Document:

Third Amendment to October 18, 2002 Employment Agreement

 Exhibit 10.2 
 March 16, 2006 
 Mr. Bruce A. Williamson 
 79 Wincrest Falls 
 Cypress, Texas 77429 
  

	 	Re:	Third 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 and September 15, 2005 (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 Third Amendment to the Original Agreement (the “Third 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 follows: 
 I. 
 Paragraph 2(c) of the Prior Agreement is hereby amended and restated in its entirety as follows:

 “(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) other than in such circumstances as contemplated in Paragraph 2(d), you shall receive, in lieu of the payments and benefits described in Paragraph 3 hereof, severance pay and other
benefits under this Agreement which are equal to the severance pay and other benefits that you would have received under the Dynegy Inc. Executive Severance Pay Plan (as Amended on September 15, 2005) (the ‘Executive Plan’) as if you
were a participant (holding the title of Chief Executive Officer) in such plan who had satisfied all conditions and requirements to receive severance pay and other benefits thereunder, but disregarding for this purpose any provisions related to
stock options. In addition to any severance pay and other benefits for which you are eligible under the Executive Plan you shall be entitled to 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 payable no later than March 15th of the calendar year following your termination of employment. Any outstanding stock options, restricted stock awards,
phantom stock and other equity-based awards previously granted to you shall become vested as of your employment termination date. 
 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 General Counsel of the Company by written notice of not less than thirty (30) days, setting forth the
grounds therefor, 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 General Counsel of the Company.” 
 II. 
 Paragraph 2(d) of the Original Agreement is hereby amended and restated in its entirety as follows: 
 “(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 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 sixty (60) days before or within one year after the effective date of a ‘change in control’ (as defined
below), 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 cash payment payable no later than March 15th of the calendar year following
your termination of employment equal to 2.99 times the greater of (a) your average annual Base Salary and average 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 annual 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 cash payment payable no later than March 15th of the calendar year following your termination of employment in an amount equal to (1) the aggregate annual target
opportunity under the Company’s Incentive Compensation Plan and any other applicable short term incentive compensation plans or arrangements in which you participate that could have been earned by you for the fiscal year of the Company during
which such termination of employment occurs (determined as if all applicable goals and targets had been satisfied in full), multiplied by (2) a fraction, the numerator of which is the number of days during the period beginning on the first day
of such fiscal year and ending on the date of such termination of employment, and the denominator of which is three hundred sixty-five (365); and (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 

  

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employment termination date; but the continued medical, dental and vision benefits referenced herein are contingent upon your payment of your respective
portion of the premium required for each such benefit. Any outstanding stock options, restricted stock awards, phantom stock and other equity-based awards previously granted to you shall immediately vest upon a ‘change in control’.

 For purposes of this Agreement, ‘change in control’ shall have the same meaning as specified in Section 2.1
of the first amendment to the Second Supplement to the Dynegy Inc. Executive Severance Pay Plan (the ‘Executive Plan Second Supplement’).” 
 The provisions of this Third 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 Third Amendment, the Original 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 Third Amendment in the
space provided below and return a copy to me. 
  

			
	EXECUTIVE
	
	 /s/ Bruce A. Williamson

	Bruce A. Williamson
	
	DYNEGY INC.
		
	By:	 	 /s/ J. Kevin Blodgett

	Name:	 	J. Kevin Blodgett
	 Title:
	 	General Counsel & EVP, Administration

  

