of both parties for the Executive to
enter into the restrictive covenants set forth in this Section 6 to, among other
things, protect the legitimate business interests of the Company and those of
its subsidiaries and affiliates, including the protection of the Company’s and
its subsidiaries’ and affiliates’ trade secrets and other confidential and
proprietary information, and that such restrictions and covenants contained in
this Section 6 are reasonable in geographic and temporal scope and in all other
respects given the nature and scope of the Executive’s duties, his access to the
Company’s trade secrets and other confidential and proprietary information, and
the nature and scope of the Company’s and its subsidiaries’ and affiliates’
businesses and that such restrictions and covenants do not and will not unduly
impair the Executive’s ability to earn a living after termination of his
employment with the Company.  The Executive further acknowledges and agrees that
(i) the Company would not have entered into this Agreement but for the
restrictive covenants of the Executive set forth in this Section 6, and (ii)
such restrictive covenants have been made by the Executive in order to induce
the Company to enter into this Agreement.  Therefore, and in further
consideration of, (A) the Company’s agreement to provide the Executive with
access to the Company’s confidential and proprietary information, (B) the mutual
covenants and promises contained in this Agreement and/or (C) the compensation
and benefits to be paid or provided hereunder, and to protect the Company’s and
its subsidiaries and affiliates’ business interest, confidential and proprietary
information and goodwill:

 

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(a)           Noncompetition.  During the term of the Executive’s employment
with the Company and for the two (2)-year period following termination of such
employment under any circumstances (the “Restricted Period”), the Executive
shall not, within any jurisdiction or marketing area in which the Company or any
of its subsidiaries or affiliates is engaged in business or marketing
activities, directly or indirectly, own, manage, operate, control, or provide
executive or management level consulting, employment or management services to,
any business competitive with the business conducted by the Company or any of
its affiliates.  The scope of businesses and the jurisdictions and marketing
areas within which the Executive has agreed not to compete pursuant to this
Section 6(a) shall, for any challenged activity of the Executive, be determined
as of the date of any such activity.

 

Notwithstanding the foregoing, the Executive’s ownership solely as an investor
of two percent (2%) or less of the outstanding securities of any class of any
publicly-traded securities of any company shall not, by itself, be considered to
be competition with the Company or any of its subsidiaries or affiliates.

 

(b)           Nonsolicitation.  During the term of the Executive’s employment
with the Company and for the Restricted Period following termination of such
employment under any circumstances, the Executive shall not, directly or
indirectly, (i) employ, cause to be employed or hired, recruit, solicit for
employment or otherwise contract for the services of, or establish a business
relationship with (or assist any other person in engaging in any such
activities), any person who is, or within twelve (12) months before any date of
determination was (and, following the termination of the Executive’s employment
with the Company, within twelve (12) months before or after such termination,
was) an employee, agent or consultant of the Company or any of its subsidiaries
or affiliates (collectively, the “Company Entities”); or (ii) otherwise induce
or attempt to induce (or assist any other person in engaging in any such
activities) any employee, agent or contractor of any Company Entity to terminate
such person’s employment or other relationship with the Company Entities, or in
any way interfere with the relationship between any Company Entity and any such
employee, agent or contractor; (iv) solicit or attempt to solicit (otherwise
than on behalf of any Company Entity) any person that is, or within twelve (12)
months before any date of determination was (and, following the termination of
the Executive’s employment with the Company, within twelve (12) months before or
after such termination, was) a client, lender, investor, customer, supplier,
licensee or business relation of any Company Entity with whom Executive had a
material relationship or about whom Executive had access to material trade
secret or confidential information, or who any Company Entity solicited to be a
client, customer, supplier or licensee during either such twelve (12)-month
period and with whom Executive had a material relationship or about whom
Executive had access to material trade secret or confidential information, or
induce or attempt to induce any such person to cease, reduce or not commence
doing business with any Company Entity (or assist any other person in engaging
in any such activities); or (v) interfere in any way with the relationship
between any Company Entity and any person that is or was a client, lender,
investor, customer, supplier, licensee or other business relation of such
Company Entity (or assist any other person in engaging in any such activities)
if Executive had a material relationship or had access to material trade secret
or confidential information about such person or entity.

