**Exhibit 10.11**

**$750,000,000**

**DYNEGY HOLDINGS INC.**

8.375% Senior Notes due 2016 

**PURCHASE AGREEMENT**

March 29, 2006 

CreditSuisse Securities (USA) LLC 

Citigroup Global Markets Inc., 

Banc of America Securities LLC 

J.P. Morgan Securities Inc., 

    c/o Credit Suisse Securities (USA)LLC, 

        Eleven Madison Avenue, 

            New York, N.Y. 10010-3629 

Dear Sirs: 

1.*Introductory*. Dynegy Holdings Inc., a Delaware corporation (the “**Company**”), proposes, subject to the terms and conditions stated herein, to issue and sell to the several initial purchasers named in Schedule A hereto(the “**Purchasers**”) U.S.$750,000,000 principal amount of its 8.375% Senior Notes due 2016 (“**Offered Securities**”) to be issued under a second supplemental indenture to be dated as of April 12, 2006 to theindenture dated September 26, 1996, as restated as of March 23, 1998, amended and restated as of March 14, 2001 and supplemented by a first supplemental indenture dated as of July 25, 2003 (collectively, the“**Indenture**”), between the Company and Wilmington Trust Company (as successor to JP Morgan Chase Bank, N.A.), as Trustee, on a private placement basis pursuant to an exemption under Section 4(2) of the United StatesSecurities Act of 1933 (the “**Securities Act**”), and hereby agrees with the several Purchasers as follows. 

The holders ofthe Offered Securities will be entitled to the benefits of a Registration Rights Agreement of even date herewith among the Company and the Purchasers (the “**Registration Rights Agreement**”), pursuant to which the Company has agreed tofile a registration statement with the Securities Exchange Commission (the “**Commission**”) to exchange the Offered Securities for a new class of securities issued under the Indenture and registered under the Securities Act subject tothe terms and conditions therein specified. 

As used herein, the term “**Operative Documents**” refers to this Agreement, theRegistration Rights Agreement, the Indenture and the Offered Securities. 

2. *Representations and Warranties of the Company*. TheCompany represents and warrants to, and agrees with, the several Purchasers that: 

(a) A preliminary offering circular datedas of March 29, 2006 (the “**Preliminary Offering Circular**”) relating to the Offered Securities to be offered by the Purchasers and a final offering circular (the “**Final Offering Circular**”) disclosing theoffering price and other final terms of the Offered Securities dated as of the date of this Agreement (even if finalized and issued subsequent to the date of this Agreement) have been or will be prepared by the Company. “**General DisclosurePackage**” means the Preliminary Offering Circular, together with any Issuer Free Writing Communication (as hereinafter defined) existing at the Applicable Time (as hereinafter defined) as evidenced by its being specified in Schedule B tothis Agreement (including the term sheet listing the final terms of the Offered Securities and their offering, included in Schedule B to this Agreement, which is referred to as the “**Terms Communication**”). Any reference herein to thePreliminary Offering Circular, the Offering Circular or the General Disclosure Package shall be deemed to refer to and include the filing of any Exchange Act Report (as defined). “**Applicable Time**” means 3:15 P.M. (EST time) on thedate of this Agreement. As of the date of this Agreement and as of the Closing Date, the Final Offering Circular does not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statementstherein, in the light of the 

circumstances under which they were made, not misleading. At the Applicable Time and as of the ClosingDate neither (i) the General Disclosure Package, nor (ii) any individual Supplemental Marketing Material (as hereinafter defined), when considered together with the General Disclosure Package, included any untrue statement of a materialfact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding two sentences do not apply to statements in or omissions fromthe Preliminary or Final Offering Circular, the General Disclosure Package or any Supplemental Marketing Material based upon written information furnished to the Company by any Purchaser through Credit Suisse Securities (USA) LLC (“**CreditSuisse**”) specifically for use therein, it being understood and agreed that the only such information is that described as such in Section 8(b) hereof. On the date of this Agreement, the Company’s annual report on Form 10-Kmost recently filed with the Commission and all subsequent reports (collectively, the “**Exchange Act Reports**”) which have been or subsequently are deemed to be incorporated by reference in the Preliminary Offering Circular, theGeneral Disclosure Package or the Final Offering Circular do not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they weremade, not misleading. Such documents, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act and the rules and regulations of the Commission thereunder. 

“**Free Writing Communication**” means a written communication (as such term is defined in Rule 405 under the Securities Act) thatconstitutes an offer to sell or a solicitation of an offer to buy the Offered Securities and is made by means other than the Preliminary Offering Circular or the Final Offering Circular. “**Issuer Free Writing Communication**” means aFree Writing Communication prepared by or on behalf of the Company, used or referred to by the Company or containing a description of the final terms of the Offered Securities or of their offering, in the form retained in the Company’s records.“**Supplemental Marketing Material**” means any Issuer Free Writing Communication other than any Issuer Free Writing Communication specified in Schedule B to this Agreement. 

(b) No order or decree preventing the use of the General Disclosure Package, the Final Offering Circular or any order asserting that thetransactions contemplated by this Agreement are subject to the registration requirements of the Securities Act, has been issued and no proceeding for that purpose has commenced or is pending or, to the knowledge of the Company, is contemplated.

(c) Each of the Company and its subsidiaries has been duly incorporated or formed and is an existing corporation, limitedliability company, limited partnership or general partnership in good standing under the laws of its state of organization, with power and authority (corporate and other) to own its properties and conduct its business as described in the GeneralDisclosure Package; and each of the Company and its subsidiaries is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its businessrequires such qualification, except to the extent the failure to so qualify or be in good standing could not reasonably be expected to have a material adverse effect on the condition (financial or other), business, properties, results of operationsor, to the knowledge of the Company, prospects of the Company and its subsidiaries, taken as a whole (a “**Material Adverse Effect**”). The Company has all requisite corporate power and authority to enter into the Operative Documentsand has full power and authority to authorize, issue and sell the Offered Securities as contemplated by this Agreement. 

(d)Neither the Company nor any of its subsidiaries is (i) in default in the performance of any obligation, agreement, covenant or condition contained in any indenture, loan agreement, mortgage, lease or other agreement or instrument to which theCompany or its subsidiaries is a party or by which the Company or any of its subsidiaries or their respective property is bound, or (ii) in violation of its respective charter or by-laws, operating agreement or other organizational documentthat governs the existence or administration of such entity, in each case, except as could not reasonably be expected to have a Material Adverse Effect. 

(e)(i) As of the date hereof, subject to changes in the ordinary course of business or as contemplated by the General Disclosure Package, the Company has the capitalization set forth in the General Disclosure Package,under the heading “Capitalization,” (ii) all of the issued shares of capital stock of the Company and its subsidiaries have been duly and validly authorized and issued 

and are fully paid and non-assessable and (iii) the capital stock of each subsidiary owned by theCompany, directly or through subsidiaries, is owned free from liens, encumbrances and material defects, other than those arising under the Company’s third amended and restated credit agreement, dated March 6, 2006 (the “CreditFacility”), with Citicorp USA, Inc. and JPMorgan Chase Bank, N.A., as co-administrative agents, JPMorgan Chase Bank, N.A., as collateral agent, Citigroup Global Markets Inc. and JPMorgan Securities Inc., as joint lead arrangers, and the otherfinancial institutions parties thereto as lenders. 