 3Non-Qualified Stock Option Award Agreement

 Exhibit 10.3 
 NON-QUALIFIED STOCK OPTION AWARD AGREEMENT 
 THIS NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (this
“Agreement”) is made as of the 16th day of March, 2006, between DYNEGY INC., an Illinois corporation, and all of its subsidiaries (the “Company”), and Bruce A. Williamson (“Employee”). A copy of the Dynegy Inc. 2002
Long Term Incentive Plan (the “Plan”) is annexed to this Agreement and shall be deemed a part of this Agreement as if fully set forth herein. Unless the context otherwise requires, all terms that are not defined herein but which are
defined in the Plan shall have the same meaning given to them in the Plan when used herein. 
 1. The Grant. The Compensation and
Human Resources Committee of the Board of Directors (the “Committee”) granted to Employee on March 16, 2006 (“Effective Date”), as a matter of separate inducement and not in lieu of any salary or other compensation for
Employee’s services, the right and option to purchase (the “Option”), in accordance with the terms and conditions set forth in the Plan and in this Agreement, an aggregate number of 967,707 shares (the “Shares”) of
Class A common stock of Dynegy, no par value per share (the “Common Stock”), at a price of $4.88 per share (the “Exercise Price”). Employee acknowledges receipt of a copy of the Plan, and agrees that the Option shall be
subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof, and to all of the terms and conditions of this Agreement. The Option shall not be treated as an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). The Exercise Price is, in the judgment of the Committee, not less than one hundred percent (100%) of the Fair Market Value of
a share of the Common Stock on the Effective Date. If it is subsequently determined by the Committee, in its sole discretion, that the terms and conditions of this Agreement and/or the Plan are not compliant with Code Section 409A, or any
Treasury regulations or Internal Revenue Service guidance promulgated thereunder, this Agreement and/or the Plan may be amended accordingly. 
 2. Exercise. Subject to the provisions, limitations and other relevant provisions of the Plan and of this Agreement, and the earlier expiration of the Option as herein provided, Employee may exercise the Option to purchase some or
all of the Shares as follows: 
 (a) The Option shall become exercisable in three cumulative equal annual installments as
follows: 
 (i) on the first anniversary of the Effective Date, the right to purchase one-third of the aggregate number of
Shares shall become exercisable without further action by the Committee; 
 (ii) on the second anniversary of the Effective
Date, the right to purchase an additional one-third of the aggregate number of Shares shall become exercisable without further action by the Committee; and 
 (iii) on the third anniversary of the Effective Date, the right to purchase the remaining one-third of the aggregate number of Shares shall become exercisable without further action by the Committee. 

 (b) Notwithstanding any other provision of this Agreement, the unexercised portion of the
Option, if any, will automatically and without notice terminate and become null and void upon the expiration of ten (10) years from the Effective Date of the Option. 
 (c) Any exercise by Employee of the Option, or portion thereof, shall be conducted by delivery of an irrevocable notice of exercise to the
Company or its designee as provided in the Plan. In no event shall Employee be entitled to exercise the Option for less than a whole Share. 
 (d) Notwithstanding any other provision of this Agreement, upon the occurrence of a Change in Control, the Option shall become fully vested and immediately exercisable in full on the date of the Change in Control. For
purposes hereof, “Change in Control” shall mean the occurrence of any of the following events: (i) a merger of Dynegy with another entity, a consolidation involving Dynegy, or the sale of all or substantially all of the assets or
equity interests of Dynegy to another entity if, in any such case, (A) the holders of equity securities of Dynegy immediately prior to such event do not beneficially own immediately after such event equity securities of the resulting entity
entitled to sixty percent (60%) or more of the votes then eligible to be cast in the election of directors (or comparable governing body) of the resulting entity in substantially the same proportions that they owned the equity securities of
Dynegy immediately prior to such event or (B) the persons who were members of the Board immediately prior to such event do not constitute at least a majority of the board of directors of the resulting entity immediately after such event;
(ii) the dissolution or liquidation of Dynegy, in each case having substantially the effect specified in Section 12.30 of the Illinois Business Corporation Act of 1983, as amended, but excluding a reorganization pursuant to chapter 11 of
Title 11, U.S. Code, as amended; (iii) a circumstance where any person or entity, including a “group” as contemplated by Section 13(d)(3) of the Exchange Act, acquires or gains ownership or control (including, without limitation,
power to vote) of more than twenty percent (20%) (which percentage shall be increased to forty percent (40%) in the case of ownership or control by Chevron Corporation or a “group” of which Chevron Corporation is a part) of the
combined voting power of the outstanding securities of, (A) if Dynegy has not engaged in a merger or consolidation, Dynegy, or (B) if Dynegy has engaged in a merger or consolidation, the resulting entity; (iv) circumstances where, as
a result of or in connection with, a contested election of directors, the persons who were members of the Board immediately before such election shall cease to constitute a majority of the Board; or (v) the Board (or the Committee) adopts a
resolution declaring that a Change in Control has occurred. For purposes of the “Change in Control” definition, (1) “resulting entity” in the context of an event that is a merger, consolidation or sale of all or
substantially all of the subject assets or equity interests shall mean the surviving entity (or acquiring entity in the case of an asset or equity interest sale), unless the surviving entity (or acquiring entity in the case of an asset sale) is a
subsidiary of another entity and the holders of common stock of Dynegy receive capital stock of such other entity in such transaction or event, in which event the resulting entity shall be such other entity, and (2) subsequent to the
consummation of a merger or consolidation that does not constitute a Change in Control, the term “Dynegy” shall refer to the resulting entity and the term “Board” shall refer to the board of directors (or comparable governing
body) of the resulting entity. 
  