 

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(c)           Confidential Information.  (i) The Executive acknowledges that all
customer lists and information, vendor or supplier lists and information,
inventions, trade secrets, know-how or other non-public, confidential or
proprietary knowledge, information or data with respect to the products,
services, operations, finances, business or affairs of the Company or its
subsidiaries and affiliates or with respect to confidential, proprietary or
secret processes, methods, inventions, services, techniques, customers
(including, without limitation, the identity of the customers of the Company or
its subsidiaries and affiliates and the specific nature of the services provided
by the Company or its subsidiaries and affiliates), employees (including,
without limitation, the matters subject to this Agreement) or plans of or with
respect to the Company or its subsidiaries and affiliates or the terms of this
Agreement (all of the foregoing collectively hereinafter referred to as,
“Confidential Information”) are property of the Company or its applicable
subsidiaries or affiliates.  The Executive further acknowledges that the Company
and its subsidiaries and affiliates intend, and make reasonable good faith
efforts, to protect the Confidential Information from public disclosure. 
Therefore, the Executive agrees that, except as required by law or regulation or
as legally compelled by court order (provided that in such case, the Executive
shall promptly notify the Company of such order, shall cooperate with the
Company in attempting to obtain a protective order or to otherwise restrict such
disclosure, and shall only disclose Confidential Information to the minimum
extent necessary to comply with any such law, regulation or order), during the
Employment Term and at all times thereafter, the Executive shall not, directly
or indirectly, divulge, transmit, publish, copy, distribute, furnish or
otherwise disclose or make accessible any Confidential Information, or use any
Confidential Information for the benefit of anyone other than the Company and
its subsidiaries and affiliates, unless and to the extent that the Confidential
Information becomes generally known to and available for use by the general
public other than as a result of the Executive’s acts or omissions or such
disclosure is necessary in the course of the Executive’s proper performance of
his duties under this Agreement.

 

(ii) The Company Entities do not wish to incorporate any unlicensed or
unauthorized material into their products or services.  Therefore, the Executive
agrees that he will not disclose to the Company, use in the Company’s business,
or cause the Company to use, any information or material which is a trade
secret, or confidential or proprietary information, of any third party,
including, but not limited to, any former employer, competitor or client, unless
the Company has a right to receive and use such information or material.  The
Executive will not incorporate into his work any material or information which
is subject to the copyrights of any third party unless the Company has a written
agreement with such third party or otherwise has the right to receive and use
such material or information.

 

(d)           Company Intellectual Property.  The Executive agrees to promptly
disclose to the Company any and all work product, inventions, artistic works,
works of authorship, designs, methods, processes, technology, patterns,
techniques, data, Confidential Information, patents, trade secrets, trademarks,
domain names, copyrights, and the like, and all other intellectual property
relating to the business of the Company and any of its affiliates which are
created, authored, composed, invented, discovered, performed, perfected, or
learned by the Executive (either solely or jointly with others) during the
Employment Term (collectively, together with such intellectual property as may
be owned or acquired by the Company, the “Company Intellectual Property”).  The
Company Intellectual Property shall be the sole and absolute property of the
Company and its affiliates.  All work performed by the Executive in authoring,
composing, inventing, creating, developing or modifying Company Intellectual
Property and/or other work product to which copyright protection may attach
during the course of the Executive’s employment with the Company shall be
considered “works made for hire” to the extent permitted under applicable
copyright law and will be considered the sole property of the Company.  To the
extent such works, work product or Company Intellectual Property are not
considered “works made for hire,” all right, title, and interest to such works,
work product and Company Intellectual Property, including, but not limited to,
all copyrights, patents, trademarks, rights of publicity, and trade secrets, is
hereby assigned to the Company and the Executive agrees, at the Company’s
expense, to execute any documents requested by the Company or any of its
affiliates at any time in relation to such assignment.  The Executive
acknowledges and agrees that the Company is and will be the sole and absolute
owner of all trademarks, service marks, domain names, patents, copyrights, trade
dress, trade secrets, business names, rights of publicity, inventions,
proprietary know-how and information of any type, whether or not in writing, and
all other intellectual property used by the Company or held for use in the
business of the Company, including all Company Intellectual Property.  The
Executive further acknowledges and agrees that any and all derivative works,
developments, or improvements based on intellectual property, materials and
assets subject to this Section 6 created during the Employment Term (including,
without limitation, Company Intellectual Property) shall be exclusively owned by
the Company.  The Executive will cooperate with the Company and any of its
affiliates, at no additional cost to such parties (whether during or after the
Employment Term), in the confirmation, registration, protection and enforcement
of the rights and property of the Company and its affiliates in such
intellectual property, materials and assets, including, without limitation, the
Company Intellectual Property.