(f) The Offered Securities have been duly and validly authorized by theCompany and, when duly executed by the Company in accordance with the terms of the Indenture, assuming due authentication of the Offered Securities by the Trustee, upon delivery to the Purchasers against payment therefor in accordance with the termshereof, will be validly issued and delivered, and will constitute valid and binding obligations of the Company entitled to the benefits of the Indenture, enforceable against the Company in accordance with their terms, except as such enforceabilitymay be limited by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) general principles of equity and thediscretion of the court before which any proceeding therefore may be brought (regardless of whether such enforcement is considered in a proceeding in equity or at law). On the date of this Agreement the Offered Securities conform to the descriptionthereof contained in the General Disclosure Package and on the Closing Date the Offered Securities will conform to the description thereof contained in the Final Offering Circular. 

(g) The Exchange Securities (as defined in the Registration Rights Agreement) have been, or as of the Registered Exchange Offer (asdefined in the Registration Rights Agreement) will have been, duly and validly authorized by the Company and, when duly executed by the Company in accordance with the terms of the Indenture, assuming due authentication of the Exchange Securities bythe Trustee, upon exchange for the Initial Securities (as defined in the Registration Rights Agreement), will be validly issued and delivered, and will constitute valid and binding obligations of the Company entitled to the benefits of theIndenture, enforceable against the Company in accordance with their terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, or other similar laws now or hereafter ineffect relating to creditors’ rights generally and (ii) general principles of equity and the discretion of the court before which any proceeding therefore may be brought (regardless of whether such enforcement is considered in a proceedingin equity or at law). The Exchange Securities will conform to the descriptions thereof contained in the Registration Statement (as defined in the Registration Rights Agreement). 

(h) The Indenture has been, or as of the Closing Date will have been, duly and validly authorized by the Company, and upon its executionand delivery and, assuming due authorization, execution and delivery by the Trustee, will constitute the valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may belimited by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, or other similar laws now or hereafter in effect relating to creditors’ rights generally and (ii) general principles of equity and thediscretion of the court before which any proceeding therefore may be brought (regardless of whether such enforcement is considered in a proceeding in equity or at law); and assuming the accuracy of the Purchasers’ representations and warrantiesand the Purchasers’ compliance with the agreements in Section 4 hereof and compliance with the limitations and restrictions contained under the heading “Transfer Restrictions” in the Final Offering Circular, no qualification ofthe Indenture under the Trust Indenture Act of 1939, as amended (the “**TIA**”) is required in connection with the offer and sale of the Offered Securities contemplated hereby; and the Indenture conforms in all material respects to therequirements of the TIA, and the rules and regulations of the Commission applicable to an indenture which is qualified thereunder. On the date of this Agreement the Indenture conforms to the description thereof in the General Disclosure Package, andon the Closing Date the Indenture will conform to the description thereof in the Final Offering Circular. 

(i) ThisAgreement and the Registration Rights Agreement have been duly authorized, executed and delivered by the Company. 

(j)Except as disclosed in the General Disclosure Package, there are no contracts, agreements or understandings between the Company and any person that would give rise to a valid claim against the Company or any Purchaser for a brokerage commission,finder’s fee or other like payment. 

(k) No consent, approval, authorization, or order of, or filing with, any governmentalagency or body or any court is required for the consummation of the transactions contemplated by the Operative Documents in connection with the issuance and sale of the Offered Securities by the Company, except for (i) the order of theCommission declaring the Exchange Offer Registration or the Shelf Registration Statement (each as defined in the Registration Rights Agreement) effective, (ii) such as may be required under foreign or state securities laws, blue sky laws andrelated regulations, (iii) those that have been obtained or made on or prior to the Closing Date and (iv) those that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect and would notmaterially adversely affect the ability of the Company to perform its obligations under the Operative Documents. 

(l) Theexecution, delivery and performance of the Operative Documents, and the issuance and sale of the Offered Securities and compliance with the terms and provisions thereof, will not result in a breach or violation of any of the terms and provisions of,or constitute a default under (i) any statute, any rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their properties,(ii) any agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the properties of the Company or any of its subsidiaries is subject, or(iii) the charter or by-laws of the Company or any of its subsidiaries, except in the case of (i) and (ii), for such breaches, violations or defaults as could not reasonably be expected to have a Material Adverse Effect. 

(m) Except as disclosed in the General Disclosure Package, the Company and its subsidiaries possess adequate certificates, authorities orpermits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by them and have not received any notice of proceedings relating to the revocation or modification of any such certificate, authority orpermit that, if determined adversely to the Company or its subsidiaries, could individually or in the aggregate reasonably be expected to have a Material Adverse Effect. 

(n) Except as disclosed in the General Disclosure Package, each of the Company and its subsidiaries is in compliance with all applicablestatutes, regulations and orders of, and all applicable restrictions imposed by all governmental agencies, bodies or courts, except where the failure to comply could not reasonably be expected to have a Material Adverse Effect. 

(o) To the knowledge of the Company, no labor dispute with the employees of the Company and its subsidiaries, that could reasonably beexpected to result in a Material Adverse Effect is imminent. 

(p) The Company and its subsidiaries own or possess onreasonable terms, adequate trademarks, trade names and other rights to patents, copyrights and other intellectual property (collectively, “**intellectual property rights**”) necessary to conduct the business now operated by them, orpresently employed by them, and have not received any notice of infringement of or conflict with asserted rights of others with respect to any intellectual property rights that, if determined adversely to the Company or any of its subsidiaries,could reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. 

(q) Except asdisclosed in the General Disclosure Package, neither the Company nor any of its subsidiaries is in violation of any statute, any rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign havingjurisdiction over the Company or any of its subsidiaries or any of their respective properties, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or humanexposure to hazardous or toxic substances (collectively, “**environmental laws**”), owns or operates any real property contaminated with any substance that is subject to any environmental laws, is liable for any off-site disposal orcontamination pursuant to any environmental laws, or is subject to any claim relating to any environmental laws, which violation, contamination, liability or claim could reasonably be expected to, individually or in the aggregate, have a MaterialAdverse Effect; and the Company is not aware of any pending investigation which might lead to such a claim. 

(r) Except as disclosed in the General Disclosure Package, there are no pending actions,suits or proceedings against or affecting the Company, any of its subsidiaries or their respective properties that, if determined adversely to the Company or its subsidiaries, could reasonably be expected to, individually or in the aggregate, have aMaterial Adverse Effect, or would materially and adversely affect the ability of the Company to perform its obligations under the Operative Documents; and except as disclosed in the General Disclosure Package no such actions, suits or proceedingsare, to the Company’s knowledge, threatened or contemplated. 

(s) The financial statements of the Company included orincorporated by reference in the General Disclosure Package present fairly the financial position of the Company and its consolidated subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and suchfinancial statements have been prepared in conformity with the generally accepted accounting principles in the United States applied on a consistent basis; and the assumptions used in preparing the pro forma financial statements of the Companyincluded or incorporated by reference in the General Disclosure Package provide a reasonable basis for presenting the significant effects directly attributable to the transactions or events described therein, the related pro forma adjustments giveappropriate effect to those assumptions, and the pro forma columns therein reflect the proper application of those adjustments to the corresponding historical financial statement amounts. The Company has prepared restated consolidated balance sheetsas of December 31, 2004, 2003, 2002 and 2001, and a restated consolidated statement of changes in stockholders’ equity for each of the four years in the period ended December 31, 2004. PricewaterhouseCoopers LLP has audited theCompany’s restated consolidated balance sheet as of December 31, 2004 and the restated consolidated statement of changes in stockholders’ equity for each of the two years in the period ended December 31, 2004 (collectively, the“**Audited Restated Financial Statements**”). The Company’s restated consolidated balance sheets and restated consolidated statements of changes in stockholders’ equity for periods prior to those included in the AuditedRestated Financial Statements (collectively, the “**Unaudited Restated Financial Statements**”) were prepared by the Company on a basis consistent with the Audited Restated Financial Statements, and the selected financial data set forthunder the captions “Summary Historical and Unaudited Pro Forma Condensed Consolidated Financial Data” and “Selected Financial Data” and other financial information derived from the Unaudited Restated Financial Statements that isincluded or incorporated by reference in the General Disclosure Package fairly present the information included therein. 

