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                                                                    EXHIBIT 10.3

                             CONTRACT FOR SERVICES

     This Contract for Services ("Contract") is made between Daniel L.
Dienstbier ("Contractor") and Dynegy Inc., an Illinois Corporation (the
"Company"), and is executed this 21 day of 2002 and is effective as of May 28,
2002, (the "Effective Date").

     1. Term of Agreement. The term of this Contract shall commence on the
Effective Date and continue until one of the parties to the Contract terminates
it in accordance with the terms specified in Section 8 below.

     2. Duties of Contractor. Contractor will provide consulting services to the
Company in the role and with the title of "Interim Chief Executive Officer" of
the Company. The Company will provide an office for Contractor's use as Interim
Chief Executive Officer of the Company in the headquarters of the Company at
1000 Louisiana, Suite 5800, Houston, Texas 77002. Contractor will report
directly to Glenn Tilton, Interim Chairman of the Board of the Company.
Contractor will assist the Company in its direction and management of the
Company. Contractor shall observe and comply with all lawful and reasonable
directions and instructions by and on the part of the Company's management and
endeavor to promote the interests of the Company, and do nothing which may cause
or be likely to cause any loss or damage to the Company in business, reputation
or otherwise. During the term of the Contract, Contractor will not act as a
consultant, contractor or employee in any capacity on behalf of any other
business organization. Contractor also will not engage or participate in any
business transaction in a personal capacity that is a competing interest of, or
in opposition to, the interests of the Company.

     Contractor will continue to serve on the Board of Directors of Dynegy Inc.
but will not serve on the Audit or Compensation Committees. Contractor will
continue memberships on the Governance, Finance and Executive Committees.

     3. Compensation. For services rendered by Contractor to the Company as
Interim Chief Executive Officer, the Company shall pay Contractor $1,000,000
(one million dollars) per annum to be paid rateably once per month. Contractor
and the Company agree that such compensation may be paid in the form of cash
and/or in grants of Class A Common Stock of the Company, and the determination
of the amounts to be paid in cash and/or Class A Common Stock of the Company
shall be made by the mutual agreement of the parties. At the end of the term of
the Contract, Contractor will be eligible to receive, in the Company's sole
discretion, a one time lump-sum bonus payment. In addition, at the end of the
term of the Contract, Consultant will be eligible to receive, in the Company's
sole discretion and based on the achieving of certain corporate performance
goals and objectives, a one time grant of Class A Common Stock of the Company in
an amount as determined by the Company and approved by the Board of Directors of
the Company. Contractor will only remain eligible to receive such grant of

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stock if he is, at the time of the effective date of such grant, a member of the
Board of Directors of the Company.

     4. Consulting Relationship and Taxation. Contractor is an independent
contractor and, as a result, the Company will not withhold any monies from
Contractor's compensation for the purposes of any federal or state taxing
authority. Contractor is solely responsible for any tax liability arising from
the compensation the Company pays Contractor under the terms of this Contract.
Contractor agrees that, in the event it is determined by some taxing authority
that the payments under this Contract are subject to any United States tax
liability, he shall be fully responsible for said liability and hereby agrees to
fully indemnify and hold the Company harmless for any amounts determined to be
due and owning by Contractor, including any fines, interest or penalties.

     5. Expenses. The Company agrees to reimburse Contractor for all reasonable
and customary travel and other expenses related to the performance of his duties
as a Contractor to the Company.

     6. Indemnification. If, at any time during or after the Term of this
Contract, Contractor is made a party to or threatened to be made a party to any
civil, criminal or administrative action, suit or proceeding by reason of the
services performed for the Company under this Contract, Contractor shall be
indemnified by the Company, to the fullest extent permitted under applicable
law, against expenses actually and reasonably incurred by him or imposed on him
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
Contractor acted in good faith and in a manner he reasonably believed to be in,
or not opposed to, the best interest of the Company, except with respect to
matters as to which it is finally adjudged by a court of competent jurisdiction
that Contractor is liable to the Company or to such other corporation,
partnership, joint venture, trust or other enterprise for willful misconduct in
the performance of his duties. Further, such indemnification shall extend to any
criminal action or proceeding if Contractor had no reasonable cause to believe
his conduct was unlawful. As used herein, the term "expenses" shall include all
obligations actually and reasonably incurred by Contractor for the payment of
money, including, without limitation, attorney's 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
Contractor. Such expenses shall be advanced by Company at the request of
Contractor. The foregoing indemnification provisions shall be in addition to any
other rights to indemnification to which Contractor may be entitled.