 

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(e)           Company Property.  All Confidential Information, Company
Intellectual Property, files, records, correspondence, memoranda, notes or other
documents (including, without limitation, those in computer-readable form) or
property relating or belonging to the Company and its subsidiaries and
affiliates, whether prepared by the Executive or otherwise coming into his
possession or control in the course of the performance of his services under
this Agreement, shall be the exclusive property of the Company and shall be
delivered to the Company, and not retained by the Executive (including, without
limitation, any copies thereof), promptly upon request by the Company and, in
any event, promptly upon termination of the Employment Term.  The Executive
acknowledges and agrees that he has no expectation of privacy with respect to
the Company’s telecommunications, networking or information processing systems
(including, without limitation, stored computer files, email messages and voice
messages), and that the Executive’s activity and any files or messages on or
using any of those systems may be monitored at any time without notice.

 

(f)            Securities Law Matters. The Executive is an “accredited investor”
within the meaning of Rule 501 of Regulation D under the Securities Act of 1933,
as amended (the “Securities Act”). The Executive has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of acquiring the Shares. The Executive understands that the
shares have not been registered pursuant to the Securities Act or any applicable
state securities laws, that the Shares will be characterized as “restricted
securities” as that term is defined in Rule 144 promulgated under the Securities
Act, and that the Shares cannot be sold or otherwise disposed of without
registration under the Securities Act or an exemption therefrom.

 

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(g)           Enforcement.  The Executive acknowledges that a breach of his
covenants and agreements contained in this Section 6 would cause irreparable
damage to the Company and its subsidiaries and affiliates, the exact amount of
which would be difficult to ascertain, and that the remedies at law for any such
breach or threatened breach would be inadequate.  Accordingly, the Executive
agrees that if he breaches or threatens to breach any of the covenants or
agreements contained in this Section 6, in addition to any other remedy which
may be available at law or in equity, the Company and its subsidiaries and
affiliates shall be entitled to:  (i) cease or withhold payment to the Executive
of any severance payments described in Section 7, for which he otherwise
qualifies under such Section 7, in excess of such payments in the amount of
$2,500 payable in consideration for the Executive’s release of claims described
in Section 7(d), (ii) institute and prosecute proceedings in any court of
competent jurisdiction for specific performance and injunctive and other
equitable relief to prevent the breach or any threatened breach thereof without
bond or other security or a showing of irreparable harm or lack of an adequate
remedy at law, and (iii) an equitable accounting by any court of competent
jurisdiction of all profits or benefits arising out of such violation. 
Additionally, upon a breach by the Executive of this Section 6, the Option (and
any other stock-based awards held by the Executive) shall be automatically
canceled and forfeited without any further action.

 

(h)           Scope of Covenants.  The Company and the Executive further
acknowledge that the time, scope, geographic area and other provisions of this
Section 6 have been specifically negotiated by sophisticated commercial parties
and agree that they consider the restrictions and covenants contained in this
Section 6 to be reasonable and necessary for the protection of the interests of
the Company and its subsidiaries and affiliates, but if any such restriction or
covenant shall be held by any court of competent jurisdiction to be void but
would be valid if deleted in part or reduced in application, such restriction or
covenant shall apply in such jurisdiction with such deletion or modification as
may be necessary to make it valid and enforceable.  The restrictions and
covenants contained in each paragraph of this Section 6 shall be construed as
separate and individual restrictions and covenants and shall each be capable of
being reduced in application or severed without prejudice to the other
restrictions and covenants or to the remaining provisions of this Agreement.

 

(h)           Enforceability.  If any court holds any of the restrictions or
covenants contained in this Section 6 to be unenforceable by reason of their
breadth or scope or otherwise, it is the intention of the parties hereto that
such determination not bar or in any way affect the right of the Company and its
subsidiaries and affiliates to the relief provided in this Section 6 in the
courts of any other jurisdiction within the geographic scope of such
restrictions and covenants.

 

(i)            Disclosure of Restrictive Covenants.  The Executive agrees to
disclose in advance the existence and terms of the restrictions and covenants
contained in this Section 6 to any employer or other service recipient by whom
the Executive may be employed or retained during the Restricted Period.

