Document:

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                                                                   Exhibit 10.10
                                                                  CONFORMED COPY

                                 $1,450,000,000

                              DYNEGY HOLDINGS INC.

           Second Priority Senior Secured Floating Rate Notes due 2008

              9.875% Second Priority Senior Secured Notes due 2010

              10.125% Second Priority Senior Secured Notes due 2013

                               PURCHASE AGREEMENT
                               ------------------
                                                                  August 1, 2003

Credit Suisse First Boston Llc
Banc of America Securities Llc
Citigroup Global Markets Inc.
J.p. Morgan Securities Inc.
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
Abn Amro Incorporated
Banc One Capital Markets Inc.
Credit Lyonnais Securities Inc.
Deutsche Bank Securities Inc.
Sg Cowen Securities Corporation,
Td Securities (Usa), Inc.
 c/o Credit Suisse First Boston LLC
     Eleven Madison Avenue
     New York, N.Y. 10010-3629

Ladies and Gentlemen:

     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") an aggregate of U.S. $225,000,000 principal amount of its Second
Priority Senior Secured Floating Rate Notes due 2008 (the "2008 Notes"), U.S.
$525,000,000 principal amount of its 9.875% Second Priority Senior Secured Notes
due 2010 (the "2010 Notes") and an aggregate of U.S. $700,000,000 principal
amount of its 10.125% Second Priority Senior Secured Notes due 2013 (the "2013
Notes" and, together with the 2008 Notes and the 2010 Notes, the "Notes") to be
issued under an indenture to be dated as of August 11, 2003 (the "Indenture"),
among the Issuers (as defined below) and Wilmington Trust Company, as trustee
(the "Trustee"), on a private placement basis pursuant to an exemption under
Section 4(2) of the United States Securities Act of 1933, as amended (the
"Securities Act"). The Notes will be unconditionally guaranteed as to the
payment of principal, premium, if any, and interest (the "Guarantees" and,
together with the Notes, the "Offered Securities") by the Subsidiary Guarantors
and the Affiliate Guarantors listed on the signature pages to this Agreement
(each a "Guarantor" and, collectively, the "Guarantors" and, together with the
Company, the "Issuers"). Terms used but not otherwise defined herein have
meanings given to them in the Offering Document (as defined below).

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     The Issuers have agreed to secure, equally and ratably, the Offered
Securities by granting to Wells Fargo Bank Minnesota, N.A., as collateral
trustee (the "Collateral Trustee"), for the benefit of the holders of the
Offered Securities (collectively, the "Secured Parties"), a second priority lien
(subject to Priority Liens, as each term is defined in the Description of the
Notes section of the Offering Document (as defined below)) on the equity
securities of certain subsidiaries of Dynegy Inc., which includes the Company
and certain of its subsidiaries, in each case as described in the Offering
Document under the caption "Description of the Collateral" (the "Pledged
Equity"), and certain of its other assets as described in the Offering Document
under the caption "Description of the Collateral" (together with the Pledged
Equity, the "Collateral"), as evidenced by the shared security agreement to be
dated August 11, 2003 among the Issuers and the Collateral Trustee (the "Shared
Security Agreement") and the non-shared security agreement to be dated August
11, 2003 among the Issuers and the Collateral Trustee (the "Non-Shared Security
Agreement"), the mortgages or deeds of trust as described in the Offering
Document under the caption "Description of the Collateral" (the "Mortgages") and
the Intercreditor Agreement to be dated August 11, 2003 among the Issuers, the
Collateral Trustee, the Priority Lien Debt Agent and the collateral trustee for
the Priority Lien Debt (the "Intercreditor Agreement" and, together with the
Shared Security Agreement, the Non-Shared Security Agreement and the Mortgages,
the "Security Documents").

     As used herein, the term "Operative Documents" refers to this Agreement,
the Indenture, the Offered Securities and the Security Documents.

     2.  Representations and Warranties of the Issuers. Each of the Issuers,
jointly and severally, represents and warrants to, and agrees with, the several
Purchasers that:

          (a)  A preliminary offering circular dated July 25, 2003 (the
     "Preliminary Offering Circular") has been prepared by the Issuers and an
     offering circular dated the date hereof (the "Offering Circular") relating
     to the Offered Securities has been prepared by the Issuers. Such
     Preliminary Offering Circular and Offering Circular, as supplemented as of
     the date of this Agreement, and any other document approved by the Company
     for use in connection with the contemplated resale of the Offered
     Securities, are hereinafter collectively referred to as the "Offering
     Document," which term shall include the portions of the documents
     specifically incorporated by reference therein (the "Incorporated
     Information"). The Preliminary Offering Circular did not, as of the date
     thereof, and the Offering Circular (in the form used by the Purchasers to
     confirm sales) as of its date does not, include any untrue statement of a
     material fact or omit 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 sentence does not apply to
     statements in or omissions from the Preliminary Offering Circular or the
     Offering Circular based upon written information furnished to the Company
     by any Purchaser through Credit Suisse First Boston LLC ("CSFB")
     specifically for use therein, it being understood and agreed that the only
     such information is that described as such in Section 7(b) hereof.

          (b)  No order or decree preventing the use of the Offering Document,
     or any order asserting that the transactions 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 or any of the Guarantors, is
     contemplated.

          (c)  Each Issuer has been duly incorporated or formed and is an
     existing corporation, limited liability 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 Offering Document;
     and each Issuer 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 business requires such qualification,

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     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 operations
     or, to the knowledge of the Issuers, prospects of Dynegy Inc. and its
     subsidiaries, taken as a whole (a "Material Adverse Effect"). Each Issuer
     has all requisite corporate power and authority to enter into the Operative
     Documents and each Issuer has full power and authority to authorize, issue
     and sell the Offered Securities as contemplated by this Agreement.

          (d)  Illinois Power Company has been duly incorporated and is an
     existing corporation in good standing under the laws of Illinois, with
     power and authority (corporate and other) to own its properties and conduct
     its business as described in the Offering Document; and 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 business requires 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.

          (e)  None of the Issuers nor any of their respective 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 that is material to the Issuers and their
     respective subsidiaries, taken as a whole, to which the Issuers or their
     respective subsidiaries is a party or by which the Issuers or any of their
     subsidiaries or their respective property is bound, except for alleged
     defaults with respect to certain agreements as disclosed in the Offering
     Circular under the caption "Business--Legal Proceedings", or (ii) in
     violation of its respective charter or by-laws, operating agreement or
     other organizational document that governs the existence or administration
     of such entity, in each case, except as could not reasonably be expected to
     have a Material Adverse Effect.

          (f)  (i) As of March 31, 2003, each of the Company and Dynegy Inc. has
     an authorized capitalization as set forth in the Offering Document, under
     the heading "Capitalization of Dynegy Holdings Inc. - Actual," and
     "Capitalization of Dynegy Inc. - Actual" respectively, (ii) all of the
     issued shares of capital stock of each of the Issuers have been duly and
     validly authorized and issued and are fully paid and non-assessable, (iii)
     all of the issued shares of capital stock of each subsidiary of Dynegy Inc.
     other than the Issuers have been duly and validly authorized and issued and
     are fully paid and non-assessable, and (iv) the capital stock of each
     subsidiary owned by the Company or a Guarantor, as the case may be,
     directly or through subsidiaries, is owned free from liens, encumbrances
     and material defects other than liens on Pledged Equity that secure the
     Offered Securities and the Priority Lien Debt.

          (g)  The Notes 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 Notes by the Trustee, upon
     delivery to the Purchasers against payment therefor in accordance with the
     terms hereof, 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 enforceability may 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 the discretion 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 Closing Date (as defined below), the Notes will conform to the
     descriptions thereof contained in the Offering Circular.

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          (h)  The Guarantees to be issued by each of the Guarantors have been,
     or as of the Closing Date will have been, duly and validly authorized by
     each Guarantor and, when duly executed and delivered by each Guarantor in
     accordance with the terms of the Indenture and upon the due execution,
     authentication and delivery of the Notes in accordance with the Indenture
     and the attachment of the Guarantee thereto and the issuance of the Offered
     Securities in the sale to the Purchasers contemplated by this Agreement,
     will constitute valid and binding obligations of each of the Guarantors,
     enforceable against each of the Guarantors 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 in effect 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 proceeding in equity or at law). On the
     Closing Date, the Guarantees will conform to the description thereof in the
     Offering Circular.

          (i)  The Indenture has been, or as of the Closing Date will have been,
     duly and validly authorized by each of the Issuers, and upon its execution
     and delivery and, assuming due authorization, execution and delivery by the
     Trustee, will constitute the valid and binding agreement of the Issuers,
     enforceable against the Issuers in accordance with its terms, except as
     such enforceability may 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 the discretion 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 warranties and
     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 Offering Circular, no qualification
     of the 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 the requirements of the TIA, and the rules and regulations of
     the Commission applicable to an indenture which is qualified thereunder. On
     the Closing Date, the Indenture will conform to the description thereof in
     the Offering Circular.

          (j)  This Agreement has been, or as of the Closing Date will have
     been, duly authorized, executed and delivered by each of the Issuers.

          (k)  Each of the Security Documents has been, or as of the Closing
     Date will have been, duly authorized by each of the Issuers that is a party
     to each such Security Document and, when validly executed and delivered by
     such Issuers, will constitute a valid and legally binding obligation of the
     Company and each Guarantor party thereto and will be enforceable against
     the Company and each Guarantor party thereto in accordance with its terms,
     subject to (i) bankruptcy, insolvency, fraudulent transfer conveyance,
     reorganization, moratorium and similar laws of general applicability
     relating to creditors' rights and to general equity principles, or other
     similar laws now or hereafter in effect 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 proceeding in equity or at
     law).

          (l)  When executed and delivered to the Collateral Trustee at the
     Closing Date (or such later date pursuant to the last sentence of this
     clause), the Security Documents will grant and create, in favor of the
     Collateral Trustee for the benefit of the Secured Parties as security for
     all of the Secured Obligations, a valid and enforceable security interest
     in the Collateral, and when the filings referred to in Section 6(c)(i) are
     made, such security interests will be perfected second priority security
     interests (subject to Priority Liens) to the extent that a security
     interest in such

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     Collateral may be perfected by such filings. When delivered at the Closing
     Date, each Mortgage will be delivered, duly acknowledged and, if required
     for recordation, attested and otherwise will be in recordable form, and
     when such Mortgage is filed for record and recorded in the filing office
     identified therein, the security interest of the Collateral Trustee in the
     real property described therein will be duly perfected. Each of the Company
     and Guarantors Issuers is a "registered organization" (as defined in
     Article 9 of the Uniform Commercial Code) as defined in, and under the law
     of, the state in which it is identified in the Indenture as being organized
     and at the Closing Date (or when the necessary filings have been made as
     promptly as practicable thereafter) all security interests granted under
     the Security Documents in Collateral consisting of personal property or
     fixtures will be duly perfected to the extent such security interests may
     be perfected by filing upon the filing of the financing statements referred
     to in Section 6(c) hereof. As of the Closing Date, the representations and
     warranties contained in the Security Documents will be true and correct in
     all material respects. Notwithstanding the foregoing, to the extent that
     any regulatory notice, action or approval in the state or New York
     ("Regulatory Act") is required in order to validly encumber an EWG or an
     interest in an EWG located in such jurisdiction that constitutes a part of
     the Collateral as contemplated by the Security Documents, then creation of
     the valid security interest contemplated by this clause shall not occur
     with respect to any such EWG or interest therein until such Regulatory Act
     has occurred, and the Issuers hereby agree to, and shall, use all
     commercially reasonable efforts to pursue and obtain all necessary
     Regulatory Acts in order to perfect security interests in the EWGs or
     interests therein as promptly as practicable following the date of this
     Agreement but which may not occur until after the Closing Date.