     7. Foreign Corrupt Practices Act. Contractor agrees that he will not make
(including, without limitation, through a friend or family member with personal
relationships with government officials), any payment, loan, or gift (or any
offer, promise

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or authorization of any such payment, loan or gift) of money or anything of
value (collectively, a "Gift") to or for the use of: (i) any government
official; (ii) any political party or official or any candidate for political
office; or (iii) any other person, under the following circumstances:

     (a) when Contractor knows or has reason to know that all or any portion of
     the Gift will be offered, given, or promised, directly or indirectly, to
     any person named in item (i) or (ii) above for the purpose of inducing the
     person to do any act or make any decision in his/her official capacity
     (including, without limitation, the decision to fail to perform his/her
     official function) in order to advance any business of the Company or any
     affiliate thereof in any manner; or

     (b) when Contractor knows or has reason to know that all or any portion of
     such Gift will be offered, given or promised, directly or indirectly, to
     any person named in items (i), (ii) or (iii) above for the purpose of
     inducing the aforementioned person to use his influence with a government
     or instrumentality to affect any act or decision of such government or
     instrumentality in order to advance the business or projects of the Company
     or any affiliate thereof in any manner.

For purposes of this Agreement, the term "government official" includes an
employee of a government-owned or government-controlled enterprise.

Without limiting any of the foregoing provisions of this Section 7, Contractor
declares that he is or promptly will become familiar with the U.S. Foreign
Corrupt Practices Act, 15 U.S.C. 78a, et seq. (as amended, supplemented and
replaced from time to time, the "FCPA") and its purposes, any is or promptly
will become familiar with the FCPA's prohibition on the payment or giving of
anything of value, either directly or indirectly, by persons or entities to an
official of a foreign government for the purpose of influencing an act or
decision of such official in his/her official capacity, or inducing such
official to use his/her influence with the foreign government to assist a person
or entity in obtaining or retaining business for or with, or directing business
to, any person or entity. Contractor shall defend, indemnify, and hold harmless
the Company against any and all claims and losses arising out of or in
connection with any actual or threatened breach of this Section 7.

     8. Termination of the Contract. At any time subsequent to the Effective
Date, either the Company or Contractor may terminate this Contract with thirty
(30) days written notice to the other party. Upon termination of the Contract
under this Section 8, Contractor will not be entitled to any further
compensation except that which was earned prior to the date of termination of
the Contract.

     9. Contractor's Confidentiality Agreement. Contractor acknowledges that the
Company has established a valuable and extensive trade in the services it
provides, which has been developed at considerable expense to the Company.
Contractor agrees that, by virtue of the relationship of trust and confidence
between


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Contractor and the Company, Contractor has and will have certain information and
knowledge of the business and operations of the Company that are confidential
and proprietary in nature, including without limitation, information about
finances, processes, technology, customers and customer contracts.

     Contractor agrees that he will not at any time disclose or use, either
during or after the term of this Contract, any information, knowledge or data
which he receives or develops during his relationship with the Company that is
proprietary to the Company or that relates to the trade secrets of the Company.
Such information, knowledge or data includes the following which is by example
only: confidential information and knowledge pertaining to the technology,
equipment, processes and operations of the businesses of the Company, as well as
confidential knowledge and information pertaining to the Company's financial
data, pricing data, marketing data, business plans and strategies, information
concerning profitability or margins, negotiations and contracts, research,
customer or vendor lists, inventions, and discoveries ("Proprietary
Information"). Proprietary Information does not include information known to the
Contractor on the Effective Date or which now or at the time of disclosure is
generally known in the industry.

     Contractor further agrees that any materials and/or information developed
by him for the Company's use during the term of this Contract are the sole and
exclusive property of the Company. Any materials and information that are the
property of the Company shall be returned to the Company immediately upon
termination of this Contract or upon oral or written request. Contractor further
agrees that any use of said materials or information subsequent to termination
of this Contract or a request of return shall constitute a violation of this
Contract. Contractor agrees that upon termination of this Contract, he shall
promptly return any and all documents containing the above information,
knowledge or data, or relating thereto, to the Company. Contractor acknowledges
that the Proprietary Information is created at substantial cost and expense to
the Company and that unauthorized use or disclosure would cause irreparable
injury to the Company.