 

(j)            Extension of Restricted Period.  If the Executive breaches this
Section 6 in any respect, the restrictions contained in this Section will be
extended for a period equal to the period that the Executive was in breach.

 

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7.             Termination.

 

(a)           Termination of Employment.  The employment of the Executive
hereunder and the Employment Term may be terminated at any time (i) by the
Company with Cause on written notice to the Executive, (ii) by the Company
without Cause on ninety (90) days written notice to the Executive (provided that
during such notice period the Company shall not be required to provide work for
the Executive and may require that the Executive not report to the Company’s
offices), (iii) by the Company due to the Executive’s Disability (as defined in
the Severance Plan) on written notice to the Executive,  (iv) by the Executive
with Good Reason, (v) by the Executive without Good Reason on sixty (60) days
written notice to the Company (which notice period may be waived by the Company
in its discretion, in which case, such termination shall be effective
immediately upon the Company’s receipt of notice thereof from the Executive),
(vi) without action by the Company, the Executive or any other person or entity,
immediately upon the Executive’s death, (vii) in connection with a Change in
Control (within the meaning as set forth in the Dynegy Inc. Executive Change in
Control Severance Pay Plan (the “Change in Control Plan”)) or (viii) due to the
expiration of the Employment Term pursuant to Section 3.  If the Executive’s
employment is terminated for any reason under this Section 7, the Company shall
be obligated to pay or provide to the Executive (or his estate, as applicable)
in a lump sum within thirty (30) days following such termination, or at such
other time prescribed by any applicable plan:  (A) any Base Salary payable to
the Executive pursuant to this Agreement, accrued up to and including the date
on which the Executive’s employment terminates, (B) any employee benefits to
which the Executive is entitled upon termination of his employment with the
Company in accordance with the terms and conditions of the applicable plans of
the Company, (C) reimbursement for any unreimbursed business expenses incurred
by the Executive prior to his date of termination pursuant to Section 5(e), and
(D) payment for accrued but unused vacation time as of the date of his
termination, in accordance with Company policy.

 

(b)           Severance Plan and Change in Control Plan.   The Executive shall
be entitled to participate in the Severance Plan and the Change in Control Plan;
provided, however, that to the extent the Executive is eligible to receive
severance payable under Section IV.A of the Severance Plan, the amount payable
to the Executive thereunder shall be increased by an amount equal to two (2)
times the current target Award (as described in Section 5(c) hereof), as in
effect immediately prior to the date of the Executive’s termination of
employment.  For the avoidance of doubt and for purposes of the Severance Plan
only, the Executive is hereby deemed to hold a comparable position to the CEO
and Chief Operating Officer and will therefore be entitled to twenty-four (24)
Months of Base Pay (as defined in the Severance Plan) as severance pay, subject
to the other terms and conditions of the Severance Plan.  For the avoidance of
doubt, delivery by the Company of notice of non-renewal of the Initial Term or
an Additional Term pursuant to Section 3, shall be deemed to be a termination
without Cause for purposes of the Severance Plan (provided, however, that no
circumstance constituting Cause exists at such time of the delivery of such
notice of non-renewal).  Notwithstanding the foregoing, the Executive hereby
waives his participation in the Third Amendment to the Severance Plan.

 

(c)           No Additional Rights.  The Executive acknowledges and agrees that,
except as specifically described in this Section 7 or Section 5(d)(i), all of
the Executive’s rights to any compensation, benefits, bonuses or severance from
the Company and its subsidiaries and affiliates after termination of the
Employment Term shall cease upon such termination.

 

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(d)           Resignation as Officer or Director.  Upon a termination of
employment, unless requested otherwise by the Company, the Executive shall
resign each position (if any) that the Executive then holds as a director or
officer of the Company or of any affiliates of the Company.  The Executive’s
execution of this Agreement shall be deemed the grant by the Executive to the
officers of the Company of a limited power of attorney to sign in the
Executive’s name and on the Executive’s behalf any such documentation as may be
required to be executed solely for the limited purposes of effectuating such
resignations.

 

8.             Excise Tax Reimbursement Policy.      The Executive shall be a
Covered Employee within the meaning of the Dynegy Excise Tax Reimbursement
Policy (the “Excise Tax Reimbursement Policy”), as in effect from time to time. 
For the avoidance of doubt, the Executive’s excise tax gross-up calculation
shall take into account the applicable federal, state and local tax rates to
which the Executive is subject at the time the Executive pays the excise tax.