(t) Except as disclosed in the General Disclosure Package, since the date as of which the information is given in the General Disclosure Package, there has been no material adverse change, nor any development or event involving aprospective material adverse change, in the condition (financial or other), business, properties, results of operations or, to the knowledge of the Company, prospects of the Company and its subsidiaries, taken as a whole and, except as disclosed inor contemplated by the General Disclosure Package, there has been no dividend or distribution of any kind declared, paid or made by Company on any class of its capital stock. 

(u) The Company is subject to the reporting requirements of either Section 13 or Section 15(d) of the Exchange Act and filesreports with the Commission on the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. 

(v) The Company isnot an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the United States Investment Company Act of 1940 (the “**Investment CompanyAct**”); and the Company is not and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the General Disclosure Package, will not be an “investmentcompany” as defined in the Investment Company Act. 

(w) The Company has established and maintains disclosure controlsand procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), which (i) are designed to ensure that material information relating to the Company and its consolidated subsidiaries is made known to the principal executiveofficer and its principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared; (ii) have been evaluated for effectiveness as of adate within 90 days prior to the date of the Company’s Annual Report (as defined below); and (iii) except as disclosed in the General Disclosure Package, are effective in all material respects to perform the functions for which they wereestablished. 

(x) Based on the most recent evaluation of its disclosure controls and procedures, theCompany is not aware of (i) any significant deficiency in the design or operation of internal controls which could adversely affect the ability of the Company to record, process, summarize and report financial data or any material weaknesses ininternal controls, other than the material weakness relating to tax accounting and reconciliation controls and processes disclosed in the General Disclosure Package; or (ii) any fraud, whether or not material, that involves management or otheremployees who have a significant role in internal controls. 

(y) Since the date of the most recent evaluation of suchdisclosure controls and procedures, there have been no significant changes in internal controls or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies andmaterial weaknesses, except as disclosed in the General Disclosure Package. 

(z) PricewaterhouseCoopers LLP who havecertified certain financial statements of the Company and its subsidiaries are independent public accountants with respect to the Company as required by the Securities Act and the rules and regulations of the Commission thereunder. 

(aa) Except as set forth in the General Disclosure Package, neither the Company nor any of its subsidiaries is (i) subject toregulation under the Federal Power Act, as amended (“**FPA**”), other than as a power marketer or an “exempt wholesale generator” (“**EWG**”) with market-based rate authority, or as a “qualifyingfacility” (“**QF**”) under the Public Utility Regulatory Policies Act of 1978, as amended (16 U.S.C. Section 796 et seq.) (“**PURPA**”), as contemplated by 18 C.F.R. Section 292.601(c), or (ii) withrespect to each of the power generation projects in which any of the Company or its subsidiaries has an interest that is a QF, subject to any state law or regulation with respect to rates or the financial or organizational regulation of electricutilities, other than as contemplated by 18 C.F.R. Section 292.602(c). 

(bb) Each of the Company’s subsidiariesproviding retail electric service in the states of California and Texas is authorized under applicable statutes and administrative rules to sell electricity on a retail basis, and such authority is not subject to any pending challenge,investigation, or proceeding. In Illinois, the Company’s subsidiary is in compliance with all laws and administrative rules with respect to providing retail electric service in that state and is in the process of making a revised filingattesting to such compliance based on changed circumstances None of the Company’s subsidiaries providing retail electric service is subject to any rate cap or mitigation measure other than rate caps and mitigation measures generally applicableto similarly situated retail service providers selling in the geographic market where such subsidiary conducts its business. 

(cc) Except as disclosed in the General Disclosure Package, each of the power generation projects certified as a QF under PURPA in which the Company or its subsidiaries has an interest meets the requirements for certification as a QF as setout in PURPA and the regulations of the Federal Energy Regulatory Commission (“**FERC**”) promulgated thereunder, as amended from time to time. 

(dd) Each of the Company and its subsidiaries that sells power at market-based rates outside of the Electric Reliability Council of Texas,Inc. (“**ERCOT**”) has a validly-issued order from the FERC authorizing it to engage in wholesale sales of electricity, ancillary services in certain markets and, to the extent permitted under its market-based rate tariff, otherproducts and services at market-based rates. The FERC has not issued any orders limiting the ability of each such entity to engage in the wholesale sales of electricity at market-based prices, and had not imposed any rate caps or mitigation measuresother than rate caps and mitigation measures generally applicable to similarly situated marketers or generators selling electricity, ancillary services or other products at wholesale in the geographic market where each such entity conducts itsbusiness. 

(ee) Each of the Company’s subsidiaries participating in the ERCOT wholesale electric market has registeredwith the Public Utilities Commission of Texas (“**PUCT**”) as a power 

generation company, and has authority to sell power at wholesale at a market-based rate that is notsubject to any rate cap or mitigation measure other than those generally applicable to similarly situated marketers or generators selling electricity in the ERCOT wholesale electric market. 

(ff) There are no pending complaints filed with the FERC seeking abrogation or modification of a contract for the sale of power by theCompany or any of its subsidiaries. 

(gg) No securities of the same class (within the meaning of Rule 144A(d)(3) underthe Securities Act) as the Offered Securities are listed on any national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system. 

(hh) The offer and sale of the Offered Securities by the Company to the several Purchasers in the manner contemplated by this Agreement(assuming that the representations and warranties in Section 4 of this Agreement are true and correct and the Purchasers comply with the offer and sale procedures set forth in this Agreement) will be exempt from the registration requirements ofthe Securities Act by reason of Section 4(2) thereof, and Regulation D and Regulation S thereunder. 

(ii) Neither theCompany nor any of its affiliates, nor any person acting on its or their behalf (it being understood that no representation is made with respect to any Purchaser or any Purchaser’s affiliates or any of their representatives) (i) has,within the six-month period prior to the date hereof, offered or sold in the United States or to any U.S. person (as such terms are defined in Regulation S under the Securities Act) the Offered Securities or any security of the same class or seriesas the Offered Securities or (ii) has offered or will offer or sell the Offered Securities (A) in the United States by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) under the SecuritiesAct or (B) with respect to any such securities sold in reliance on Rule 903 of Regulation S under the Securities Act, by means of any directed selling efforts within the meaning of Rule 902(c) of Regulation S. The Company, its respectiveaffiliates and any person acting on its or their behalf (it being understood that no representation is made with respect to any Purchaser or any Purchaser’s affiliates or any of their representatives) have complied and will comply with theoffering restrictions requirement of Regulation S and the sale of the Offered Securities pursuant to Regulation S is not part of a plan or scheme to evade the registration provisions of the Securities Act. The Company has not entered and will notenter into any contractual arrangement with respect to the distribution of the Offered Securities except for this Agreement. 