          (m)  No consent, approval, authorization, or order of, or filing with,
     any governmental agency or body or any court is required to mortgage the
     Projects that comprise, in part, the Collateral except as are (i) purely
     ministerial or (ii) Regulatory Acts as may be required in order to validly
     encumber an EWG or an interest in an EWG.

          (n)  Except as disclosed in the Offering Document, there are no
     contracts, agreements or understandings between the Company or any of the
     Guarantors and any person that would give rise to a valid claim against the
     Company, any Guarantor or any Purchaser for a brokerage commission,
     finder's fee or other like payment.

          (o)  No consent, approval, authorization, or order of, or filing with,
     any governmental agency 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
     Issuers, except for (i) such filings with respect to the perfection of
     security interests on the Collateral and the Mortgages to be made or
     otherwise delivered on or within a commercially reasonable time after the
     Closing Date, (ii) such as may be required under foreign or state
     securities laws, blue sky laws and related regulations, (iii) those that
     have been obtained or made on or prior to the Closing Date, (iv) those that
     could not, individually or in the aggregate, reasonably be expected to have
     a Material Adverse Effect and would not materially adversely affect the
     ability of the Issuers to perform their respective obligations under the
     Operative Documents and (v) such Regulatory Acts as may be required in
     order to validly encumber an EWG or an interest in an EWG.

          (p)  The execution, delivery and performance of the Operative
     Documents and the issuance and sale of the Offered Securities will not
     conflict with or 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 Issuers or any of their
     respective subsidiaries or any of their properties (other than Regulatory
     Acts as may be required in order to validly encumber an EWG or Interest in
     an EWG), (ii) any agreement or instrument to which the Issuers or any of
     their respective subsidiaries

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     is a party or by which the Issuers or any of their respective subsidiaries
     is bound or to which any of the properties of the Issuers or any of their
     respective subsidiaries is subject, or (iii) the charter or by-laws of the
     Issuers or any of their respective 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.

          (q)  Except as disclosed in the Offering Document or as could not
     reasonably be expected to have a Material Adverse Effect, each obligor
     under the Operative Documents (the "Obligors" and each an "Obligor") has
     (i) good and marketable title to (in the case of fee interests in real
     property), (ii) valid leasehold interests in (in the case of leasehold
     interests in real or personal property), and (iii) good title to (in the
     case of all other personal property), all of its respective properties and
     assets reflected in its respective financial statements. All such
     properties and assets are free and clear of Liens except for Priority Liens
     and Permitted Liens.

          (r)  Except as disclosed in the Offering Document, each of the Issuers
     and their respective subsidiaries possesses adequate certificates,
     authorities or permits issued by appropriate governmental agencies or
     bodies necessary to conduct the business now operated by them and has not
     received any notice of proceedings relating to the revocation or
     modification of any such certificate, authority or permit that, if
     determined adversely to any of the Issuers or their respective
     subsidiaries, could individually or in the aggregate reasonably be expected
     to have a Material Adverse Effect.

          (s)  Except as disclosed in the Offering Document, each of the Issuers
     and their respective subsidiaries is in compliance with all applicable
     statutes, 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.

          (t)  No labor dispute with the employees of the Issuers and their
     respective subsidiaries, that could reasonably be expected to result in a
     Material Adverse Effect, to the knowledge of the Issuers, is imminent.

          (u)  The Issuers and their respective subsidiaries own or possess on
     reasonable 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, or presently 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 Issuers or any of their respective subsidiaries, could reasonably be
     expected to, individually or in the aggregate, have a Material Adverse
     Effect.

          (v)  Except as disclosed in the Offering Document, none of the Issuers
     or any of their respective 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 having jurisdiction over the Issuers or any
     of their respective 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 human
     exposure 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 or contamination 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 Material Adverse Effect; and
     neither the Company nor any Guarantor is aware of any pending investigation
     which might lead to such a claim.

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          (w)  Except as disclosed in the Offering Document, there are no
     pending actions, suits or proceedings against or affecting the Issuers, any
     of their respective subsidiaries or their respective properties that, if
     determined adversely to the Issuers, or their respective subsidiaries,
     could reasonably be expected to, individually or in the aggregate, have a
     Material Adverse Effect, or would materially and adversely affect the
     ability of the Company or the Guarantors to perform their respective
     obligations under the Operative Documents; and except as disclosed in the
     Offering Document no such actions, suits or proceedings are, to the
     Company's or any Guarantor's knowledge, threatened or contemplated.

          (x)  The financial statements included in the Offering Document
     present fairly the financial position of Dynegy Inc. and its consolidated
     subsidiaries as of the dates shown and their results of operations and cash
     flows for the periods shown, and such financial statements have been
     prepared in conformity with the generally accepted accounting principles in
     the United States applied on a consistent basis.

          (y)  Except as disclosed in the Offering Document, since the date
     as of which the information is given in the Offering Circular, there has
     been no material adverse change, nor any development or event involving a
     prospective material adverse change, in the condition (financial or other),
     business, properties, results of operations or, to the knowledge of the
     Issuers, prospects of the Issuers and their respective subsidiaries, taken
     as a whole and, except as disclosed in or contemplated by the Offering
     Circular, there has been no dividend or distribution of any kind declared,
     paid or made by Dynegy Inc. on any class of its capital stock.

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

          (aa) The Company is not 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 Company Act"); 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 Offering
     Document, will not be an "investment company" as defined in the Investment
     Company Act.

          (bb) Dynegy Inc. has established and maintains disclosure controls and
     procedures (as such term is defined in Rule 13a-14 under the Exchange Act),
     which (i) are designed to ensure that material information relating to
     Dynegy Inc. and its consolidated subsidiaries is made known to the
     principal executive officer 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 a date within 90 days prior to
     the date of Dynegy Inc.'s most recently filed quarterly report; and (iii)
     are effective in all material respects to perform the functions for which
     they were established.

          (cc) Based on the most recent quarterly evaluation of its disclosure
     controls and procedures, Dynegy Inc. is not aware of (i) any significant
     deficiency in the design or operation of internal controls which could
     adversely affect the ability of Dynegy Inc. to record, process, summarize
     and report financial data or any material weaknesses in internal controls,
     except as disclosed in the Offering Document; or (ii) any fraud, whether or
     not material, that involves management or other employees who have a
     significant role in internal controls.

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          (dd) Since the date of the most recent evaluation of such disclosure
     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 and material weaknesses, except as disclosed in the Offering
     Document.

          (ee) PricewaterhouseCoopers LLP who have certified certain financial
     statements of the Company and its subsidiaries are independent public
     accountants as required by the Securities Act and the rules and regulations
     of the Commission thereunder.

          (ff) Except as set forth in the Offering Document, none of the Issuers
     or any of their respective subsidiaries is (i) a "registered holding
     company," or a "subsidiary company" or "affiliate" of a "registered holding
     company" within the meaning of the Public Utility Holding Company Act of
     1935 ("PUHCA"); (ii) a "public utility company" as defined under Section
     2(a) of PUHCA, with the exception of Illinois Power Company; (iii) subject
     to regulation 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 "qualifying facility" ("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), with the exception of Illinois Power Company, or (iv) with
     respect to each of the power generation projects in which any of the
     Issuers or their respective 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 electric utilities, other than as
     contemplated by 18 C.F.R. Section 292.602(c).

          (gg) Each of the Company's subsidiaries providing retail electric
     service in the states of Illinois, Michigan, New York and Texas has a
     validly issued order from the relevant state public utility or commerce
     commission to sell electricity on a retail basis, and such orders are not
     subject any pending challenge, investigation, or proceeding, authorizing
     such subsidiary to engage in sales of electricity at retail under the laws
     of that state. None of the Company's subsidiaries providing retail electric
     service is subject to any rate cap or mitigation measure other than rate
     caps and mititgation measures generally applicable to similarly situated
     retail service providers selling in the geographic market where such
     subsidiary conducts its business (and with respect to Illinois Power
     Company, its geographic market shall be the State of Illinois and Illinois
     Power Company does not provide retail electric service outside the State of
     Illinois).

          (hh) Except as disclosed in the Offering Document, 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 set out in PURPA and the regulations of the Federal Energy
     Regulatory Commission ("FERC") promulgated thereunder, as amended from time
     to time.

          (ii) Each of the Guarantors and other subsidiaries of the Company that
     is an Eligible Facility within the meaning of Section 32 of PUHCA has
     received a determination from the FERC, not subject to any pending
     challenge, that it is an Exempt Wholesale Generator as that term is defined
     and used in PUHCA and in the FPA.

          (jj) Each of the Issuers and their respective subsidiaries that sells
     power at market-based rates outside of the Electric Reliability Councuil 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, other products 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 measures other than rate caps and mitigation
     measures

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     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 its business.

          (kk) Each of the Company's subsidiaries participating in the ERCOT
     wholesale electric market has registered with 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 not
     subject 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.

          (ll) Other than the complaint proceedings challenging (i) the contract
     between the California Department of Water Resources and Dynegy Power
     Marketing, Inc., Cabrillo Power I LLC, El Segundo Power LLC, and Long Beach
     Generation LLC and (ii) the contract between the Kroger Company and Dynegy
     Power Marketing, Inc., there are no pending complaints filed with the FERC
     seeking abrogation or modification of a contract for the sale of power by
     the Company or any of its subsidiaries.

          (mm) No securities of the same class (within the meaning of Rule
     144A(d)(3) under the 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.

          (nn) The offer and sale of the Offered Securities by the Issuers 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 of the Securities Act by reason of Section 4(2)
     thereof, and Regulation D and Regulation S thereunder.

          (oo) None of the Issuers nor any of their respective 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
     series as 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 Securities Act 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 Issuers, their respective affiliates 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 the offering
     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 and
     each of the Guarantors has not entered and will not enter into any
     contractual arrangement with respect to the distribution of the Offered
     Securities except for this Agreement.

          (pp) Except in connection with (1) the 4.75% convertible subordinated
     debentures due 2023 of Dynegy Inc. in a private placement pursuant to Rule
     144A and Regulation S under the Securities Act, (2) the junior unsecured
     subordinated notes due 2015 of Dynegy Inc. issued or to be issued to
     Chevron USA pursuant to one or more valid exemptions from registration
     under the Securities Act, (3) the convertible preferred stock due 2033 of
     Dynegy Inc. issued or to be issued

                                        9

<PAGE>

     to Chevron USA pursuant to one or more valid exemptions from registration
     under the Securities Act and (4) as disclosed in the Offering Document,
     there are no contracts, agreements or understandings between the Company or
     any Guarantor and any person granting such person the right to require the
     Company or such Guarantor to file a registration statement under the
     Securities Act with respect to any securities of the Company or such
     Guarantor or to require the Company or such Guarantor to include such
     securities with the Offered Securities registered pursuant to any
     Registration Statement.

          (qq) None of the Company, any Guarantor, any of their respective
     subsidiaries nor any agent thereof acting on the behalf of them has taken,
     and none of them will take, 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.

          (rr) The Issuers and each of their respective subsidiaries carry, or
     are covered by, insurance in such amounts and covering such risks as is
     adequate for 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.

          (ss) Except for the "negative watch" outlook for Dynegy Inc. issued by
     Standard & Poor's Ratings Group prior to the date of this Agreement, no
     "nationally recognized statistical rating organization" as such term is
     defined for purposes of Rule 436(g)(2) under the Securities Act (i) has
     imposed (or has informed the Company or any Guarantor that it is
     considering imposing) any condition (financial or otherwise) on the
     Company's or any Guarantor's retaining any rating assigned to the Company
     or any Guarantor, any securities of the Company or any Guarantor or (ii)
     has indicated to the Company or any Guarantor 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, any Guarantor or any securities of the Company or any Guarantor.