 

9.             Notices.  All notices, requests, demands, claims, consents and
other communications which are required, permitted or otherwise delivered
hereunder shall in every case be in writing and shall be deemed properly served
if:  (a) delivered personally, (b) sent by registered or certified mail, in all
such cases with first class postage prepaid, return receipt requested, or
(c) delivered by a recognized overnight courier service, to the parties at the
addresses as set forth below:

 

If to the Company:

Dynegy, Inc.

 

1000 Louisiana Street, Suite 5800

 

Houston, Texas 77002

 

Attention:  General Counsel

 

 

If to the Executive:

 

 

At the Executive’s residence address as maintained by the Company in the regular
course of its business for payroll purposes.

 

or to such other address as shall be furnished in writing by either party to the
other party; provided that such notice or change in address shall be effective
only when actually received by the other party.  Date of service of any such
notices or other communications shall be:  (a) the date such notice is
personally delivered, (b) three days after the date of mailing if sent by
certified or registered mail, or (c) one business day after date of delivery to
the overnight courier if sent by overnight courier.

 

10.           Jurisdiction; Venue.  Except as otherwise provided in Section 6(g)
in connection with equitable remedies, each of the parties hereto hereby
irrevocably submits to the exclusive jurisdiction of any federal or state court
located in the State of Texas, County of Harris over any suit, action, dispute
or proceeding arising out of or relating to this Agreement and each of the
parties agrees that any action relating in any way to this Agreement must be
commenced only in the courts of the State of Texas, federal or state.  Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted or
not prohibited by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding brought in such a
court and any claim that any such suit, action or proceeding brought in such a
court has been brought in an inconvenient forum.  Each of the parties hereto
hereby irrevocably consents to the service of process in any suit, action or
proceeding by sending the same by certified mail, return receipt requested, or
by recognized overnight courier service, to the address of such party set forth
in Section 9.

 

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11.           Waiver of Jury Trial.  THE PARTIES TO THIS AGREEMENT EACH HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT
OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS
RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE.  THE PARTIES TO THIS AGREEMENT
EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY.

 

12.           Section 409A.

 

(a)           The intent of the parties is that payments and benefits under this
Agreement comply with or be exempt from Section 409A of the Code and the
regulations and guidance promulgated thereunder (collectively “Code Section
409A”), and the Company shall have complete discretion to interpret and
construe this Agreement and any associated documents in any manner that
establishes an exemption from (or compliance with) the requirements of Code
Section 409A.  Any terms of this Agreement that are undefined or ambiguous shall
be interpreted by the Company in its discretion in a manner that complies with
Code Section 409A to the extent necessary to comply with Code Section 409A.  If
for any reason, such as imprecision in drafting, any provision of this Agreement
(or of any award of compensation, including, without limitation, equity
compensation or benefits) does not accurately reflect its intended establishment
of an exemption from (or compliance with) Code Section 409A, as demonstrated by
consistent interpretations or other evidence of intent, such provision shall be
considered ambiguous as to its exemption from (or compliance with) Code Section
409A and shall be interpreted by the Company in a manner consistent with such
intent, as determined in the discretion of the Company.  If, notwithstanding the
foregoing provisions of this Section 12(a), any provision of this Agreement
would cause the Executive to incur any additional tax or interest under Code
Section 409A, the Company shall, after consulting with the Executive, reform
such provision in a manner intended to avoid the incurrence by the Executive of
any such additional tax or interest; provided that the Company agrees to
maintain, to the maximum extent practicable, the original intent and economic
benefit to the Executive of the applicable provision without violating the
provisions of Code Section 409A.

 

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(b)                                 Any reimbursements and in-kind benefits
provided under this Agreement that constitute deferred compensation within the
meaning of Code Section 409A shall be made or provided in accordance with the
requirements of Code Section 409A, including, without limitation, that (i) in no
event shall any fees, expenses or other amounts eligible to be reimbursed by the
Company under this Agreement be paid later than the last day of the calendar
year next following the calendar year in which the applicable fees, expenses or
other amounts were incurred; (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits that the Company is obligated to pay or
provide, in any given calendar year shall not affect the expenses that the
Company is obligated to reimburse, or the in-kind benefits that the Company is
obligated to pay or provide, in any other calendar year, provided that the
foregoing clause (ii) shall not be violated with regard to expenses reimbursed
under any arrangement covered by Code Section 105(b) solely because such
expenses are subject to a limit related to the period the arrangement is in
effect; (iii) the Executive’s right to have the Company pay or provide such
reimbursements and in-kind benefits may not be liquidated or exchanged for any
other benefit; and (iv) in no event shall the Company’s obligations to make such
reimbursements or to provide such in-kind benefits apply later than the
Executive’s remaining lifetime (or if longer, through the sixth (6th)
anniversary of the Commencement Date).