(jj) Except as disclosed in the General Disclosure Package, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement underthe Securities Act with respect to any securities of the Company or to require the Company to include such securities with the Offered Securities registered pursuant to any registration statement. 

(kk) Neither the Company nor any of its subsidiaries nor any agent thereof acting on the behalf of them has taken, and none of them willtake, any action that might cause this Agreement or the issuance or sale of the Offered Securities to violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System. 

(ll) The Company and each of its subsidiaries carry, or are covered by, insurance in such amounts and covering such risks as is adequatefor the conduct of their respective businesses and the value of their respective properties and as is customary for companies engaged in similar businesses in similar industries. 

(mm) No “nationally recognized statistical rating organization” as such term is defined for purposes of Rule 436(g)(2) under theSecurities Act (i) has imposed (or has informed the Company that it is considering imposing) any condition (financial or otherwise) on the Company’s retaining any rating assigned to the Company or any securities of the Company or(ii) has indicated to the Company that it is considering (a) the downgrading, suspension, or withdrawal of, or any review for a possible change that does not indicate the direction of the possible change in, any rating so assigned or(b) any change in the outlook for any rating of the Company or any securities of the Company. 

(nn) Except for such matters as could not reasonably be expected to have a MaterialAdverse Effect, the Company is in compliance with all presently applicable provisions of ERISA; no “reportable event” (as defined in ERISA), has occurred with respect to any “pension plan” (as defined in ERISA), for which theCompany would have any liability; the Company has not incurred and does not expect to incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan” or (ii) Sections 412 or 4971of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the “**Code**”); and each “pension plan” for which the Company would have any liability that is intended tobe qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification. 

(oo) The Company has filed all material federal, state and local income and franchise tax returns required to be filed through the datehereof and has paid all taxes due thereon, and no tax deficiency except where the same may be contested in good faith by appropriate proceedings, and no tax deficiency has been determined adversely to the Company or any of its subsidiaries which hashad (nor does the Company has any knowledge of any tax deficiency in writing which, if determined adversely to the Company or any of its subsidiaries, could reasonably be expected to have) a Material Adverse Effect. 

(pp) Prior to the date hereof, neither the Company nor any of its affiliates has taken any action which is designed to or which hasconstituted or which might have been expected to cause or result in stabilization or manipulation of the price of any security of the Company in connection with the offering of the Offered Securities. 

(qq) The General Disclosure Package contains all the information specified in, and meeting the requirements of, Rule 144A(d)(4) under theSecurities Act. 

(rr) The statements set forth in the Preliminary and the Final Offering Circular under the caption“Description of Notes,” insofar as they purport to constitute a summary of the terms of the Offered Securities, under the captions “Material U.S. Federal Income Tax Considerations,” “Description of Certain Indebtedness”and “Plan of Distribution,” insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate and fair summaries in all material respects. 

3. *Purchase, Sale and Delivery of Offered Securities*. On the basis of the representations, warranties and agreements herein contained, but subjectto the terms and conditions herein set forth, the Company agrees to sell to the Purchasers, and the Purchasers agree, severally and not jointly, to purchase from the Company, at a purchase price of 98% of the principal amount thereof plus accruedinterest from April 12, 2006 to the Closing Date (as hereinafter defined), the respective principal amounts of Offered Securities set forth opposite the names of the several Purchasers in Schedule A hereto. 

The Company will deliver against payment of the purchase price the Offered Securities in the form of one or more permanent global securities indefinitive form (the “**Global Securities**”) deposited with the Trustee as custodian for The Depository Trust Company (“**DTC**”) and registered in the name of Cede & Co., as nominee for DTC. Interests in anypermanent global securities will be held only in book-entry form through DTC, except in the limited circumstances described in the Final Offering Circular. Payment for the Offered Securities shall be made by the Purchasers in Federal (same day)funds by wire transfer to an account at a bank acceptable to Credit Suisse, on April 12, 2006, or at such other time not later than seven full business days thereafter as Credit Suisse and the Company determine, such time being herein referred to asthe “**Closing Date**”, against delivery to the Trustee as custodian for DTC of the Global Securities representing all of the Offered Securities. The Global Securities will be made available for inspection at the office of Cravath,Swaine & Moore LLP at least 24 hours prior to the Closing Date. 

4. *Representations by Purchasers; Resale by Purchasers*.(a) Each Purchaser severally represents and warrants to the Company that it is an “accredited investor” within the meaning of Regulation D under the Securities Act. 

(b) Each Purchaser severally acknowledges that the Offered Securities have not been registered under the Securities Act and may not be offered or soldwithin the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S or pursuant to an exemption from the registration requirements of the Securities Act. Each Purchaser severally represents andagrees that it has 

offered and sold the Offered Securities and will offer and sell the Offered Securities (i) as part of theirdistribution at any time and (ii) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, only in accordance with Rule 144A (“**Rule 144A**”) or Rule 903 under the Securities Act.Accordingly, neither such Purchaser nor its affiliates, nor any persons acting on its or their behalf, have engaged or will engage in any directed selling efforts with respect to the Offered Securities, and such Purchaser, its affiliates and allpersons acting on its or their behalf have complied and will comply with the offering restrictions requirement of Regulation S. Each Purchaser severally agrees that, at or prior to confirmation of sale of the Offered Securities, other than a salepursuant to Rule 144A, such Purchaser will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases the Offered Securities from it during the restricted period a confirmation or noticeto substantially the following effect: 

“The Securities covered hereby have not been registered under the U.S. Securities Act of 1933(the “Securities Act”) and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later ofthe date of the commencement of the offering and the closing date, except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meanings given to them byRegulation S.” 

Terms used in this subsection (b) have the meanings given to them by Regulation S. 

(c) Each Purchaser severally agrees that it and each of its affiliates has not entered and will not enter into any contractual arrangement with respectto the distribution of the Offered Securities except for any such arrangements with the other Purchasers or affiliates of the other Purchasers or with the prior written consent of the Company. 

(d) Each Purchaser severally agrees that it and each of its affiliates will not offer or sell the Offered Securities by means of any form of generalsolicitation or general advertising, within the meaning of Rule 502(c) under the Securities Act, including, but not limited to (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar mediaor broadcast over television or radio, or (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. Each Purchaser severally agrees, with respect to resales made in reliance on Rule 144Aof any of the Offered Securities, to deliver either with the confirmation of such resale or otherwise prior to settlement of such resale a notice to the effect that the resale of such Offered Securities has been made in reliance upon the exemptionfrom the registration requirements of the Securities Act provided by Rule 144A. 

(e) Each of the Purchasers severally represents and agreesthat (i) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services andMarkets Act 2000 (the “**FSMA**”)) received by it in connection with the issue or sale of any Offered Securities in circumstances in which section 21(1) of the FSMA does not apply to the Company; and (ii) it has complied and willcomply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Offered Securities in, from or otherwise involving the United Kingdom 

5. *Certain Agreements of the Company*. The Company agrees with the several Purchasers that: 

(a) The Company will advise Credit Suisse promptly of any proposal to amend or supplement the Preliminary or Final Offering Circular andwill not effect such amendment or supplementation without Credit Suisse’s consent (which consent shall not be unreasonably withheld or delayed). If, at any time prior to the completion of the resale of the Offered Securities by the Purchasers,there occurs an event or development as a result of which any document included in the Preliminary or Final Offering Circular, the General Disclosure Package or any Supplemental Marketing Material included or would include an untrue statement of amaterial fact or omitted or would omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at such time, not misleading, the Company promptly will notify Credit Suisse of suchevent and promptly will prepare, at its own expense, an amendment or supplement which will correct such statement or omission. Neither Credit Suisse’s consent to, nor the Purchasers’ delivery to offerees or investors of, any such amendmentor supplement shall constitute a waiver of any of the conditions set forth in Section 6. 