          (tt) Except for such matters as could not reasonably be expected to
     have a Material Adverse Effect, the Company is in compliance in all
     material respects 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 the Company 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 4971 of 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 to be
     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.

          (uu) Except as disclosed in the Offering Circular, Dynegy Inc. and its
     subsidiaries have filed all material federal, state and local income and
     franchise tax returns required to be filed through the date hereof and have
     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 Issuers or any of their
     respective subsidiaries which has had (nor does the Company or the
     Guarantors have any knowledge of any tax deficiency in writing which, if
     determined adversely to the Issuers or any of their respective
     subsidiaries, could reasonably be expected to have) a Material Adverse
     Effect.

                                       10

<PAGE>

          (vv) Prior to the date hereof, neither the Company nor any of its
     affiliates has taken any action which is designed to or which has
     constituted 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.

          (ww) The Offering Document contains all the information specified in,
     and meeting the requirements of, Rule 144A(d)(4) under the Securities Act.

          (xx) The statements set forth in the Offering Circular under the
     caption "Description of the Notes," insofar as they purport to constitute a
     summary of the terms of the Offered Securities and the Security Documents,
     under the captions "Offering Circular Summary--Recent Developments,"
     "Certain Relationships and Related Party Transactions," "Description of the
     Collateral," "Description of the Amended Credit Facility," "Series B
     Preferred Stock Restructuring," "United States Federal Income Tax
     Considerations" 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.

          (yy) The market-related and customer-related data and estimates
     included in the Offering Document are based on or derived from sources
     which the Company believes to be reliable.

     3.  Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Issuers agree to sell to the
Purchasers, and the Purchasers agree, severally and not jointly, to purchase
from the Issuers (a) the respective principal amounts of Offered Securities
constituting 2008 Notes and the Guarantees thereof set forth in the first column
opposite the names of the several Purchasers in Schedule A hereto, at a purchase
price of 97.5% of the principal amount thereof plus accrued interest from August
11, 2003 to the Closing Date (as hereinafter defined), (b) the respective
principal amounts of Offered Securities constituting 2010 Notes and the
Guarantees thereof set forth in the second column opposite the names of the
several Purchasers in Schedule A hereto, at a purchase price of 96.871% of the
principal amount thereof plus accrued interest from August 11, 2003 to the
Closing Date and (c) the respective principal amounts of Offered Securities
constituting 2013 Notes and the Guarantees thereof set forth in the third column
opposite the names of the several Purchasers in Schedule A hereto, at a purchase
price of 96.717% of the principal amount thereof plus accrued interest from
August 11, 2003 to the Closing Date.

     The Company will deliver against payment of the purchase price the Offered
Securities in the form of one or more permanent global Notes in definitive form
(the "Global Notes") with the Guarantees affixed thereto (together with the
Global Notes, 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 any permanent Global Securities will be
held only in book-entry form through DTC, except in the limited circumstances
described in the Offering Document. 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 CSFB, on August 11, 2003, or at such other time
not later than seven full business days thereafter as CSFB and the Company
determine, such time being herein referred to as the "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 checking at the office of O'Melveny & Myers LLP, 30 Rockefeller
Plaza, New York, New York 10012 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 Issuers
     that it is an "accredited investor" within the meaning of Regulation D
     under the Securities Act.

                                       11

<PAGE>

          (b)  Each Purchaser severally acknowledges that the Offered Securities
     have not been registered under 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 except in accordance with Regulation S or pursuant to an exemption
     from the registration requirements of the Securities Act. Each Purchaser
     severally represents and agrees that it has offered and sold the Offered
     Securities and will offer and sell the Offered Securities (i) as part of
     their distribution 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 all persons 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 sale pursuant
     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 notice to 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 of the 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
          by Regulation 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 respect to 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 general solicitation 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 media or 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 144A of 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
     exemption from the registration requirements of the Securities Act provided
     by Rule 144A.

          (e)  Each Purchaser severally represents and agrees that: (i) it has
     not offered or sold and prior to the expiry of a period of six months from
     the closing date, will not offer or sell any of the Offered Securities to
     persons in the United Kingdom except to persons whose ordinary activities
     involve them in acquiring, holding, managing or disposing of investments
     (as principal or agent) for the purposes of their businesses or otherwise
     in circumstances which have not resulted and will not result in an offer to
     the public in the United Kingdom within the meaning of the Public Offers of
     Securities Regulations 1995; (ii) 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 and Markets Act

                                       12

<PAGE>

     2000) received by it in connection with the issue or sale of any of the
     Offered Securities in circumstances in which section 21(1) of the FSMA does
     not apply to the Issuers; and (iii) it has complied and will comply with
     all applicable provisions of the FSMA with respect to anything done by it
     in relation to the of the Offered Securities in, from or otherwise
     involving the United Kingdom.

     5. Certain Agreements of the Issuers. Each of the Issuers, jointly and
severally, agrees with the several Purchasers that:

          (a)  The Company will advise CSFB promptly of any proposal to amend or
     supplement the Offering Circular and will not effect such amendment or
     supplement without CSFB'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 any event occurs as a result of
     which the Offering Document as then amended or supplemented would include
     an untrue statement of a material fact or omit 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 Company
     promptly will notify CSFB of such event and promptly will prepare, at its
     own expense, an amendment or supplement which will correct such statement
     or omission. Neither CSFB's consent to, nor the Purchasers' delivery to
     offerees or investors of, any such amendment or supplement shall constitute
     a waiver of any of the conditions set forth in Section 6.

          (b)  The Company will furnish to CSFB copies of the Preliminary
     Offering Circular, the Offering Document and all amendments and supplements
     to such documents, in each case as soon as available and in such quantities
     as CSFB 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 the Securities Act, the
     Company will promptly furnish or cause to be furnished to CSFB (and, upon
     request, to each of the other Purchasers) and, upon request of holders and
     prospective purchasers of the Offered Securities, to such holders and
     purchasers, 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 permit compliance 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 Issuers will use all commercially reasonable efforts to
     obtain the qualification of the Offered Securities for sale and the
     determination of their eligibility for investment under the laws of such
     jurisdictions in the United States and Canada as CSFB designates and will
     continue such qualifications in effect so long as required for the resale
     of the Offered Securities by the Purchasers, provided that neither the
     Company nor any Guarantor will 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 and Dynegy Inc. will, upon request, furnish to CSFB, each of the
     other Purchasers 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 and Dynegy Inc. will furnish to CSFB and, upon
     request, to each of the other Purchasers, 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 and Dynegy Inc. will furnish to CSFB and, upon
     reasonable request, to each of the other Purchasers (i) as soon as
     available, a copy of each report and any definitive proxy statement of the

                                       13

<PAGE>

     Company and Dynegy Inc. 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 4 hereof, the Issuers
     consent to the use of the Offering Document, and any amendments and
     supplements thereto required pursuant to Section 5(a) hereto, by the
     Purchasers.

          (g)  During the period of two years after the Closing Date, the
     Company will not, 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 registered under the Securities Act.

          (h)  During the period of two years after the Closing Date, the
     Company will not be or become, 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 Investment Company Act.

          (i)  Each of the Issuers jointly and severally agree 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
     the Collateral Agent and their respective professional advisers, (ii) all
     expenses in connection with the execution, issue, authentication, packaging
     and initial delivery of the Offered Securities, the preparation and
     printing of the Preliminary Offering Circular and the Offering Circular and
     amendments and supplements thereto, and any other document relating to the
     issuance, offer, sale and delivery of the Offered Securities, (iii) the
     cost of qualifying the Offered Securities for trading in The Portal/SM/
     Market ("PORTAL") of The Nasdaq 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 for sale under the state 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, and (vi) for expenses incurred in distributing the Preliminary
     Offering Circular and the Offering Circular (including any amendments and
     supplements thereto) to the Purchasers. The Company will reimburse the
     Purchasers for all travel expenses of the Purchasers and the Company's
     officers and employees and any other expenses of the Purchaser and the
     Company in connection with attending or hosting meetings with prospective
     purchasers of the Offered Securities.

          (j)  In connection with the offering, until CSFB shall have notified
     the Company 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 or with 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 of its
     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)  For a period from the date of the initial offering of the Offered
     Securities by the Purchasers to the Closing Date, the Company and each of
     the Guarantors will not offer, sell, contract to sell, pledge or otherwise
     dispose of, directly or indirectly, any United States dollar-denominated
     debt securities issued or guaranteed by the Company or any Guarantor and
     having a maturity of more than one year from the date of issue except
     issuances of Offered Securities pursuant to the conversion or exchange of
     convertible or exchangeable securities or the exercise of warrants or
     options, in each case outstanding on the date hereof, grants of employee
     stock options pursuant to the terms of a plan in effect on the date hereof,
     issuances of Offered Securities

                                       14

<PAGE>

     pursuant to the exercise of such options or the exercise of any other
     employee stock options outstanding on the date hereof; provided that this
     sentence shall not prohibit the offering, issuance and sale of the
     convertible subordinated debentures due 2023 of Dynegy Inc. and the
     guarantee of such debentures by the Company on or before the Closing Date
     or after the Closing Date pursuant to an option granted to the initial
     purchasers thereof. Neither the Company nor any Guarantor will at any time
     offer, sell, contract to sell, pledge or otherwise dispose of, directly or
     indirectly, any securities under circumstances where such offer, sale,
     pledge, contract or disposition would cause the exemption afforded by
     Section 4(2) of the Securities Act or the safe harbor of Regulation S
     thereunder to cease to be applicable to the offer and sale of the Offered
     Securities.

          (l)  The Company will apply the net proceeds from the sale of the
     Offered Securities to be sold by it hereunder substantially in accordance
     with the description set forth in the Offering Document under the caption
     "Use of Proceeds."

          (m)  Except as stated in this Agreement and in the Offering Document,
     neither the Issuers nor any of their respective affiliates have taken, nor
     will any of them take, directly or indirectly, any action designed to or
     that might reasonably be expected to cause or result in stabilization or
     manipulation of the price of any security of the Company or any of the
     Guarantors to facilitate the sale or resale of the Offered Securities.

          (n)  The Issuers will use their best efforts to permit the Offered
     Securities to be designated PORTAL securities in accordance with the rules
     and 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.

          (o)  The Issuers agree not to sell, offer for sale or solicit offers
     to buy or otherwise negotiate in respect of any security (as defined in 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.

          (p)  The Issuers agree to comply with all the terms and conditions of
     the Operative Documents and all agreements set forth in the representation
     letters of the Issuers to DTC relating to the approval of the Offered
     Securities by DTC for "book entry" transfer.

          (q)  The Issuers 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.

     6.  Conditions of the Obligations of the Purchasers. The obligations of the
several Purchasers to purchase and pay for the Offered Securities will be
subject to the accuracy of the representations and warranties on the part of the
Issuers herein as of the date hereof and on the Closing Date, to the accuracy of
the statements of officers of the Issuers made pursuant to the provisions
hereof, to the performance by the Issuers of their respective obligations
hereunder and to the following additional conditions precedent:

          (a)  The Purchasers shall have received a letter, substantially in the
     form attached hereto as Annex B, dated the date of this Agreement, of
     PricewaterhouseCoopers LLP confirming that they are independent public
     accountants within the meaning of the Securities Act and the applicable
     published rules and regulations thereunder ("Rules and Regulations"). Such
     letter shall be in form and substance reasonably satisfactory to the
     Purchasers as agreed 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.