     10. Agreement Not to Solicit or Recruit Employees of the Company. During
the term of this Contract, Contractor agrees to refrain from soliciting,
recruiting, encouraging, or initiating contact with any of the Company's
employees in any way for the purpose of offering them employment, either as an
employee or as a Contractor or adviser, with Contractor, directly or indirectly,
for himself or with or for others. During the term of this Contract, Contractor
further agrees to refrain from authorizing, directing, or advising any third
persons or entities to solicit, recruit, encourage, or initiate contact with
any of the Company's employees in any way for the purpose of offering them
employment, either as an employee or as a Contractor or adviser, with
Contractor, directly or indirectly, for himself or with or for others.

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     11. Cessation of Business. Notwithstanding any provisions in this Contract
to the contrary, in the event that the Company shall cease operating its
business, then this Contract shall terminate as of the last day of the month in
which the Company ceases operations, with the same force and effect as if such
last day of the month originally was set as the termination date hereof. A
merger, acquisition or similar corporate restructuring under which the principal
business of the Company is continued shall not be considered cessation of the
business of the Company.

     12. Dispute Resolution. Contractor hereby agrees that any dispute relating
to this Contract or to the breach of this Contract arising between Contractor
and the Company shall be settled by arbitration in accordance with the
arbitration rules of the American Arbitration Association. The arbitration
proceeding, including the rendering of an award, shall take place in Houston,
Texas. All fees and expenses associated with the arbitration shall be allocated
by the arbitrators. The award of the arbitrator and/or mediator shall be final
and binding upon the parties without appeal or review except as permitted by the
Federal Arbitration Act.

     13. Waiver of Breach of Agreement. If either party waives a breach of this
Contract by the other party, that waiver will not operate or be construed as a
waiver of any other or subsequent breaches.

     14. Waiver of Implied Warranties and Representations. The terms,
conditions, representations, warranties, covenants and provisions applicable to
this Contract are set forth expressly and completely in this Contract. The
parties hereby waive, disclaim and negate for all purposes (i) any other term,
condition, representation, warranty, covenant and/or provision of any kind
hereunder, whether implied, statutory, or other, and (ii) any right of quantum
meruit in connection with any work or service provided hereunder or contemplated
hereby.

     15. Notice. Any notice given by the Company to Contractor under this
Contract shall be sufficient if in writing and either (1) hand delivered to
Contractor, or (2) mailed, returned receipt requested, to Contractor's last
address on the records of the Company. Any notice given by Contractor to the
Company under this Contract shall be sufficient if in writing and either (1)
hand delivered to the Chairman of the Board of the Company, or (2) mailed,
returned receipt requested, to the Chairman of the Board of the Company.

     16. Assignment. This Contract is assignable by either party only with the
express written consent of the other party.

     17. Severability. Any provisions of this Contract prohibited by or
unenforceable under any applicable law of any jurisdiction shall as to such
jurisdiction be deemed ineffective and deleted from this Contract without
affecting any other provision of this Contract or the effectiveness of such
provision in any jurisdiction in which it is not

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prohibited or unenforceable. It is the desire of the parties hereto that this
Contract be enforced to the maximum extent permitted by law, and should any
provision contained herein be held unenforceable, the parties hereby agree and
consent that such provision shall be reformed to make it a valid and enforceable
provision to the maximum extent permitted by applicable law.

     18. Survival of Provisions. The provisions of Sections 6, 9, 10, and 12
through 20, inclusive, of this Contract shall survive termination of this
agreement and shall be enforceable by the Company and the Contractor for a
period of two years after such termination, regardless of the circumstances of
such termination, except that the provisions of Section 6 shall survive
forever.

     19. Choice of Law. This Contract shall be construed and governed by the
laws of the State of Texas except as to those items governed by Section 10
herein. Any and all matters of dispute arising out of, or in any way connected
with, this Contract or the relationship between Contractor and the Company,
except those matters governed by the dispute resolution provided in Section 11
above, shall be subject to determination only by the Courts of Houston, Harris
County, Texas. Contractor and the Company hereby consent and submit to the
exclusive jurisdiction of the Courts of Houston, Harris County, Texas.


     20. Entire Agreement and Amendment. This Contract supersedes any and all
other agreements, either oral or in writing, between the parties hereto with
respect to the Company's retention of Contractor. This Contract contains the
entire agreement of the parties with respect to the subject matter covered
hereby and may be amended, waived or terminated only by an instrument in writing
executed by both parties hereto.


CONTRACTOR

/s/ Daniel L. Dienstbler
-------------------------------------           June 21, 2002
    Daniel L. Dienstbler



DYNEGY INC.

/s/ Glenn Tilton                                June 25, 2002
-------------------------------------
By:  Glenn Tilton
Its: Interim Chairman of the Board


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