(b) The Company will furnish to Credit Suisse copies of the Preliminary OfferingCircular, each other document comprising a part of the General Disclosure Package, the Final Offering Circular, all amendments and supplements to such documents and each item of Supplemental Marketing Material, in each case as soon as available andin such quantities as Credit Suisse reasonably requests. At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act, and any Offered Securities remain “restricted securities” within the meaning of theSecurities Act, the Company will promptly furnish or cause to be furnished to Credit Suisse (and, upon request, to each of the other Purchasers) and, upon request of holders and prospective purchasers of the Offered Securities, to such holders andpurchasers, copies of the information required to be delivered to holders and prospective purchasers of the Offered Securities pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto) in order to permitcompliance with Rule 144A in connection with resales by such holders of the Offered Securities. The Company will pay the expenses of printing and distributing to the Purchasers all such documents. 

(c) The Company will use all commercially reasonable efforts to obtain the qualification of the Offered Securities for sale and thedetermination of their eligibility for investment under the laws of such jurisdictions in the United States and Canada as Credit Suisse designates and will continue such qualifications in effect so long as required for the resale of the OfferedSecurities by the Purchasers, provided that the Company will not be required to qualify as a foreign corporation or to file a general consent to service of process in any such state. 

(d) During the period of two years after the Closing Date, the Company will, upon request, furnish to Credit Suisse, each of the otherPurchasers and any holder of Offered Securities a copy of the restrictions on transfer applicable to the Offered Securities. 

(e) During the period of five years hereafter, unless such documents are available electronically via the EDGAR system maintained by the Commission, the Company will furnish to Credit Suisse and, upon request, to each of the otherPurchasers, as soon as practicable after the end of each fiscal year, a copy of its annual report to stockholders for such year; and the Company will furnish to Credit Suisse and, upon reasonable request, to each of the other Purchasers (i) assoon as available, a copy of each report and any definitive proxy statement of the Company mailed to stockholders, and (ii) the information required to be provided to the Trustee for the Offered Securities pursuant to the Indenture. 

(f) Subject to the Purchasers’ compliance with its representations and warranties and agreements set forth in Section 4hereof, the Company consents to the use of the Preliminary Offering Circular, any other documents comprising any part of the General Disclosure Package, the Final Offering Circular and any amendments and supplements thereto required pursuant toSection 5(a) hereto, by the Purchasers. 

(g) During the period of two years after the Closing Date, the Company willnot, and will not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Offered Securities that have been reacquired by any of them, unless such Offered Securities are resold in a transaction registeredunder the Securities Act. 

(h) During the period of two years after the Closing Date, the Company will not be or become, anopen-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act. 

(i) The Company agrees to pay all expenses incidental to the performance of its obligations under the Operative Documents including(i) the fees and expenses of the Trustee and their respective professional advisers, (ii) all expenses in connection with the execution, issue, authentication, packaging and initial delivery of the Offered Securities and, as applicable,the Exchange Securities (as defined in the Registration Rights Agreement), the preparation and printing of the Preliminary Offering Circular, any other documents comprising any part of the General Disclosure Package, the Final Offering Circular, allamendments and supplements thereto, each item of Supplemental Marketing Material and any other document relating to the issuance, offer, 

sale and delivery of the Offered Securities and as applicable the Exchange Securities, (iii) thecost of qualifying the Offered Securities for trading in The PortalSM Market (“**PORTAL**”) of TheNasdaq Stock Market, Inc. and any expenses incidental thereto, (iv) for any expenses (including fees and disbursements of counsel) incurred in connection with qualification of the Offered Securities or the Exchange Securities for sale under thestate securities laws as provided in Section 5(c) and the printing of memoranda relating thereto, (v) for any fees charged by investment rating agencies for the rating of the Offered Securities or the Exchange Securities, and (vi) forexpenses incurred in distributing the Preliminary Offering Circular, any other documents comprising any part of the General Disclosure Package, the Final Offering Circular (including any amendments and supplements thereto) and any SupplementalMarketing Material to the Purchasers. 

(j) In connection with the offering, until Credit Suisse shall have notified theCompany and the other Purchasers, which notice shall be promptly provided upon the written request of the Company, of the completion of the resale of the Offered Securities, neither the Company nor any of its affiliates has or will, either alone orwith one or more other persons, bid for or purchase for any account in which it or any of its affiliates has a beneficial interest any Offered Securities or attempt to induce any person to purchase any Offered Securities; and neither it nor any ofits affiliates will make bids or purchases for the purpose of creating actual, or apparent, active trading in, or of raising the price of, the Offered Securities. 

(k) The Company will apply the net proceeds from the sale of the Offered Securities to be sold by it hereunder substantially in accordancewith the description set forth in the Final Offering Circular under the caption “Use of Proceeds.” 

(l) Except asstated in this Agreement, the General Disclosure Package or the Final Offering Circular, neither the Company nor any of its affiliates have taken, nor will any of them take, directly or indirectly, any action designed to or that might reasonably beexpected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Offered Securities. 

(m) The Company will use its best efforts to permit the Offered Securities to be designated PORTAL securities in accordance with the rulesand regulations adopted by the National Association of Securities Dealers, Inc. relating to trading in PORTAL and to permit the Offered Securities to be eligible for clearance and settlement through DTC. 

(n) The Company agrees not to sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as definedin the Securities Act), that would be integrated with the sale of the Offered Securities in a manner that would require the registration under the Securities Act of the sale to the Purchasers or the resale of the Offered Securities. 

(o) The Company agrees to comply with all the terms and conditions of the Operative Documents and all agreements set forth in therepresentation letter of the Company to DTC relating to the approval of the Offered Securities by DTC for “book entry” transfer. 

(p) The Company will do and perform all things required or necessary to be done and performed under this Agreement by them prior to the Closing Date, and to satisfy all conditions precedent to the Purchasers’obligations hereunder to purchase the Offered Securities. 

(q) In connection with the sale of the Offered Securities to thePurchasers, the Company will file the notice on Form D required by Rule 503 under the Securities Act within the time required by such Rule and otherwise in compliance with such Rule. A copy of such notice shall be furnished promptly to CreditSuisse. 

6. *Free Writing Communications*. (a) The Company represents and agrees that, unless it obtains the priorconsent of Credit Suisse, and each Purchaser represents and agrees that, unless it obtains the prior consent of the Company and Credit Suisse, it has not made and will not make any offer relating to the Offered Securities that would constitute anIssuer Free Writing Communication. 

(b) The Company consents to the use by any Purchaser of a Free Writing Communicationthat (i) contains only (A) information describing the preliminary terms of the Offered 

Securities or their offering or (B) information that describes the final terms of the OfferedSecurities or their offering and that is included in the Terms Communication or is included in or is subsequently included in the Final Offering Circular or (ii) does not contain any material information about the Company or its securities thatwas provided by or on behalf of the Company, it being understood and agreed that any such Free Writing Communication referred to in clause (i) or (ii) shall not be an Issuer Free Writing Communication for purposes of this Agreement.