 

(c)                                  The Company makes no representation or
warranty and shall have no liability to the Executive or any other person if any
provisions of this Agreement are determined to constitute deferred compensation
subject to Code Section 409A but do not satisfy an exemption from, or the
conditions of, Code Section 409A.

 

13.                                 General.

 

(a)                                  Governing Law.  This Agreement and the
legal relations thus created between the parties hereto shall be governed by,
and construed in accordance with, the internal laws of the State of Texas,
without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of Texas or any other jurisdiction) that would cause
the application of the law of any jurisdiction other than the State of Texas. 
The parties hereto acknowledge and agree that this Agreement was executed and
delivered in the State of Texas.

 

(b)                                 Construction and Severability.  Whenever
possible, each provision of this Agreement shall be construed and interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by, or invalid, illegal or
unenforceable in any respect under, any applicable law or rule in any
jurisdiction, such prohibition, invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement or any other jurisdiction, and
the parties undertake to implement all efforts which are necessary, desirable
and sufficient to amend, supplement or substitute all and any such prohibited,
invalid, illegal or unenforceable provisions with enforceable and valid
provisions in such jurisdiction which would produce as nearly as may be possible
the result previously intended by the parties without renegotiation of any
material terms and conditions stipulated herein.

 

(c)                                  Cooperation. During the Employment Term and
thereafter, the Executive shall cooperate with the Company and be reasonably
available to the Company with respect to continuing and/or future matters
related to the Executive’s employment period with the Company and/or its
subsidiaries or affiliates, whether such matters are business-related, legal,
regulatory or otherwise (including, without limitation, the Executive appearing
at the Company’s request to give testimony without requiring service of a
subpoena or other legal process, volunteering to the Company all pertinent
information and turning over to the Company all relevant documents which are or
may come into the Executive’s possession).  Following the Employment Term, the
Company shall reimburse the Executive for all reasonable out of pocket expenses
incurred by the Executive in rendering such services that are approved by the
Company.  In addition, if more than an incidental cooperation is required at any
time after the termination of the Executive’s employment, the Executive shall be
paid (other than for the time of actual testimony) a per day fee based on his
base salary described in Section 5(a) at the time of such termination divided by
225.

 

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(d)                                 Successors and Assigns.  This Agreement
shall bind and inure to the benefit of and be enforceable by the Company and its
successors and assigns and the Executive and the Executive’s heirs, executors,
administrators, and successors; provided that the services provided by the
Executive under this Agreement are of a personal nature, and rights and
obligations of the Executive under this Agreement shall not be assignable or
delegable, except for any death payments otherwise due the Executive, which
shall be payable to the estate of the Executive; provided further the Company
may assign this Agreement to, and all rights hereunder shall inure to the
benefit of, any subsidiary or affiliate of the Company or any person, firm or
corporation resulting from the reorganization of the Company or succeeding to
the business or assets of the Company by purchase, merger, consolidation or
otherwise; and provided further that in the event of the Executive’s death, any
unpaid amount due to the Executive under this Agreement shall be paid to his
estate.

 

(e)                                  Executive’s Representations.  The Executive
hereby represents and warrants to the Company that:  (i) the execution, delivery
and performance of this Agreement by the Executive do not and shall not conflict
with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which the Executive is a party or by
which the Executive is bound; (ii) the Executive is not a party to or bound by
any employment agreement, noncompetition or nonsolicitation agreement or
confidentiality agreement with any other person or entity besides the Company
and (iii) upon the execution and delivery of this Agreement by the Company, this
Agreement shall be the valid and binding obligation of the Executive,
enforceable in accordance with its terms.  THE EXECUTIVE HEREBY ACKNOWLEDGES AND
REPRESENTS THAT THE EXECUTIVE HAS CONSULTED WITH INDEPENDENT LEGAL COUNSEL
REGARDING THE EXECUTIVE’S RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT, TO THE
EXTENT DETERMINED NECESSARY OR APPROPRIATE BY THE EXECUTIVE, AND THAT THE
EXECUTIVE FULLY UNDERSTANDS THE TERMS AND CONDITIONS CONTAINED HEREIN.