                                       15

<PAGE>

          (b)  Subsequent to the execution and delivery of this Agreement, there
     shall not have occurred (i) any change, or any development or event
     involving a prospective change, in the condition (financial or other),
     business, properties or results of operations of the Company or any of the
     Guarantors and their respective subsidiaries taken as a whole which, in the
     judgment of a majority in interest of the Purchasers, including CSFB, 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 securities of
     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 its rating 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, except for the
     "negative watch" outlook for Dynegy Inc. issued by Standard & Poor's
     Ratings Group prior to the date of this Agreement, any announcement that
     the Company has been placed on negative 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 in interest of the
     Purchasers, including CSFB, 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 secondary
     market; (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 the Company 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 United States; 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 a majority in
     interest of the Purchasers including CSFB, 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 of and delivery and payment for the Offered Securities.

          (c)  The Collateral Trustee shall have received (with a copy for the
     Purchasers) at the Closing Date:

               (i)   appropriately completed copies, which have been duly
               authorized for filing by the appropriate Person, of Uniform
               Commercial Code Financing Statements naming the Company as a
               debtor and the Collateral Trustee as the secured party, or other
               similar instruments or documents to be filed under the UCC of all
               jurisdictions as may be necessary or, in the reasonable opinion
               of the Trustee and its counsel, desirable to perfect the security
               interests of the Trustee pursuant to the Security Documents;

               (ii)  certified copies of Uniform Commercial Code Requests for
               Information or Copies (Form UCC-11), or a similar search report
               certified by a party acceptable to the Trustee, dated a date
               reasonably near to the Closing Date, listing all effective
               Financing Statements (as defined below) which name the Company
               (under its present name and any previous names) as the debtor,
               together with copies of such Financing Statements (as defined
               below) (none of which shall cover any collateral described in the
               Security Documents, other than such Financing Statements that
               evidence Permitted Prior Liens);

               (iii) such releases, reconveyances, satisfactions or other
               instruments as it may request to confirm the release,
               satisfaction and discharge in full of all mortgages and

                                       16

<PAGE>

               deeds of trust at any time delivered by the Company to secure any
               obligations in respect of the Black Thunder credit facility, duly
               executed, delivered and acknowledged in recordable form by the
               grantee named therein or its of record successors or assigns;

               (iv)  a copy of the Collateral Trust Agreement executed by the
               Credit Facility Agent under the existing credit facility; and

               (v)   such other approvals, opinions or documents as the
               Purchasers, the Trustee or the Collateral Trustee may reasonably
               request in form and substance satisfactory to each of them.

          (d)  All Uniform Commercial Code Financing Statements or other similar
     Financing Statements and Uniform Commercial Code Form UCC-3 termination
     statements required pursuant to clauses (c)(i) and (ii) above
     (collectively, the "Financing Statements") shall have been delivered to CT
     Corporation System or another similar filing service company acceptable to
     the Trustee (the "Filing Agent"). The Filing Agent shall have acknowledged
     in a writing reasonably satisfactory to the Trustee and its counsel (i) the
     Filing Agent's receipt of all Financing Statements, (ii) that the Financing
     Statements have either been submitted for filing in the appropriate filing
     offices or will be submitted for filing in the appropriate offices within
     ten days following the Closing Date and (iii) that the Filing Agent will
     notify the Trustee and its counsel of the results of such submissions
     within 30 days following the Closing Date.

          (e)  The Company shall have received the consent of the requisite
     lenders under the Company's existing Credit Agreement dated as of April 1,
     2003, to amend the credit facility thereunder substantially on the terms
     set forth in the Offering Document, and such amendment shall have become
     effective prior to or on the Closing Date on substantially the terms
     described in the Offering Circular; upon the effectiveness of such
     amendment the consummation of the transactions contemplated under the
     Agreement shall not conflict with the Company's Credit Agreement as then in
     effect; and the Purchasers shall have received counterparts, conformed as
     executed, of such amendment to the Credit Agreement and such other
     documentation as they deem necessary to evidence the consummation thereof.

          (f)  The Purchasers shall have received counterparts, conformed as
     executed, of the Exchange Agreement, dated as of July 28, 2003, with
     respect to the exchange of Dynegy Inc.'s $1.5 billion Series B mandatorily
     convertible redeemable preferred stock currently held by a subsidiary of
     ChevronTexaco for cash and other securities of Dynegy Inc., substantially
     on the terms described in the Offering Circular.

          (g)  The Purchasers shall have received an opinion, dated the Closing
     Date, of O'Melveny & Myers LLP, special counsel for the Issuers, that:

               (i)    The Company is validly existing as a corporation in good
          standing under the laws of the State of Delaware, has the corporate
          power and authority under the Delaware General Corporate Law (the
          "DGCL") and its certificate of incorporation and bylaws to own its
          properties and conduct its business as described in the Offering
          Circular;

               (ii)   Each Guarantor listed on the signature pages to this
          Agreement organized under the laws of the State of New York (the "New
          York Guarantors", each of which shall be identified in such opinion)
          is validly existing as a corporation or limited liability

                                       17

<PAGE>

          company, as the case may be, in good standing under the laws of the
          State of New York, has the corporate or limited liability company
          power and authority under the New York Business Corporation Law or the
          New York Limited Liability Company Law, as the case may be, and its
          certificate of incorporation and bylaws or limited liability company
          agreement, as the case may be, to own its properties and conduct its
          business as described in the Offering Circular;

               (iii)  Each Guarantor listed on the signature pages to this
          Agreement organized under the laws of the State of Delaware (the
          "Delaware Guarantors", each of which shall be identified in such
          opinion) is validly existing as a corporation, limited liability
          company, or limited partnership, as the case may be, in good standing
          under the laws of the State of Delaware, has the corporate, limited
          liability company or partnership power and authority under the DGCL,
          the Delaware Limited Liability Company Act or the Delaware Revised
          Uniform Limited Partnership Act, as the case may be, and its
          certificate of incorporation and bylaws, limited liability company
          operating agreement or limited partnership agreement, as the case may
          be, to own its properties and conduct its business as described in the
          Offering Circular;

               (iv)   The Company and each of the New York Guarantors and
          Delaware Guarantors has all requisite corporate or limited liability
          company power and authority, as the case may be, to enter into the
          Operative Documents and the Company and each of the New York
          Guarantors and Delaware Guarantors has requisite corporate or limited
          liability company power and authority, as the case may be, to
          authorize, issue and sell the Notes and the New York and Delaware
          Guarantees, as the case may be, as contemplated by this Agreement;

               (v)    The Notes have been duly authorized by all necessary
          corporate action on the part of the Company and, when executed and
          authenticated in accordance with the provisions of the Indenture and
          delivered to and paid for by the Purchasers in accordance with the
          terms of this Agreement, will be the legally valid and binding
          obligations of the Company, entitled to the benefits of the Indenture
          and enforceable against the Company in accordance with their terms,
          except to the extent that such enforceability may be limited by
          bankruptcy, insolvency, reorganization, moratorium or similar laws
          relating to or affecting creditors' rights generally (including,
          without limitation, fraudulent conveyance laws) and by general
          principles of equity including, without limitation, concepts of
          materiality, reasonableness, good faith and fair dealing and the
          possible unavailability of specific performance or injunctive relief,
          regardless whether considered in a proceeding in equity or at law. The
          Notes conform in all material respects to the description thereof in
          the Offering Document;

               (vi)   The Guarantee of each of the New York Guarantors and the
          Delaware Guarantors has been duly authorized by all necessary
          corporate or limited liability action, as the case may be, on the part
          of such New York Guarantor or Delaware Guarantor, as the case may be,
          and, assuming due authorization by the Colorado, Connecticut,
          Illinois, Michigan, Nevada, Texas, Virginia, Canadian and the United
          Kingdom Guarantors (each as identified on the signature pages to this
          Agreement, and such Guarantors collectively the "Other Guarantors"),
          when executed by each such Guarantor and when the Notes on which
          Guarantees have been endorsed have been duly executed by the Company
          and authenticated by the Trustee in accordance with the terms of the
          Indenture and delivered and paid for by the Purchasers in accordance
          with the terms of this Agreement, the Guarantee of each Guarantor will
          be legally valid and obligation of such Guarantor, enforceable against
          such Guarantor, as the case may be, in accordance with its terms,

                                       18

<PAGE>

          except to the extent that such enforceability may be limited by
          bankruptcy, insolvency, reorganization, moratorium or similar laws
          relating to or affecting creditors' rights generally (including,
          without limitation, fraudulent conveyance laws) and by general
          principles of equity including, without limitation, concepts of
          materiality, reasonableness, good faith and fair dealing and the
          possible unavailability of specific performance or injunctive relief,
          regardless whether considered in a proceeding in equity or at law. The
          Guarantees conform in all material respects to the description thereof
          in the Offering Document;

               (vii)  The execution and delivery of the Indenture have been
          authorized by all necessary corporate or limited liability action, as
          the case may be, on the part of the Company and each of the New York
          Guarantors and the Delaware Guarantors and, assuming the due
          authorization, execution and delivery thereof by the Other Guarantors,
          is the legally valid and binding agreement of the Company and each of
          the Guarantors, enforceable against the Company and each of the
          Guarantors in accordance with its terms, except to the extent that
          such enforceability may be limited by bankruptcy, insolvency,
          reorganization, moratorium or similar laws relating to or affecting
          creditors' rights generally (including, without limitation, fraudulent
          conveyance laws) and by general principles of equity including,
          without limitation, concepts of materiality, reasonableness, good
          faith and fair dealing and the possible unavailability of specific
          performance or injunctive relief, regardless whether considered in a
          proceeding in equity or at law. The Indenture conforms in all material
          respects to the description thereof in the Offering Document;

               (viii) The Indenture conforms in all material respects to the
          requirements of the Trust Indenture Act, and the rules and regulations
          of the Commission applicable to an indenture which is qualified
          thereunder;

               (ix)   The execution and delivery of each Security Document
          (other than the Mortgages, as to which we do not express any opinion)
          have been authorized by all necessary corporate or limited liability
          action, as the case may be, on the part of the Company and each of the
          New York Guarantors and the Delaware Guarantors and, assuming due
          authorization by the Other Guarantors, is the legally valid and
          binding agreement of the Company and each of the Guarantors that is a
          party to each such Security Document, enforceable against the Company
          and each of the Guarantors (to the extent a party thereto) in
          accordance with their terms, except to the extent that such
          enforceability may be limited by bankruptcy, insolvency,
          reorganization, moratorium or similar laws relating to or affecting
          creditors' rights generally (including, without limitation, fraudulent
          conveyance laws) and by general principles of equity including,
          without limitation, concepts of materiality, reasonableness, good
          faith and fair dealing and the possible unavailability of specific
          performance or injunctive relief, regardless whether considered in a
          proceeding in equity or at law. The Security Documents, to the extent
          describe in the Offering Circular, conform in all material respects to
          the descriptions thereof in the Offering Circular;

               (x)    The Security Documents create security interests in favor
          of the Collateral Agent in the Collateral (as defined in the Security
          Documents), as security for the Offered Securities, in which a
          security interest can be created under Article 9 of the Uniform
          Commercial Code as in effect in the State of New York, except that to
          the extent any part of the Collateral consists of an EWG located in
          the state of New York or an interest therein, the Security Documents
          will create such security interests only upon the

                                       19

<PAGE>

          prior satisfaction or waiver of any Regulatory Act that may be
          required pursuant to Section 70 of the New York Public Service Code;