7. *Conditions of the Obligations of the Purchasers*. The obligations of the several Purchasers to purchase and payfor the Offered Securities will be subject to the accuracy of the representations and warranties on the part of the Company herein as of the date hereof and on the Closing Date, to the accuracy of the statements of officers of the Company madepursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions precedent: 

(a) The Purchasers shall have received a letter, dated the date of this Agreement, of PricewaterhouseCoopers LLP, independent public accountants of the Company, substantially in the form attached hereto as Annex A,confirming that they are independent public accountants within the meaning of the Securities Act and the applicable published rules and regulations thereunder. Such letter shall be in form and substance reasonably satisfactory to the Purchasers asagreed as of the date hereof and shall cover the matters ordinarily covered by accountants’ “comfort letters” to initial purchasers in connection with offerings similar to the offering of the Offered Securities. 

(b) Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development orevent involving a prospective change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as a whole which, in the judgment of a majority in interest of the Purchasers,including Credit Suisse, is material and adverse and makes it impractical or inadvisable to proceed with completion of the offering or the sale of and payment for the Offered Securities; (ii) any downgrading in the rating of any debt securitiesof the Company by any “nationally recognized statistical rating organization” (as defined for purposes of Rule 436(g) under the Securities Act), or any public announcement that any such organization has under surveillance or review itsrating of any debt securities of the Company (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating) or any announcement that the Company has been placed onnegative outlook as of or after the date of this Agreement; (iii) any change in U.S. or international financial, political or economic conditions or currency exchange rates or exchange controls as would, in the judgment of a majority ininterest of the Purchasers, including Credit Suisse, be likely to prejudice materially the success of the proposed issue, sale or distribution of the Offered Securities, whether in the primary market or in respect of dealings in the secondarymarket; (iv) any material suspension or material limitation of trading in securities generally on the New York Stock Exchange or any setting of minimum prices for trading on such exchange, or any suspension of trading of any securities of theCompany on any exchange or in the over-the-counter market; (v) any general banking moratorium declared by U.S. Federal or New York authorities; (vi) any major disruption of settlements of securities or clearance services in the UnitedStates; or (vii) any attack on, outbreak or escalation of hostilities or act of terrorism involving the United States, any declaration of war by Congress or any other national or international calamity or emergency if, in the judgment of amajority in interest of the Purchasers including Credit Suisse, the effect of any such attack, outbreak, escalation, act, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the offering or sale ofand delivery and payment for the Offered Securities. 

(c) The Purchasers shall have received an opinion, dated the ClosingDate, of Akin Gump Strauss Hauer & Feld LLP, counsel for the Company, that: 

(i) The Company is validly existing asa corporation in good standing under the laws of the State of Delaware, has the corporate power and authority under the Delaware General Corporate Law and its certificate of incorporation and bylaws to own its properties and conduct its business asdescribed in the General Disclosure Package; 

(ii) Each subsidiary of the Company listed in an annex to this opinion is validlyexisting as a corporation in good standing under the laws of the jurisdiction of its incorporation; 

(iii) The Company hasthe corporate power and authority to (i) enter into the Operative Documents and the Exchange Securities (collectively, the “**Transaction Documents**”) and (ii) authorize, issue and sell the Offered Securities, as contemplatedby this Agreement; 

(iv) The Offered Securities when duly authenticated in accordance with the terms of the Indenture andduly paid for by and delivered to the Purchasers in accordance with the terms of the Purchase Agreement will constitute valid and binding obligations of the Company entitled to the benefits of the Indenture and will be enforceable against theCompany in accordance with their terms. The Offered Securities conform in all material respects to the description thereof in the General Disclosure Package and the Final Offering Circular; 

(v) The Exchange Securities, when duly executed, authenticated, issued and delivered as provided in the Indenture and the RegistrationRights Agreement, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms. 

(vi) The Indenture is a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. The Indenture conforms in all material respects to the description thereof in theGeneral Disclosure Package and the Final Offering Circular; 

(vii) The Indenture conforms in all material respects to therequirements of the TIA, and the rules and regulations of the Commission applicable to an indenture which is qualified thereunder; 

(viii) The Company is not and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the General Disclosure Package and the Final Offering Circular, will not be an“investment company” as defined in the Investment Company Act; 

(ix) No FPA approval or authorization is requiredfor the execution and delivery by the Company of the Operative Documents and the performance by the Company of the obligations thereunder; 

(x) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body (each, a “**Filing**”) is required under any laws for the due executionand delivery of the Transaction Documents by the Company and the performance by the Company of its obligations thereunder, subject to the assumptions set forth in paragraph (xvi) and except (i) routine Filings necessary in connection withthe conduct of the Company’s business, including routine Filings required to be made under the Exchange Act, (ii) such other Filings as have been obtained or made, (iii) Filings required under Federal and state securities laws asprovided in the Registration Rights Agreement and (iv) Filings required to maintain corporate and similar standing and existence. 

(xi) The execution and delivery of the Transaction Documents by the Company do not, and the performance by the Company of their obligations thereunder will not, result in any violation of any order, writ, judgment ordecree known to us. 

(xii) The execution and delivery of each Transaction Document by the Company does not, and theperformance by the Company of its obligations thereunder will not, (a) violate the Certificate of Incorporation or By-Laws of the Company, (b) breach or result in a default of any currently existing agreement or instrument listed as anexhibit to the Exchange Act Documents, or (c) violate any law, rule or regulation. 

(xiii) (a) The execution and delivery of each Transaction Document by the Company,and the performance by the Company of its obligations under the Transaction Documents, have been duly authorized by all necessary corporate action on the part of the Company and (b) each Transaction Document (other than the Exchange Securities)has been duly executed and delivered by the Company. 

(xiv) The Registration Rights Agreement is a valid and bindingobligation of the Company, enforceable against the Company in accordance with its terms. 

(xv) The statements contained inthe Preliminary and the Final Offering Circular under the captions (a) “Description of Notes,” insofar as such statements purport to constitute a summary of the terms of the Indenture and the Offered Securities,(b) “Description of Certain Indebtedness and “Plan of Distribution”, insofar as such statements purport to constitute a summary of the documents referred to therein, and (c) “Material U.S. Federal Income TaxConsiderations” insofar as such statements purport to constitute a summary of the United States federal tax laws referred to therein, in each case, are accurate and fairly summarize in all material respects the matters referred to therein; and

(xvi) Assuming without independent investigation, (a) that the Offered Securities are sold to the Purchasers, andinitially resold by the Purchasers, in accordance with the terms of and in the manner contemplated by, the Purchase Agreement and the Final Offering Circular; (b) the accuracy of the representations and warranties of the Company set forth inthe Purchase Agreement and in those certain certificates delivered at the closing; (c) the accuracy of the representations and warranties of the Purchasers set forth in the Purchase Agreement; (d) the due performance and compliance by theCompany and the Purchasers of their respective covenants and agreements set forth in the Purchase Agreement; and (e) the Purchasers’ compliance with the Final Offering Circular and the transfer procedures and restrictions describedtherein, it is not necessary to register the Offered Securities under the Securities Act or to qualify an indenture in respect thereof under the TIA in connection with the issuance and sale of the Offered Securities by the Company to the Purchasersor in connection with the offer, resale and delivery of the Offered Securities by the Purchasers in the manner contemplated by the Purchase Agreement and the Final Offering Circular, it being expressly understood that such counsel expresses noopinion in this paragraph (xvi) or paragraph (x) as to any subsequent offer or resale of any of the Offered Securities. 