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 3. Termination of Employment. The Option may be exercised only while Employee remains an employee
of the Company and will terminate and cease to be exercisable upon Employee’s termination of employment with the Company, except that: 
 (a) if Employee shall die while in the employ of the Company, the Option awarded hereunder shall immediately vest with respect to all of the remaining Shares and become fully exercisable without further action by the
Committee, and Employee’s legal representative, or the person, if any, who acquired the Option by bequest or inheritance or by reason of the death of Employee, may exercise the Option, to the extent not previously exercised, in respect of any
or all such Shares at any time up to and including the date three (3) years after the date of death, after which date the Option will automatically and without notice terminate and become null and void; and 
 (b) if Employee’s employment with the Company terminates by reason of disability (as defined in the Company’s long term
disability program or plan in which Employee is a participant or, if Employee does not participate in any such plan, as defined in the Dynegy Inc. Long Term Disability Plan, as amended), the Option awarded hereunder shall immediately vest with
respect to all of the remaining Shares and become fully exercisable without further action by the Committee, and Employee may exercise the Option, to the extent not previously exercised, in respect of any or all such Shares at any time up to and
including the date three (3) years after the date of termination of Employee’s employment by reason of such disability, after which date the Option will automatically and without notice terminate and become null and void; and 

(c) if Employee’s employment with the Company terminates by reason of retirement by Employee following (i) the date on which
such Employee has reached fifty-five (55) years of age and (ii) at least five (5) years of service as an employee of the Company or its subsidiaries, the Option awarded hereunder shall continue to become exercisable in accordance with
Section 2(a) of this Agreement, and Employee may exercise the Option, to the extent not previously exercised, at any time up to and including the date five (5) years after the date of termination of Employee’s employment by reason of
such retirement, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and 
 (d) if Employee’s employment with the Company terminates by reason of dismissal by the Company For Cause, as such term is defined
below, then the Option, to the extent not previously exercised, will immediately, automatically and without notice or further action by the Committee, terminate and become null and void; and 
 (e) if Employee’s employment with the Company terminates by reason of dismissal by the Company other than For Cause, as defined
below, or by Employee due to a resignation following a Constructive Termination, as defined below, the Option awarded hereunder shall immediately vest with respect to all remaining Shares and become fully exercisable without further actions of the
Committee, and Employee may exercise the Option, to the extent not previously exercised, at any time up to and including the date three (3) years after the date of such termination of employment; and 
  

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 (f) if Employee’s employment with the Company terminates by reason of resignation by
the Employee unrelated to a Constructive Termination and at a time when Employee was entitled to exercise the Option, Employee may exercise the Option, to the extent not previously exercised, with respect to any or all such number of Shares as to
which the Option was exercisable as of the date of Employee’s termination of employment, at any time up to and including the date ninety (90) days after the date of termination by reason of such resignation, after which date the Option
will automatically and without notice terminate and become null and void; and 
 (g) if Employee’s employment with the
Company is involuntarily terminated by the Company (or a successor thereto) by reason of and upon (or within 12 months following) the occurrence of a Change in Control, the Option shall become fully vested and immediately exercisable in full on the
date of the Change of Control, and such Option shall remain exercisable from such date for the lesser of: (i) five (5) years from the date of such Change in Control; (ii) the remaining period of time for exercise of the Option
hereunder (irrespective of any mandatory exercise period specified herein that would otherwise be triggered by the termination of employment of such Employee); or (iii) such period of time (which period of time may end as early as the
consummation of a “Corporate Change,” as such term is defined in the Plan) as the Committee may determine in connection with or in contemplation of a Corporate Change in the exercise of its discretion under the Plan, with respect to which
the Committee has the discretion to, among other things, require the surrender of stock options (which surrender may be in exchange for a cash payment, if applicable) and to cancel such stock options upon the consummation of a Corporate Change as
further described in the Plan. 
 (h) For purposes of this Agreement: 
 “Cause” shall mean (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 your employment 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 your employment agreement by you which is not cured within 10 days after written notice is provided to you by the Company. 
 “Constructive Termination” shall be deemed to have occurred in the event that (i) your Base Salary as defined in your
employment agreement is reduced; (ii) the Company materially breaches your employment 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 