 

(f)                                    Compliance with Rules and Policies.  The
Executive shall perform all services in accordance with the policies, procedures
and rules established by the Company and the Board.  In addition, the Executive
shall comply with all laws, rules and regulations that are generally applicable
to the Company or it subsidiaries or affiliates and their respective employees,
directors and officers.

 

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(g)                                 Forfeiture.  Notwithstanding any other
provision of this Agreement to the contrary, any payments or benefits under this
Agreement shall be subject to any forfeiture, repayment or recoupment policy of
the Company, as in effect from time to time, or any forfeiture, repayment or
recoupment otherwise required by applicable law.

 

(h)                                 Withholding Taxes.  All amounts payable
hereunder shall be subject to the withholding of all applicable taxes and
deductions required by any applicable law.

 

(i)                                     Entire Agreement.  This Agreement,
together with the Change in Control Plan, Excise Tax Reimbursement
Policy, Incentive Compensation Plan, LTIP and Severance Plan, constitutes the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and terminates and supersedes any and all prior
agreements, understandings and representations, whether written or oral, by or
between the parties hereto or their affiliates which may have related to the
subject matter hereof in any way.  In the event of a conflict or ambiguity
between this Agreement and the Change in Control Plan, Excise Tax Reimbursement
Policy, Incentive Compensation Plan, LTIP or Severance Plan, the terms and
conditions of the Agreement shall govern.

 

(j)                                     Duration.  Notwithstanding the
Employment Term hereunder, this Agreement shall continue for so long as any
obligations remain under this Agreement.

 

(k)                                  Survival.  The covenants set forth in
Sections 6 and 13(c) of this Agreement shall survive and shall continue to be
binding upon the Executive notwithstanding the termination of this Agreement for
any reason whatsoever.

 

(l)                                     Amendment and Waiver.  The provisions of
this Agreement may be amended or waived only with the prior written consent of
the Company and the Executive, and no course of conduct or course of dealing or
failure or delay by any party hereto in enforcing or exercising any of the
provisions of this Agreement (including, without limitation, the Company’s right
to terminate the Employment Term for Cause) shall affect the validity, binding
effect or enforceability of this Agreement or be deemed to be an implied waiver
of any similar or dissimilar requirement, provision or condition of this
Agreement at the same or any prior or subsequent time.  Pursuit by either party
of any available remedy, either in law or equity, or any action of any kind,
does not constitute waiver of any other remedy or action.  Such remedies and
actions are cumulative and not exclusive.

 

(m)                               Counterparts.  This Agreement may be executed
in two or more counterparts, all of which taken together shall constitute one
instrument.

 

(n)                                 Section References.  Section headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.  The words
Section and paragraph herein shall refer to provisions of this Agreement unless
expressly indicated otherwise.

 

(o)                                 No Strict Construction.  The parties hereto
have participated jointly in the negotiation and drafting of this Agreement.  In
the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring either party
hereto by virtue of the authorship of any of the provisions of this Agreement.

 

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(p)                                 Time of the Essence; Computation of Time. 
Time is of the essence for each and every provision of this Agreement.  Whenever
the last day for the exercise of any privilege or the discharge or any duty
hereunder shall fall upon a Saturday, Sunday, or any date on which banks in
Houston, Texas are authorized to be closed, the party having such privilege or
duty may exercise such privilege or discharge such duty on the next succeeding
day which is a regular business day.

 

(q)                                 No Third Party Beneficiaries.  Nothing in
this Agreement, express or implied, is intended or shall be construed to give
any person other than the parties to this Agreement and their respective heirs,
executors, administrators, successors or permitted assigns any legal or
equitable right, remedy or claim under or in respect of any agreement or any
provision contained herein.

 

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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
hereunto executed this Agreement as of the day and year first written above.

 

 

 

 

DYNEGY, INC.

 

 

 

 

 

 

Date:

6/23/11

 

By:

/s/ Kent R. Stephenson

 

 

 

 

Name:

Kent R. Stephenson

 

 

 

 

Title:

EVP & General Counsel

 

 

 

 

 

 

 

 

CLINT C. FREELAND

 

 

 

 

 

 

Date:

6/23/11

 

/s/ Clint C. Freeland

 

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