Suchcounsel shall also state that it has no reason to believe that the Final Offering Circular, or any amendment or supplement thereto, as of its date and as of the Closing Date, contained any untrue statement of a material fact or omitted to state anymaterial fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; such counsel has no reason to believe that the documents specified in a schedule to such counsel’s letter,consisting of those included in the General Disclosure Package, as of the Applicable Time and as of the Closing Date, contained any untrue statement of a material fact, or omitted to state any material fact, necessary in order to make the statementstherein, in light of the circumstances under which they were made, not misleading; it being understood that such counsel need express no opinion as to the financial statements or other financial data or statistical data (including statistical datarelated to capacity and other matters with respect to various power plants) contained in the General Disclosure Package or the Final Offering Circular. 

(d) The Purchasers shall have received an opinion, dated the Closing Date, of J. Kevin Blodgett, General Counsel and Executive Vice President, Administration, of Dynegy Inc., that: 

(i) As of the Closing Date, the Company has an authorized equity capitalization as set forth in the General Disclosure Package and theFinal Offering Circular, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; and except as set forth in the General Disclosure Package and the FinalOffering Circular, the capital stock of each subsidiary owned by the Company, directly or through subsidiaries, to his knowledge is owned free from liens, encumbrances and material defects other than liens under the Credit Facility; 

(ii) Except as set forth in the General Disclosure Package and the Final OfferingCircular, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of theCompany or to require the Company to include such securities with the Offered Securities registered pursuant to any registration statement; and 

(iii) To such counsel’s knowledge, and other than as set forth in the General Disclosure Package and the Final Offering Circular, there are no pending actions, suits or proceedings against or affecting theCompany or its subsidiaries or any of their respective properties that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or would materially and adverselyaffect the ability of the Company to perform its obligations under the Operative Documents, or which are otherwise material in the context of the sale of the Offered Securities; and no such actions, suits or proceedings are, to such counsel’sknowledge, threatened or contemplated; and such counsel shall also state that he has no reason to believe that the Final Offering Circular, or any amendment or supplement thereto, as of the date hereof and as of the Closing Date, contained anyuntrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; such counsel has no reason to believe that thedocuments specified in a schedule to such counsel’s letter, consisting of those included in the General Disclosure Package, as of the Applicable Time and as of the Closing Date, contained any untrue statement of a material fact necessary tomake the statements therein, in light of the circumstances under which they were made, not misleading; it being understood that such counsel need express no opinion as to the financial statements or other financial data or any statistical data(including statistical data related to capacity and other matters with respect to various power plants) contained in the General Disclosure Package or the Final Offering Circular. 

(e) The Purchasers shall have received from Cravath, Swaine & Moore LLP, counsel for the Purchasers, such opinion or opinions,dated the Closing Date, with respect to the incorporation of the Company, the validity of the Offered Securities, the Final Offering Circular, the General Disclosure Package, the exemption from registration for the offer and sale of the OfferedSecurities by the Company to the several Purchasers and the resales by the several Purchasers as contemplated hereby and other related matters as Credit Suisse may require, and the Company shall have furnished to such counsel such documents as theyrequest for the purpose of enabling them to pass upon such matters. 

(f) The Purchasers shall have received a certificate,dated the Closing Date, of the President or any Vice President and a principal financial or accounting officer of the Company in which such officers, to the best of their knowledge after reasonable investigation, shall state that the representationsand warranties of the Company in this Agreement are true and correct, that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date, and that,subsequent to the date of the most recent financial statements in the General Disclosure Package there has been no material adverse change, nor any development or event that reasonably could be expected to result in a prospective material adversechange, in the condition (financial or other), business, properties, results of operations or prospects of the Company or any of its subsidiaries except as set forth in the General Disclosure Package. 

(g) The Purchasers shall have received a letter, dated the Closing Date, of PricewaterhouseCoopers LLP which meets the requirements ofsubsection (a) of this Section, except that the specified date referred to in Annex A will be a date not more than three days prior to the Closing Date for the purposes of this subsection. 

(h) As of the Closing Date, the representations and warranties contained in the Operative Documents will be true and correct in allmaterial respects. 

(i) The Company shall have furnished or caused to be furnished to the Trustee on the Closing Datecertificates of officers of the Company reasonably satisfactory to the Trustee as to the accuracy of the representations and warranties of the Company in the Operative Documents at and as of such Closing Date and as to such other matters as theTrustee may reasonably request. 

(j) On the Closing Date, each Operative Document will conform, as to legal matters, inall material respects to the description thereof contained in the General Disclosure Package and the Final Offering Circular. 

(k) On or prior to the Closing Date, the transactions contemplated by the Company’s Offer to Purchase and Consent Solicitation Statement dated March 15, 2006 (the “**SPN Tender Offer**”) shall have been consummated onthe terms set forth in the General Disclosure Package and the Final Offering Circular, including the satisfaction of the Requisite Consents Condition (as defined in the SPN Tender Offer), the execution of the Supplemental Indenture (as defined inthe SPN Tender Offer) and the acceptance for purchase of all validly tendered notes in the SPN Tender Offer. 

(l) TheCompany will furnish the Purchasers with such conformed copies of such opinions, certificates, letters and documents as the Purchasers reasonably request. Credit Suisse may in its sole discretion waive on behalf of the Purchasers compliance with anyconditions to the obligations of the Purchasers hereunder. 

8. *Indemnification and Contribution*. (a) The Company will indemnifyand hold harmless each Purchaser, its officers, partners, members, directors and its affiliates and each person, if any, who controls such Purchaser within the meaning of Section 15 of the Securities Act, against any losses, claims, damages orliabilities, joint or several, to which such Purchaser may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are basedupon any untrue statement or alleged untrue statement of any material fact contained in the Preliminary Offering Circular or the Final Offering Circular, in each case as amended or supplemented, or any Issuer Free Writing Communication orSupplemental Marketing Material or the Exchange Act Reports, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances underwhich they were made, not misleading, including any losses, claims, damages or liabilities arising out of or based upon the Company’s failure to perform its obligations under Section 5(a) of this Agreement, and will reimburse eachPurchaser for any legal or other expenses reasonably incurred by such Purchaser in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company willnot be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance uponand in conformity with written information furnished to the Company by any Purchaser through Credit Suisse specifically for use therein, it being understood and agreed that the only such information consists of the information described as such insubsection (b) below. 

(b) Each Purchaser will severally and not jointly indemnify and hold harmless the Company, its directors andofficers and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities to which the Company may become subject, under the Securities Act or theExchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the PreliminaryOffering Circular or the Final Offering Circular, in each case as amended or supplemented, or any Issuer Free Writing Communication or Supplemental Marketing Material or arise out of or are based upon the omission or the alleged omission to statetherein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untruestatement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Purchaser through Credit Suisse specifically for use therein, and will reimburse any legal or otherexpenses reasonably incurred by the Company in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred, it being understood and agreed that the only such information furnished by anyPurchaser consists of the information in the Preliminary and Final Offering Circular under the caption “Plan of Distribution” in paragraph three, fifteen and the third sentence of paragraph thirteen; provided however, that the Purchasersshall not be liable for any losses, claims, damages or liabilities arising out of or based upon the Company’s failure to perform its obligations under Section 5(a) of this Agreement. 