               (xi)   Upon the filing of the UCC-1 Financing Statement with the
          Secretary of State of the State of Delaware, the Collateral Agent will
          have a perfected security interest in the Issuer's and each Delaware
          Guarantor's interest in the Collateral (as defined in the Security
          Documents), to the extent a security interest in such Collateral can
          be perfected under the Uniform Commercial Code as in effect in the
          State of Delaware by the filing of a financing statement in Delaware,
          except that to the extent any part of the Collateral consists of an
          EWG located in the state of New York or an interest therein, the
          Security Documents will create such security interests only upon the
          prior satisfaction or waiver of any Regulatory Act that may be
          required pursuant to Section 70 of the New York Public Service Code;

               (xii)  Upon the filing of the UCC-1 Financing Statement with the
          Secretary of State of the State of New York, the Collateral Agent will
          have a perfected security interest in the New York Guarantor's
          interest in the Collateral (as defined in the Security Documents), to
          the extent a security interest in such Collateral can be perfected
          under the Code by the filing of a financing statement in New York;

               (xiii) 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 Offering Document, will not be an
          "investment company" as defined in the Investment Company Act and the
          rules and regulations of the Commission thereunder;

               (xiv)  Neither the Company nor Dynegy Inc. is (i) a registered
          holding company or is required, by Section 5 of the Public Utility
          Holding Company Act of 1935, as amended ("PUHCA"), to register as a
          holding company, or (ii) a "subsidiary company" (as defined in PUHCA)
          of a company that is a registered holding company or is required by
          Section 5 of PUHCA, to register as a holding company;

               (xv)   No FPA approval or authorization is required for the
          execution and delivery by the Issuers of this Agreement, the Offered
          Securities and the Indenture, the performance by the Issuers of the
          obligations thereunder and the grant by the Issuers of the security
          interests to be granted by them pursuant to the provisions of the
          Security Documents;

               (xvi)  No consent, approval, authorization or order of, or filing
          with, any governmental agency or body or any court is required for the
          consummation of the transactions contemplated by the Operative
          Documents in connection with the issuance or sale of the Offered
          Securities by the Company and the New York Guarantors and the Delaware
          Guarantors, except with respect to the Collateral to be made or
          otherwise delivered as of or after the Closing Date to perfect the
          security interests created by the Security Documents; except that this
          opinion shall be limited to the following (the "Applicable Laws"):
          those current statutes, rules or regulations of any governmental,
          legislative, judicial, administrative or regulatory body of the State
          of New York, the State of Delaware and the United States of America by
          which the Company is bound, which such counsel has, in the exercise of
          customary professional diligence, recognized as applicable to the
          transactions of the type contemplated by the Purchase Agreement other
          than (i) the anti-fraud provisions and registration requirements of
          the federal securities laws and the rules and regulations of the
          Commission thereunder (which, in the case of registration
          requirements, is the subject of the opinion set forth in paragraph
          (xx) of the opinion), (ii) applicable state or foreign securities or
          Blue Sky laws, (iii) the rules and

                                       20

<PAGE>
          regulations of the NASD in connection with the purchase and
          distribution of the Offered Securities by the Purchasers, (iv) energy
          regulatory laws (except to the extent set forth in paragraphs (xiv)
          and (xv) of the opinion) and (v) Regulatory Acts;

               (xvii)  The execution and delivery by each of the Company and the
          Guarantors of each of the Operative Documents to which it is a party,
          the issuance, sale and delivery of the Offered Securities and
          performance by each of the Company and the Guarantors will not
          conflict with or result in a breach or violation of any of the terms
          and provisions of, or constitute a default under (i) to our knowledge,
          any Applicable Laws, (ii) any agreement or instrument to which the
          Company, any Guarantor or any of their respective subsidiaries is a
          party or by which the Company, any Guarantor or any of their
          respective subsidiaries is bound or to which any of the properties of
          the Company, any Guarantor or any of their respective subsidiaries is
          subject that is filed pursuant to paragraph 4 or paragraph 10 of Item
          601 of Regulation S-K as an exhibit to the Company's Annual Report on
          Form 10-K/A for the year ended December 31, 2002 and to the Company's
          other reports filed since January 1, 2003 pursuant to Section 13 of
          the Exchange Act or (iii) the charter or by-laws of the Company, any
          Guarantor or any of their respective subsidiaries;

               (xviii) This Agreement has been duly authorized, executed and
          delivered by the Company and each New York Guarantor and Delaware
          Guarantor;

               (xix)   The statements contained in the Offering Document under
          the captions (a) "Description of the Notes" and "Description of the
          Collateral," insofar as such statements purport to constitute a
          summary of the terms of the Indenture, the Notes, the Guarantees and
          the Security Documents, (b) "Certain Relationships and Related Party
          Transactions," "Description of the Amended Credit Facility," "The
          Series B Preferred Stock Restructuring" and "Plan of Distribution",
          insofar as such statements purport to constitute a summary of the
          documents referred to therein, and (c) "United States Federal Income
          Tax Considerations" 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

               (xx)    Assuming without independent investigation, (a) that the
          Offered Securities are sold to the Purchasers, and initially resold by
          the Purchasers, in accordance with the terms of and in the manner
          contemplated by, the Purchase Agreement and the Offering Circular; (b)
          the accuracy of the representations and warranties of the Company and
          the Guarantors set forth in the 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 the
          Company, the Guarantor and the Purchasers of their respective
          covenants and agreements set forth in the Purchase Agreement; and (e)
          the Purchasers' compliance with the Offering Circular and the transfer
          procedures and restrictions described therein, 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
          Purchasers or 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 Offering Circular, it being expressly
          understood that we express no opinion as to any subsequent offer or
          resale of any of the Offered Securities.

                                       21

<PAGE>

     Such shall also state that it has no reason to believe that the Offering
Circular, as of its date or the date of any amendment or supplement thereto, as
of the date hereof and as of the Closing Date, contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make 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 and other financial data
contained in the Offering Circular.

          (h)  Local counsel to the Company in Colorado, Connecticut, Illinois,
     Kentucky, Louisiana, Michigan, Nevada, Ohio, Texas, Virginia and Washington
     (and with respect to the Mortgages only, in Florida, Georgia, Mississippi,
     New Mexico and North Carolina) shall have furnished to the Purchasers their
     written opinions, dated the Closing Date, substantially in the form
     attached hereto as Annex A. Such opinions shall be in form and substance
     reasonably satisfactory to the Purchasers hereto as agreed as of the date
     hereof, as to such matters under the laws of their respective states as the
     Purchasers may reasonably request.

          (i)  The Purchasers shall have received an opinion, dated the Closing
     Date, of Kevin Blodgett, Group General Counsel--Corporate Finance &
     Securities for Dynegy Inc., that:

               (i)     As of March 31, 2003, the Company has an authorized
          capitalization as set forth in the Offering Document, 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 Offering Document, the capital stock of
          each subsidiary owned by the Company or the Guarantors, as the case
          may be, directly or through subsidiaries, to his knowledge is owned
          free from liens, encumbrances and material defects;

               (ii)    Except as set forth in the Offering Document, there are
          no contracts, agreements or understandings between the Company or any
          Guarantor and any person granting such person the right to require the
          Company or such Guarantor to file a registration statement under the
          Securities Act with respect to any securities of the Company or such
          Guarantor or to require the Company or such Guarantor to include such
          securities with the Offered Securities and Guarantees registered
          pursuant to any Registration Statement; and

               (iii)   To my knowledge, and other than as set forth in the
          Offering Document, there are no pending actions, suits or proceedings
          against or affecting the Company, any Guarantor or any of their
          respective subsidiaries or any of their respective properties that, if
          determined adversely to the Company, any Guarantor or any of their
          respective subsidiaries, would individually or in the aggregate have a
          Material Adverse Effect, or would materially and adversely affect the
          ability of the Company or any Guarantor 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's knowledge, threatened or
          contemplated; and

     Such shall also state that it has no reason to believe that the Offering
Circular, as of its date or as of the Closing Date, contained or contains any
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make 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
contained in the Offering Circular. Such counsel also shall confirm, based on
certificates of public officials, that the Company is duly qualified to do
business as a foreign corporation in good standing in the other jurisdictions
where so qualified and nothing has come to

                                       22

<PAGE>

the attention of such counsel to cause him to believe that the Company is not so
duly qualified, in each case except to the extent the failure to so qualify or
be in good standing in such other jurisdictions could not reasonably be expected
to have a Material Adverse Effect.

          (j)  The Purchasers shall have received from Latham & Watkins LLP,
     counsel for the Purchasers, such opinion or opinions, dated the Closing
     Date, with respect to the incorporation of the Company and certain
     Guarantors, the validity of the Offered Securities, the Offering Document,
     the exemption from registration for the offer and sale of the Notes and the
     Guarantees by the Issuers, respectively, to the several Purchasers and the
     resales by the several Purchasers as contemplated hereby and other related
     matters as CSFB may require, and the Issuers shall have furnished to such
     counsel such documents as they request for the purpose of enabling them to
     pass upon such matters.

          (k)  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 and Dynegy Inc. in which
     such officers, to the best of their knowledge after reasonable
     investigation, shall state that the representations and warranties of the
     Company and each Guarantor in this Agreement and the Security Documents are
     true and correct, that the Company and each Guarantor has complied with all
     agreements and satisfied all conditions on its part to be performed or
     satisfied hereunder and under other Operative Documents at or prior to the
     Closing Date, and that, subsequent to the date of the most recent financial
     statements in the Offering Document there has been no material adverse
     change, nor any development or event that reasonably could be expected to
     result in a prospective material adverse change, in the condition
     (financial or other), business, properties, results of operations or
     prospects of the Company, any Guarantor or any of their respective
     subsidiaries except as set forth in the Offering Circular (exclusive of any
     amendment or supplement thereto on or after the date hereof).

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

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

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

          (o)  The Trustee and the Collateral Agent shall have received evidence
     reasonably satisfactory to the Trustee and the Collateral Agent that the
     Collateral Agent shall have "control" (within the meaning of Sections 8-106
     and 9-106 of the Uniform Commercial Code) over any securities accounts
     included in the Collateral and "control" (within the meaning of Section
     9-104 of the Uniform Commercial Code) over the Asset Sale Proceeds Account
     and Escrow Account included in the Collateral.

          (p)  On the Closing Date, each Operative Document will conform, as to
     legal matters, in all material respects to the description thereof
     contained in the Offering Circular.

                                       23

<PAGE>

          (q)  The Company and each Guarantor will furnish the Purchasers with
     such conformed copies of such opinions, certificates, letters and documents
     as the Purchasers reasonably request. CSFB may in its sole discretion waive
     on behalf of the Purchasers compliance with any conditions to the
     obligations of the Purchasers hereunder.