  

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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. 
 4. Registration. The Company intends to register the Shares
for issuance under the Securities Act of 1933, as amended (the “Act”), and to keep such registration effective throughout the period the Option is exercisable. In the absence of such effective registration or an available exemption from
registration under the Act, issuance of the Shares will be delayed until registration of such shares is effective or an exemption from registration under the Act is available. The Company intends to use its best efforts to ensure that no such delay
will occur. In the event exemption from registration under the Act is available upon an exercise of the Option, Employee (or the person permitted to exercise the Option in the event of Employee’s death or incapacity), if requested by the
Company to do so, will execute and deliver to the Company, in writing, such agreements and other documents containing such provisions as the Company may require to assure compliance with applicable securities laws. 
 Employee agrees that the Shares will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or
state securities laws. Employee also agrees that (i) the certificates representing the Shares may bear such legend or legends as the Committee in its sole discretion deems appropriate in order to assure compliance with applicable securities
laws and (ii) the Company may refuse to register transfer of the Shares on the stock transfer records of the Company, and may give related instructions to its transfer agent, if any, to stop registration of such transfer, if such proposed
transfer would in the opinion of counsel satisfactory to the Company constitute a violation of any applicable securities law. 
 5.
Employment Relationship. For purposes of this Agreement, Employee shall be considered to be in the employment of the Company as long as Employee remains an employee of (a) the Company, (b) an Affiliate (as such term is defined in
the Plan) or (c) a corporation (or a parent or subsidiary of such corporation) assuming or substituting a new option for the Option. Any question as to whether and when there has been a termination of such employment, and the cause of such
termination, shall be determined by the Committee in its sole discretion, and its determination shall be final and binding on all parties. 
 6. Withholding Taxes. By Employee’s acceptance hereof, Employee hereby (a) agrees to reimburse the Company or any Affiliate by which Employee is employed for any federal, state or local taxes required by any government to
be withheld or otherwise deducted by such corporation in respect of Employee’s exercise of the Option, (b) authorize the Company or any Affiliate by which Employee is employed to withhold from any cash compensation paid to Employee or in
Employee’s behalf, an amount sufficient to discharge any federal, state and local taxes imposed on the Company, or the Affiliate by which Employee is employed, and which otherwise has not been reimbursed by Employee, in respect of
Employee’s exercise of the Option and (c) agrees that the corporation by which Employee is employed, may, in its discretion, hold the stock certificates to which Employee is entitled upon exercise of the Option, as security for the payment
of the aforementioned withholding tax liability, until cash sufficient 

  

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to pay that liability has been accumulated, and may, in its discretion, effect such withholding by retaining Shares issuable upon the exercise of the Option
having a Fair Market Value on the date of exercise which is equal to the amount to be withheld. 
 7. Miscellaneous. 
 (a) This grant is subject to all the terms, conditions, limitations and restrictions contained in the Plan. In the event of any conflict
or inconsistency between the terms hereof and the terms of the Plan, the terms of the Plan shall be controlling. 
 (b) This
grant is not a contract of employment and the terms of Employee’s employment shall not be affected hereby or by any agreement referred to herein except to the extent specifically so provided herein or therein. Nothing herein shall be construed
to impose any obligation on the Company or on any Affiliate to continue Employee’s employment, and it shall not impose any obligation on Employee’s part to remain in the employ of the Company or of any Affiliate. 
 (c) All references in this Agreement to any “corporation” shall include a corporation, a general partnership, a joint venture, a
limited partnership, a business trust or any other lawful business entity. 
 (d) Any notices or other communications provided
for in this Agreement shall be sufficient if in writing. In the case of Employee, such notices or communications shall be effectively delivered when hand delivered to Employee at his or her principal place of employment or when sent by registered or
certified mail to Employee at the last address Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered when sent by registered or certified mail to the Company at its principal
executive offices. 
 (e) This Agreement may not be amended except by an agreement in writing signed by each of the Company
and Employee consenting to such amendment. 
 [Remainder of page intentionally left blank] 
  

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

			
	DYNEGY INC.
		
	By:	 	 /s/ J. Kevin Blodgett

	Name:	 	J. Kevin Blodgett
	Title:	 	General Counsel & EVP, Administration

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

  

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