(c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if aclaim in respect thereof is to be made against the indemnifying 

party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but thefailure to notify the indemnifying party shall not relieve it from any liability that it may have under subsection (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rightsor defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In caseany such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any otherindemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice fromthe indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by suchindemnified party in connection with the defense thereof other than reasonable costs of investigation. If the indemnifying party has assumed the defense in any such proceedings, any indemnified party shall have the right to retain its own counsel,but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the contrary; (ii) the indemnifying party has failedwithin a reasonable time to retain counsel reasonably satisfactory to the indemnified party; (iii) the indemnified party shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition tothose available to the indemnifying party; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counselwould be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the indemnifying party shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable forthe fees and expenses of more than one separate firm (in addition to any local counsel) for all indemnified parties, and that all such fees and expenses shall be reimbursed as they are incurred. Any such separate firm for any Purchaser, itsaffiliates, directors and officers and any control persons of such Purchaser shall be designated in writing by Credit Suisse and any such separate firm for the Company and its directors and officers and any control persons of the Company shall bedesignated in writing by the Company. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have beena party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes (i) an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such actionand (ii) does not include a statement as to or an admission of fault, culpability or failure to act by or on behalf of any indemnified party. 

(d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid orpayable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Companyon the one hand and the Purchasers on the other from the offering of the Offered Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not onlythe relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Purchasers on the other in connection with the statements or omissions which resulted in such losses, claims, damages orliabilities as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Purchasers on the other shall be deemed to be in the same proportion as the total net proceeds from theoffering (before deducting expenses) received by the Company bear to the total discounts and commissions received by the Purchasers from the Company under this Agreement. The relative fault shall be determined by reference to, among other things,whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Purchasers and the parties’ relative intent, knowledge, accessto information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection(d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding theprovisions of this subsection (d), no Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Offered Securities purchased by it were resold exceeds the amount of any damages which suchPurchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The Purchasers’ obligations in this subsection (d) to contribute are several in proportion to theirrespective purchase obligations and not joint. 

(e) The obligations of the Company under this Section shall be in addition to any liability which theCompany may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Purchaser within the meaning of the Securities Act or the Exchange Act; and the obligations of the Purchasers under thisSection shall be in addition to any liability which the respective Purchasers may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Company within the meaning of the Securities Act or theExchange Act. 

9. *Default of Purchasers*. If any Purchaser or Purchasers default in their obligations to purchase Offered Securitieshereunder and the aggregate principal amount of the Offered Securities that such defaulting Purchaser or Purchasers agreed but failed to purchase does not exceed 10% of the total principal amount of the Offered Securities, Credit Suisse may makearrangements satisfactory to the Company for the purchase of such Offered Securities by other persons, including any of the Purchasers, but if no such arrangements are made by the Closing Date, the non-defaulting Purchasers shall be obligatedseverally, in proportion to their respective commitments hereunder, to purchase the Offered Securities that such defaulting Purchasers agreed but failed to purchase. If any Purchaser or Purchasers so default and the aggregate principal amount of theOffered Securities with respect to which such default or defaults occur exceeds 10% of the total principal amount of the Offered Securities and arrangements satisfactory to Credit Suisse and the Company for the purchase of such Offered Securities byother persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Purchaser or the Company, except as provided in Section 10. As used in this Agreement, theterm “Purchaser” includes any person substituted for a Purchaser under this Section. Nothing herein will relieve a defaulting Purchaser from liability for its default. 

10. *Survival of Certain Representations and Obligations*. The respective indemnities, agreements, representations, warranties and other statementsof the Company or its officers and of the several Purchasers set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of anyPurchaser, the Company or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Offered Securities. If this Agreement is terminated pursuant to Section 9 or iffor any reason the purchase of the Offered Securities by the Purchasers is not consummated, the Company shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 5 and the respective obligations of the Companyand the Purchasers pursuant to Section 8 shall remain in effect. If the purchase of the Offered Securities by the Purchasers is not consummated for any reason other than solely because of the termination of this Agreement pursuant toSection 9 or the occurrence of any event specified in clause (iii), (iv), (v), (vi) or (viii) of Section 7(b), the Company will reimburse the Purchasers for all out-of-pocket expenses (including fees and disbursements of counsel)reasonably incurred by them in connection with the offering of the Offered Securities. 

11. *Notices*. All communications hereunderwill be in writing and, if sent to the Purchasers will be mailed, delivered, faxed or sent by courier and confirmed to the Purchasers, c/o Credit Suisse Securities (USA) LLC, Eleven Madison Avenue, New York, N.Y. 10010-3629, Attention: LCD-IBD,or, if sent to the Company, will be mailed, delivered or telegraphed and confirmed to it at 1000 Louisiana Street, Suite 5800, Houston, Texas 77002 Attention: General Counsel (Fax: 713-507-6808); provided, however, that any notice to a Purchaserpursuant to Section 8 will be mailed, delivered, faxed or sent by courier and confirmed to such Purchaser. 

12. *Successors*.This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the controlling persons referred to in Section 8, and no other person will have any right or obligation hereunder, exceptthat holders of Offered Securities shall be entitled to enforce the agreements for their benefit contained in the second and third sentences of Section 5(b) hereof against the Company as if such holders were parties thereto. 

13. *Representation of Purchasers*. Credit Suisse will act for the several Purchasers in connection with this purchase, and any action under thisAgreement taken by Credit Suisse will be binding upon all the Purchasers. 

14. *Counterparts*. This Agreement may be executed in anynumber of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. 

15.*Absence of Fiduciary Relationship*. The Company acknowledges and agrees that: 

(a) The Purchasershave been retained solely to act as initial purchasers in connection with the initial purchase, offering and resale of the Offered Securities and that no fiduciary, advisory or agency relationship between the Company and the Purchasers has beencreated in respect of any of the transactions contemplated by this Agreement or the Preliminary or Final Offering Circular, irrespective of whether the Purchasers have advised or are advising the Company on other matters; 

(b) the purchase price of the Offered Securities set forth in this Agreement was established by theCompany following discussions and arms-length negotiations with the Purchasers and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement;

(c) the Company has been advised that the Purchasers and their affiliates are engaged in a broad range of transactions which may involveinterests that differ from those of the Company and that the Purchasers have no obligation to disclose such interests and transactions to the Company by virtue of any fiduciary, advisory or agency relationship; and 

(d) the Company waives, to the fullest extent permitted by law, any claims it may have against the Purchasers for breach of fiduciary duty or allegedbreach of fiduciary duty and agrees that the Purchasers shall have no liability (whether direct or indirect) to the Company in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of theCompany, including stockholders, employees or creditors of the Company. 

16. *Applicable Law*. This Agreement shall be governed by,and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of laws. 

The Company herebysubmits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. 

If the foregoing is in accordance with the Purchasers’ understanding of our agreement, kindly signand return to the Company one of the counterparts hereof, whereupon it will become a binding agreement between the Company and the several Purchasers in accordance with its terms. 

Very truly yours, 

 
DYNEGY HOLDINGS INC.By 
/s/ Charles C. Cook
Name: Charles C. CookTitle: Senior Vice President and Treasurer
 
The foregoing Purchase Agreement is hereby con-firmed and accepted as of the date first above written.Credit Suisse Securities (USA) LLCCitigroup Global Markets Inc.,Banc of America Securities LLCJ.P. Morgan Securities Inc.,
 
 BY CREDIT SUISSE SECURITIES (USA) LLC By 
/s/ Mary Beth Mandanas
 Name: Mary Beth Mandanas Title: Director