     7.  Indemnification and Contribution.

          (a)  The Company and each Guarantor will, jointly and severally,
     indemnify and hold harmless each Purchaser, its partners, affiliates,
     directors and officers and each person, if any, who controls such Purchaser
     within the meaning of Section 15 of the Securities Act, against any losses,
     claims, damages or liabilities, 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 based upon any untrue
     statement or alleged untrue statement of any material fact contained in the
     Offering Document, or any amendment or supplement thereto, or any related
     preliminary offering circular, 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 under
     which they were made, not misleading, including any losses, claims, damages
     or liabilities arising out of or based upon the Company's or any
     Guarantor's failure to perform its obligations under Section 5(a) of this
     Agreement, and will reimburse each Purchaser for any legal or other
     expenses actually and 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 neither
     the Company nor any Guarantor will 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 upon and in
     conformity with written information furnished to the Company by any
     Purchaser through CSFB specifically for use therein, it being understood
     and agreed that the only such information consists of the information
     described as such in subsection (b) below; provided, further, however, that
     the foregoing indemnity agreement with respect to losses, claims, damages
     or liabilities shall not inure to the benefit of any Purchaser (or any
     person controlling any Purchaser) to the extent that such losses, claims,
     damages or liabilities arise out of or based upon (x) any untrue statement
     or alleged untrue statement of any material fact in the Preliminary
     Offering Circular or (y) the omission or alleged omission to state in the
     Preliminary Offering Circular a material fact necessary in order to make
     the statements therein, in light of the circumstances under which they were
     made, not misleading, if and only if: (1) the person asserting such losses,
     claims, damages or liabilities purchased Offered Securities from such
     Purchaser in the initial resale by such Purchaser (such person, an "Initial
     Resale Purchaser") and a copy of the Offering Circular was not sent or
     given by or on behalf of such Purchaser to such Initial Resale Purchaser,
     (2) the Company furnished to the Purchasers sufficient copies of the
     Offering Circular on a timely basis to permit delivery of the Offering
     Circular by the Purchasers to all Initial Resale Purchasers at or prior to
     the delivery of the written confirmation of the sale of the Offered
     Securities to such person, and (3) the disclosure contained in the Offering
     Circular cured the defect in the Preliminary Offering Circular giving rise
     to such losses, claims, damages or liabilities.

          (b)  Each Purchaser will severally and not jointly indemnify and hold
     harmless the Company, each Guarantor and their respective directors and
     officers and each person, if any, who controls the Company or any Guarantor
     within the meaning of Section 15 of the Securities Act, against any losses,
     claims, damages or liabilities to which the Company or any Guarantor 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 based upon any untrue statement or
     alleged untrue statement of any material fact contained in the Offering
     Document, or any amendment or supplement thereto, or any related
     preliminary offering circular,

                                       24

<PAGE>

     or arise out of or are based upon the omission or the alleged omission to
     state therein 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 untrue statement or omission or alleged
     omission was made in reliance upon and in conformity with written
     information furnished to the Company by such Purchaser through CSFB
     specifically for use therein, and will reimburse any legal or other
     expenses reasonably incurred by the Company and any Guarantor 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 any Purchaser consists of the
     following information in the Offering Document furnished on behalf of each
     Purchaser: the third, fifth, seventh and ninth paragraphs under the caption
     "Plan of Distribution"; provided, however, that the Purchasers shall not be
     liable for any losses, claims, damages or liabilities arising out of or
     based upon the Company's or any Guarantor'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 a claim 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 the failure 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 rights or 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 case any 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 other indemnifying party
     similarly notified, to assume the defense thereof, with counsel reasonably
     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 from the 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 such indemnified party in
     connection with the defense thereof other than reasonable costs of
     investigation. In any such proceeding, 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 failed within 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 to
     those 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 counsel would 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 for the 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,
     its affiliates, directors and officers and any control persons of such
     Purchaser shall be designated in writing by CSFB and any such separate firm
     for the Company, the Guarantors, their directors and officers and any
     control persons of the Company and the Guarantors shall be designated 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 been a party and indemnity could have been sought hereunder
     by such indemnified party unless such

                                       25

<PAGE>

     settlement includes (i) an unconditional release of such indemnified party
     from all liability on any claims that are the subject matter of such action
     and (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 or payable 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 Issuers on 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 only the relative benefits
     referred to in clause (i) above but also the relative fault of the Issuers
     on the one hand and the Purchasers on the other in connection with the
     statements or omissions which resulted in such losses, claims, damages or
     liabilities as well as any other relevant equitable considerations. The
     relative benefits received by the Issuers 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 the offering (before deducting expenses) received
     by the Issuers bear to the total discounts and commissions received by the
     Purchasers from the Issuers 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
     Issuers or the Purchasers and the parties' relative intent, knowledge,
     access to 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 the provisions of this subsection (d),
     no Purchaser shall be required to contribute any amount in excess of the
     amount by which the total discounts, fees and commissions received by such
     Purchaser exceeds the amount of any damages which such Purchaser 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 their
     respective purchase obligations and not joint.

          (e)  The obligations of the Company and each Guarantor under this
     Section shall be in addition to any liability which the Company and each
     Guarantor 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 this Section 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 or any Guarantor within the meaning of the Securities Act or the
     Exchange Act.

     8.  Default of Purchasers. If any Purchaser or Purchasers default in their
obligations to purchase Securities hereunder 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, CSFB may make arrangements 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 obligated severally, 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 the Offered
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 CSFB and the Company for the

                                       26

<PAGE>

purchase of such Offered Securities by other 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 Issuers, except as provided in
Section 9. As used in this Agreement, the term "Purchaser" includes any person
substituted for a Purchaser under this Section. Nothing herein will relieve a
defaulting Purchaser from liability for its default.

     9.  Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Issuers or their respective 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 any Purchaser, its affiliates, the Issuers 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 8 or if for any reason the purchase
of the Offered Securities by the Purchasers is not consummated, the Issuers
shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 5 and the respective obligations of the Issuers and the
Purchasers pursuant to Section 7 shall remain in effect and if any Offered
Securities have been purchased hereunder the representations and warranties in
Section 2 and all obligations under Section 5 shall remain in effect; provided,
that if this Agreement is terminated pursuant to Section 8 hereof, the Issuers
shall not be obligated to reimburse any defaulting Purchaser on account of any
expenses that otherwise would have been reimbursed hereunder. 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 to Section 8
or the occurrence of any event specified in clause (iii), (iv), (v), (vi) or
(vii) of Section 6(b), the Issuers 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.

     10. Notices. All communications hereunder will be in writing and, if sent
to the Purchasers will be mailed, delivered, faxed or sent by courier to the
Purchasers, c/o Credit Suisse First Boston LLC, Eleven Madison Avenue, New York,
New York 10010-3629, Attention: Transactions Advisory Group (Fax: 212-325-4296),
or, if sent to the Company or any Guarantor, 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 Purchaser pursuant to Section 7 will be mailed, delivered,
faxed or sent by courier and confirmed to such Purchaser.

     11. 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 7, and no other person will have any right or
obligation hereunder, except that 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 Issuers as if such holders
were parties hereto.

     12. Representation of Purchasers. CSFB will act for the several Purchasers
in connection with this purchase, and any action under this Agreement taken by
CSFB will be binding upon all the Purchasers.

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

     14. 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.

                                       27

<PAGE>

     The Company and each Guarantor hereby submits 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.

                                       28

<PAGE>

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

                                  Very truly yours,

                                         Dynegy Holdings Inc.

                                         By: /s/ Charles Cook
                                            ------------------------------------
                                            Title: Assistant Treasurer

                                         Dynegy Inc.

                                         BG Holdings, Inc.

                                         Illinova Corporation

                                         Illinova Energy Partners, Inc.

                                         Illinova Generating Company

                                         Igc Grimes County, Inc.

                                         Igc Grimes Frontier, Inc.

                                         Ipg Ferndale, Inc.

                                         Ipg Paris, Inc.

                                         Charter Oak (Paris), Inc.

                                         By: /s/ Robert T. Ray
                                            ------------------------------------
                                            Title: Sr. Vice President-Treasurer

                                         [continued]

                                       29

<PAGE>

Dynegy Power Corp.                       DPC II Inc.

Dynegy Services, Inc.                    Dynegy Power Management Services, L.P.,

                                         By: Dynegy Services, Inc., its
                                         general partner

Dynegy Engineering, Inc.                 Calcasieu Power, Inc.

Dynegy Operating Company                 Dynegy Parts And Technical
                                         Services, Inc.

Dynegy Power Management Services, Inc.   Hep Cogen, Inc.

Northway Cogen, Inc.                     Dynegy Power Investments, Inc.

Dynegy Power Services, Inc.              Dynegy Power Nevada, Inc.

Michigan Cogen, Inc.                     Michigan Power, Inc.

Michigan Power Holdings, Inc.            OCG Cogen, Inc.

Oyster Creek Cogen, Inc.                 RRP Company

DPC Colombia - Opon Power Resources
Company                                  Termo Santander Holding, LLC

Riverside Generation, Inc.               Riverside Generating Company, L.L.C.

Rolling Hills Generation, Inc.           Dynegy Renaissance Power, Inc.

Dynegy Northeast Generation, Inc.        Hudson Power, L.L.C.

Dynegy Midstream GP, Inc.                Dynegy Liquids G.P., L.L.C.

                                         By: Dynegy Midstream Service, Limited
                                         Partnership, its sole member

                                         By: Dynegy Midstream G.P., Inc. its
                                         general partner

On behalf of each of the entities        On behalf of each of the entities
listed above:                            listed above:

By: /s/ Robert T. Ray                    By: /s/ Robert T. Ray
   -----------------------------------      ------------------------------------
   Title: Sr. Vice President-Treasurer      Title: Sr. Vice President-Treasurer

Dynegy Midstream Services, Limited       Dynegy Liquids Marketing And Trade
Partnership

By: Dynegy Midstream G.P., Inc., its
    general partner

                                       30

<PAGE>

Dynegy OPI, LLC                          Dynegy NGL Pipeline Company, LLC

Dynegy Intrastate Pipeline, LLC          Dynegy Energy Pipeline Company LLC

Dynegy Upper Holdings, L.L.C.            Dmg Enterprises, Inc.

Havana Dock Enterprises, LLC             Dmt Holdings, Inc.

DMT G.P., L.L.C.                         Dmt Holdings, L.P.

                                         By: DMT G.P., L.L.C., its general
                                         partner

Dynegy Coal Trading & Transportation,    Ngc Storage, Inc.
L.L.C.

Black Thunder Member, Inc.               Parish Power, Inc.

Calcasieu Power, L.L.C.                  Delta Cogen, Inc.

Cogen Power, Inc.                        Cogen Power, L.P.

                                         By: CoGen Power, Inc., its general
                                         partner

Dynegy Power Holdings, Inc.              Midstream Barge Company, L.L.C.

Dynegy Regulated Holdings, LLC           Black Mountain Cogen, Inc.

Bluegrass Generation, Inc.               Bluegrass Generation Company, L.L.C.

Dynegy Cabrillo II LLC                   Dynegy Holding Company, L.L.C.

On behalf of each of the entities        On behalf of each of the entities
listed above:                            listed above:

By: /s/ Robert T. Ray                    By: /s/ Robert T. Ray
   ------------------------------------     ------------------------------------
   Title: Sr. Vice President-Treasurer      Title: Sr. Vice President-Treasurer

                                       31

<PAGE>

Blue Ridge Generation Inc.               Blue Ridge Generation Llc

Chickahominy Generating Company          Chickahominy Power, Llc

Florida Mercantile Power, Inc.           Palmetto Power, L.L.C.

Gasification Services, Inc.              Georgia Mercantile Power, Inc.

Heard County Power, L.L.C.               Hart County IPP, Inc.

Hartwell  Independent Power              Hartwell Power
Company Partners, Inc.

Dynegy Roseton, L.L.C.                   Dynegy Hudson Power Retail, L.L.C.

Dynegy Global Energy, Inc.               Dynegy Broadband Marketing And Trade

Dynegy GP INC.                           Dynegy Marketing And Trade

                                         By:  Dynegy GP, Inc.
                                         its general partner

Dynegy Technology Capital Corp.          Dynegy Strategic Investments GP, L.L.C.
Dynegy Strategic Investments, L.P.       Renaissance Power, L.L.C.

By:  Dynegy Strategic Investments GP,
     L.L.C., its general partner

Rolling Hills Generating, L.L.C.         Dynegy Power Marketing, Inc.

Dynegy Energy Services, Inc.             Illinois Power Energy, Inc.

     Des Northeast, Inc.

On behalf of each of the entities        On behalf of each of the entities
listed above:                            listed above:

By: /s/ Robert T. Ray                    By: /s/ Robert T. Ray
   ------------------------------------     ------------------------------------
   Title: Sr. Vice President-Treasurer      Title: Sr. Vice President-Treasurer

                                       32

<PAGE>

Dem GP, LLC                              Dynegy Energy Marketing, Lp

                                         By: DEM GP, LLC, its general partner

Dynegy Administrative Services Company   NIPC, Inc.

Dfs L.P., LLC                            Dynegy Catlin Member, Inc.

Dfs General Partner, LLC                 Dynegy Financial Services, Limited
                                         Partnership

                                         By: DFS General Partner, LLC, its
                                         general partner

Dynegy Midwest Generation , Inc.         Dynegy I.T., Inc.

Chesapeake Power, Inc.                   James River Energy Corp.

DPC Power Resources Holding Company      Dry Creek Power, Inc.

Rockingham Power, L.L.C.                 Dynegy Power Development Company

On behalf of each of the entities        On behalf of each of the entities
listed above:                            listed above:

By: /s/ Robert T. Ray                    By: /s/ Robert T. Ray
   -----------------------------------      ------------------------------------
   Title: Sr. Vice President-Treasurer      Title: Sr. Vice President-Treasurer

                                         Dynegy Danskammer, L.L.C.

                                         By: /s/ Charles Cook
                                            ------------------------------------
                                            Title:  Assistant Treasurer

                                         Dynegy Management, Inc.

                                         DMS LP, Inc.

                                         DMT L.P., L.L.C.

                                         Dynegy Strategic Investments LP, Inc.

                                         DEM LP, LLC

                                         By: /s/ Larry Altenbaumer
                                            ------------------------------------
                                            Name: Larry F. Altenbaumer
                                            Title: President

                                       33

<PAGE>

The foregoing Purchase Agreement is
 hereby confirmed and accepted as of
 the date first above written.

Credit Suisse First Boston LLC
Banc of America Securities LLC
Citigroup Global Markets Inc.
J.P. Morgan Securities Inc.
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
ABN AMRO Incorporated
Banc One Capital Markets Inc.
Credit Lyonnais Securities Inc.
Deutsche Bank Securities Inc.
SG Cowen Securities Corporation,
TD Securities (USA), Inc.

     By: Credit Suisse First Boston LLC

      By: /s/ Jamie Welch
         ------------------------------
         Title: Managing Director

                                       34

<PAGE>

                                   SCHEDULE A

<TABLE>
<CAPTION>
                                         Principal        Principal       Principal
                                      Amount of 2008   Amount of 2010   Amount of 2013
                                         Offered           Offered          Offered
         Purchaser                      Securities*      Securities       Securities
-----------------------------------   --------------   --------------   --------------
<S>                                   <C>              <C>              <C>
Credit Suisse First Boston LLC ....   $  108,000,000   $  252,000,000   $  336,000,000
Banc of America Securities LLC ....       20,812,500       48,562,500       64,750,000
Citigroup Global Markets Inc. .....       20,812,500       48,562,500       64,750,000
J.P. Morgan Securities Inc. .......       20,812,500       48,562,500       64,750,000
Lehman Brothers Inc. ..............       20,812,500       48,562,500       64,750,000
ABN AMRO Incorporated .............        4,821,429       11,250,000       15,000,000
Banc One Capital Markets Inc. .....        4,821,429       11,250,000       15,000,000
Credit Lyonnais Securities Inc. ...        4,821,429       11,250,000       15,000,000
Deutsche Bank Securities Inc. .....        4,821,429       11,250,000       15,000,000
Morgan Stanley & Co. Incorporated .        4,821,429       11,250,000       15,000,000
SG Cowen Securities Corporation ...        4,821,429       11,250,000       15,000,000
TD Securities (USA), Inc. .........        4,821,429       11,250,000       15,000,000
                                      --------------   --------------   --------------
   Total ..........................   $  225,000,000   $  525,000,000   $  700,000,000
                                      ==============   ==============   ==============

----------
<FN>
<F1>
*  Amounts are rounded to the nearest whole dollar.
</FN>
</TABLE>

                                       35Certificate of Disignation

  Exhibit 4.1
 CORAUTUS GENETICS INC.
 CERTIFICATE OF DESIGNATION OF
PREFERENCES AND RIGHTS OF
SERIES D PREFERRED STOCK
          Pursuant to Section 151 of the
Delaware General Corporation Law, Corautus Genetics Inc., a Delaware corporation (the “Corporation”), DOES HEREBY CERTIFY:
          That
pursuant to the authority conferred upon the Board of Directors of the Corporation (the “Board of Directors”) by the Restated Certificate of Incorporation of the Corporation, as amended (the “Certificate of
Incorporation”), the Board of Directors on July 18, 2003 duly adopted the following resolution creating a series of Preferred Stock designated as Series D Preferred Stock and such resolution has not been modified and is in full force and
effect on the date hereof:
          RESOLVED that, pursuant to the authority vested in the Board of Directors in accordance with the provisions of the
Certificate of Incorporation, a series of the class of authorized Preferred Stock, par value $0.001 per share (“Preferred Stock”), of the Corporation is hereby created and that the designation and number of shares thereof and the
voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations and restrictions thereof are as follows:
 A.      Designation and Number.
          1.      The shares of such series shall
be designated as Series D Preferred Stock (the “Series D Preferred Stock”). The number of shares initially constituting the Series D Preferred Stock shall be One Million Four Hundred Thousand (1,400,000) shares, which number may be
decreased (but not increased) by the Board of Directors without a vote of stockholders; provided, however, that such number may not be decreased below the number of then outstanding shares. No other shares of Preferred Stock shall be
designated as Series D Preferred Stock.
 B.      Rights, Preferences and Restrictions of Series D Preferred Stock. The powers, rights, preferences, privileges and restrictions
granted to and imposed on the Series D Preferred Stock is as follows:
          1.      Rank of the Corporation’s
Stock.
                 (a)         Any class or series of stock of the Corporation
shall be deemed to rank:
                              (i)         prior
to the Series D Preferred Stock, either as to the payment of dividends or as to distribution of assets upon liquidation, dissolution or winding up, or both, if the holders of such class or series shall be entitled by the terms thereof to the receipt
of dividends and of amounts distributable upon liquidation, dissolution or winding up, in preference or priority to the holders of Series D Preferred Stock (“Senior Securities”);
 1

                               (ii)
        on a parity with the Series D Preferred Stock, either as to the payment of dividends or as to distributions of assets upon liquidation, dissolution or winding up, or both, whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Series D Preferred Stock, if the holders of the Series D Preferred Stock and of such class of stock or series shall be entitled by the terms
thereof to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, or both, in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference
or priority one over the other and such class of stock or series is not a class of Senior Securities (“Parity Securities”); or
                              (iii)        
junior to the Series D Preferred Stock, either as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, or both, if such stock or series shall be Common Stock of the Corporation, par value
$0.001 per share (“Common Stock”) or if the holders of the Series D Preferred Stock shall be entitled to receipt of dividends, and of amounts distributable upon liquidation, dissolution or winding up, in preference or priority to
the holders of shares of such stock or series (“Junior Securities”).
                  (b)        The Series C Preferred Stock of the Corporation (the “Series C
Preferred Stock”) is a Parity Security. Other than Common Stock (and rights, options or other securities exercisable or convertible into Common Stock), there are no Junior Securities outstanding as of the date of the first issuance of
Series D Preferred Stock (the “Issue Date”). The Corporation shall not issue any Senior Securities (including rights or options exercisable for or convertible into any Senior Securities) except as approved by the holders of the
Series D Preferred Stock pursuant to Section B(4)(c) herein.
                  (c)        The respective definitions of Senior Securities, Junior Securities and Parity
Securities shall also include any rights or options exercisable for or convertible into any of the Senior Securities, Junior Securities and Parity Securities, as the case may be. The Series D Preferred Stock shall be subject to the creation of
Junior Securities, Parity Securities and Senior Securities as set forth herein.
         2.      Dividends. In the event the
Corporation declares any dividend on its Common Stock, holders of shares of the Series D Preferred Stock shall be entitled to receive dividends in an amount equal to the amount (and in the form of consideration) that such holders would be entitled
to receive if, pursuant to Section B(5), they had converted such Series D Preferred Stock fully into Common Stock immediately before the record date for the payment of any such dividends on Common Stock. Each such dividend shall be payable to the
holders of record of shares of the Series D Preferred Stock as they appear on the stock records of the Corporation at the close of business on the record date for such dividend on Common Stock, and the Corporation shall pay each such dividend on the
applicable payment date for such dividend on the Common Stock. No such right shall accrue to holders of shares of Series D Preferred Stock by reason of the fact that dividends on such shares are not declared in any prior year, nor shall any
undeclared or unpaid dividend bear or accrue interest.
 2

          3.      Liquidation Preference.
                  (a)        Rights on Liquidation. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary (a “Liquidation Event”), before any payment or distribution of assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of
Junior Securities, the holders of Series D Preferred Stock shall be entitled to receive, for each share of Series D Preferred Stock, the greater of (i) an amount equal to $6.50 per share (as adjusted for any splits or reverse stock splits with
respect to such share) plus an amount equal to all dividends declared and unpaid thereon to the date of final distribution to such holders, and (ii) the amount that would be received in liquidation following conversion of a share of Series D
Preferred Stock into Common Stock (such greater amount referred to hereinafter as the “Series D Liquidation Preference”). For purposes of the foregoing rights on liquidation, the holders of the Series D Preferred Stock shall have
Parity Rights with the Series C Preferred Stock as defined in Section 5(a) of the Amended and Restated Certificate of Designation for the Series C Preferred Stock (as amended or restated from time to time). If, upon any Liquidation Event, the assets
of the Corporation, or proceeds thereof, distributable among the holders of the shares of Series D Preferred Stock shall be insufficient to pay in full the Series D Liquidation Preference for all outstanding shares of Series D Preferred Stock and
liquidating payments on any Parity Securities, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Series D Preferred Stock and any such other Parity Securities ratably in accordance with the respective
amounts that would be payable on such shares of Series D Preferred Stock and any such other stock if all amounts payable thereon were paid in full.
                  (b)        Distribution of Remaining Assets. Subject to the rights of the holders
of any Parity Securities and any Senior Securities, upon any Liquidation Event, after payment of the Series D Liquidation Preference shall have been made in full to the holders of the outstanding Series D Preferred Stock as provided in this Section
B(3), any other series or class or classes of Junior Securities shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the
Series D Preferred Stock shall not be entitled to share therein.
                 (c)       
Valuation of Non-Cash Assets. Whenever any distribution provided for in this Section B(3) shall be payable in securities or property other than cash, the value of such distribution shall be the fair market value of such securities or other
property as determined in good faith by the Board of Directors.
         4.      Voting Rights.
                  (a)        Except as otherwise required by applicable law or as set forth herein, the
shares of Series D Preferred Stock shall be voted equally with the shares of any other series or class of Preferred Stock, the terms of which so provide, and the shares of Common Stock (voting together with the shares of Series D Preferred Stock, or
such other series or class of Preferred Stock, and the shares of Common Stock as a single class) at any annual or special meeting of stockholders of the Corporation, or may act by written consent in the same manner as Common Stock, upon the
following basis: each holder of one or more shares of Series D Preferred Stock shall be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the
 3

  Corporation and to such number of votes for the shares of Series D Preferred Stock held by him on the record date fixed for such meeting, or on the effective date of such written
consent, as shall be equal to the number of whole shares of Common Stock into which all of his shares of Series D Preferred Stock are convertible immediately after the close of business on the record date fixed for such meeting or the effective date
of such written consent. In the event that any other series of Preferred Stock shall have the right to vote with the Series D Preferred Stock as a single class on any matter and such other series of Preferred Stock is not convertible into Common
Stock for purposes of otherwise determining the number of votes pursuant to this Section 4(a), then the holders of any shares of the Series D Preferred Stock and such other series of Preferred Stock shall have with respect to such matters one vote
per $1 of stated liquidation preference for such shares.
                    (b)
        Without the written consent of the holders of at least two-thirds of the outstanding shares of Series D Preferred Stock or the vote of holders of at least two-thirds of the outstanding shares of Series D
Preferred Stock at a meeting of the holders of Series D Preferred Stock called for such purpose, the Corporation will not amend, alter or repeal any provision of the Certificate of Incorporation (by merger or otherwise) so as to adversely affect the
preferences, rights or powers of the Series D Preferred Stock.
                     (c)
        Without the written consent of the holders of at least two-thirds of the outstanding shares of Series D Preferred Stock or the vote of holders of at least two-thirds of the outstanding shares of Series D
Preferred Stock at a meeting of such holders called for such purpose, the Corporation will not (i) issue any additional Series D Preferred Stock, (ii) create, authorize, or issue any Senior Securities, (iii) increase the authorized amount of the
Series D Preferred Stock or any Senior Securities, or (iv) effect any split or reverse split of the Series D Preferred Stock.
                     (d)         Nothing in this Section B(4) shall be in derogation of any
rights that a holder of shares of Series D Preferred Stock may have in his capacity as a holder of shares of Common Stock as to such shares of Common Stock.
          5.        Conversion. The holders of the Series D Preferred Stock shall have conversion rights as follows (the “Conversion
Rights”):
                     (a)         Right to
Convert. Each share of Series D Preferred Stock shall be convertible, at the option of the holder thereof and in accordance with this Section B(5), at any time after the date of issuance of such share at the office of the Corporation or any
transfer agent for such stock. Upon conversion, any accrued and unpaid dividends on the Series D Preferred Stock at the date of conversion shall be paid to the holder thereof in accordance with the provisions of Section B(2).
                     (b)         Conversion Rate. Each share of outstanding Series D
Preferred Stock shall be converted into the number of duly authorized, validly issued, fully-paid and non-assessable shares of Common Stock as is determined by dividing (a) the Series D Original Purchase Price per share by (b) the Conversion Price
per share in effect for the Series D Preferred Stock at the time of conversion (collectively referred to hereinafter as the “Conversion Rate”). For purposes hereof, the “Series D Original Purchase Price” is $6.50
per share. The
 4

  ”Conversion Price” for each share of Series D Preferred Stock shall initially be the Series D Original Purchase Price and shall be subject to adjustment as set forth in
Section B(5).
                     (c)         Mechanics of
Conversion. Before any holder of Series D Preferred Stock shall be entitled to convert the same into shares of Common Stock, he shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for such stock, and shall give written notice to the Corporation at such office that he elects to convert the same and shall state therein the number of shares of Series D Preferred Stock to be converted and the name or names in which
he wishes the certificate or certificates for shares of Common Stock to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Series D Preferred Stock, or on the holder’s written
order, a certificate or certificates for the number of duly authorized, validly issued, fully paid and non-assessable shares of Common Stock to which he shall be entitled, and any fractional interest in respect of a share of Common Stock arising on
such conversion shall be settled as provided in Section B(5)(k). Upon conversion of only a portion of the shares of Series D Preferred Stock represented by any certificate, a new certificate shall be issued representing the unconverted portion of
the certificate so surrendered without cost to the holder thereof. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of surrender of the shares of Series D Preferred Stock to be converted, and
the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. If the conversion is in connection with
an underwritten offering of securities pursuant to the Securities Act of 1933, as amended, and the rules and regulations thereunder, the conversion may, at the option of any holder tendering shares of Series D Preferred Stock for conversion, be
conditioned upon the closing with the underwriters of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive the Common Stock upon conversion of the Series D Preferred Stock shall not be deemed to have
converted such Series D Preferred Stock until immediately prior to the closing of such sale of securities.
                     (d)         Conversion Price Adjustments of Preferred Stock. The
Conversion Price for each share of Series D Preferred Stock shall be subject to reduction from time to time as set forth below.
                                   (i)
         Special Definitions. For purposes of this designation, the following definitions apply. Capitalized terms not otherwise defined herein shall have the same meanings as set forth in the Certificate of
Incorporation.
                                     
         (1)         “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Section B(5)(d)(iv) below, deemed
to be issued) by the Corporation after the Issue Date, other than shares of Common Stock issued or issuable:
                                     
                        (A)         upon conversion of up to 2,000 shares of Series C Preferred
Stock;
                                     
                        (B)         in any offering where (i) all of the holders of Series D
Preferred Stock were offered preemptive rights to the shares of Common Stock (or Options, Convertible Securities or other rights deemed to be an issuance of Common Stock pursuant to 
 5

  Section B(5)(d)(iv) below) based on such holders’ pro rata ownership of Common Stock (assuming full conversion of the Series D Preferred Stock and the conversion or exercise of all
other securities and rights to acquire Common Stock held by such holders) and (ii) such holders have, in the aggregate, exercised such preemptive rights for at least fifty percent (50%) of the shares of Common Stock (or Options, Convertible
Securities or other rights deemed to be an issuance of Common Stock pursuant to Section B(5)(d)(iv) below) so offered to them;
                                     
                        (C)         to officers, directors or employees of, or consultants to,
the Corporation pursuant to stock option or stock purchase plans or agreements or other stock incentive plans or arrangements on terms approved by the Board of Directors;
                                     
                        (D)         as a dividend or distribution to (i) all holders of the
Series D Preferred Stock and/or (ii) all holders of the Series D Preferred Stock on the one hand and the holders of any Junior Securities, Parity Securities or Senior Securities on the other hand;
                                     
                        (E)         for which adjustment of the Conversion Price is made under
Section B(5)(d)(iii) hereof;
                                     
                        (F)         as a result of an adjustment to the conversion price or
conversion rate relating to the conversion of any other class or series of Preferred Stock into Common Stock under provisions in other designations providing for such adjustments;
                                     
                        (G)         pursuant to the exercise of Options outstanding as of the
Issue Date; or
                                     
                        (H)         pursuant to the conversion of the Notes.

                                    
         (2)         “Convertible Securities” shall mean any evidences of indebtedness, shares (other than Common Stock and Series C Preferred Stock) or
other securities convertible into or exchangeable for Common Stock (other than the Notes). Series D Preferred Stock is included within the definition of Convertible Securities.
                                     
         (3)         “Options” shall mean rights, options, or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities.
                                     
         (4)         “Notes” shall mean senior convertible promissory notes issued in accordance with the Loan Agreement, dated as of the Issue Date,
among the Corporation, Vascular Genetics Inc. and Boston Scientific Corporation.
                                     
         (5)         For purposes of this Section B(5), the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then
owned or held by or for the account of the Corporation.
                                     
         (6)         For purposes of this Section B(5), any shares of Common Stock issued by the Corporation pursuant to Section 7.3 of the Agreement and Plan of
Reorganization dated as of September 12, 2002, as amended, by an among GenStar Therapeutics Corporation, Genesis Acquisition Corporation and Vascular Genetics Inc. shall be deemed to be Additional Shares of Common Stock issued without
consideration.
 6

                                    (ii)
        No Adjustment of Conversion Price in Certain Circumstances. Any provision herein to the contrary notwithstanding, no adjustment in the Conversion Price for any share of Series D Preferred Stock shall
be made pursuant to Section B(5)(d)(iii) in respect of the issuance of Additional Shares of Common Stock unless the consideration per share (determined pursuant to Section B(5)(d)(v)) for an Additional Share of Common Stock issued or deemed to be
issued by the Corporation is less than the lesser of (a) $4.50 (as adjusted for any combinations, splits or reverse stock splits with respect to shares of Common Stock after the Issue Date) and (b) the Conversion Price for the Series D Preferred
Stock in effect on the date of, and immediately prior to, such issue (the lesser hereinafter referred to as the “Minimum Price.”)
                                   (iii)
        Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event this Corporation, after the Issue Date, shall issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section B(5)(d)(iv)) without consideration or for a consideration per share less than the Minimum Price in effect, then and in each such event, the Conversion Price for each such
share shall be reduced, concurrently with such issue, to a price (calculated to the nearest cent) determined by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of shares of Common Stock which the aggregate consideration received by the Corporation for the total number of Additional Shares of Common Stock so issued would purchase at the Minimum Price in effect
for each such share immediately prior to such issuance, and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Common Stock so issued. For
the purpose of the above calculation, the number of shares of Common Stock outstanding immediately prior to such issue shall be calculated on a fully-diluted basis, as if all outstanding shares of Series C Preferred Stock, and all Convertible
Securities had been fully converted into shares of Common Stock immediately prior to such issuance and any outstanding Options had been fully exercised immediately prior to such issuance (and the resulting securities fully converted into shares of
Common Stock, if so convertible) as of such date; provided, however, any outstanding shares of Series C Preferred Stock shall not be included in such calculation until such time as such shares of Series C Preferred Stock are actually converted into
shares of Common Stock.
                                   (iv)
         Deemed Issue of Additional Shares of Common Stock. In the event the Corporation at any time or from time to time after the Issue Date shall issue any Options or Convertible Securities or shall fix a
record date for the determination of holders of any class of securities then entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any
provisions contained therein designed to protect against dilution or any other adjustment) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities, the conversion of such Convertible Securities or, in the
case of Options for Convertible Securities, the number of shares of Common Stock issuable upon the conversion of the Convertible Securities issuable upon the exercise of the Options, shall be deemed to be Additional Shares of Common Stock issued as
of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued:
 7

                                      
         (1)         no further adjustments in the Conversion Price of the Series D Preferred Stock shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;
                                     
         (2)         if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the
consideration payable to the Corporation, or decrease or increase in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price of the Series D Preferred Stock computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as
it affects such Options or the rights of conversion or exchange under such Convertible Securities (provided, however, that no such adjustment of the Conversion Price shall affect Common Stock previously issued upon conversion of the Series D
Preferred Stock);
                                     
         (3)         upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been
exercised, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if:

                                    
                        (A)         in the case of Convertible Securities or Options for Common
Stock the only Additional Shares of Common Stock issued were the shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor
was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Corporation upon such exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Corporation upon such conversion or exchange; and
                                     
                        (B)         in the case of Options for Convertible Securities, only the
Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Corporation for the Additional Shares of Common Stock deemed to have been then issued
was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Corporation (determined pursuant to Section B(5)(d)(v)) upon the issue
of the Convertible Securities with respect to which such Options were actually exercised;
                                     
         (4)         no readjustment pursuant to clause (2) or (3) above shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of
(a) the Conversion Price immediately prior to the original adjustment date, or (b) the Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock (other than shares deemed to be issued pursuant to Section
B(5)(d)(iv)) between the original adjustment date and such readjustment date; 
 8

                                      
        (5)         in the case of any Options which expire by their terms not more than thirty (30) days after the date of issue thereof, no adjustment of the Conversion
Price shall be made until the expiration or exercise of all such Options, whereupon if the Options expire and are not exercised no adjustment shall be made and if such Options are exercised prior to the time they expire adjustment shall be made
under Section B(5)(d)(iii); and
                                    
        (6)         if any such record date shall have been fixed and such Options or Convertible Securities are not issued on the date fixed therefor, the adjustment
previously made in the Conversion Price which became effective on such record date shall be cancelled as of the close of business on such record date and shall instead be made on the actual date of issuance, if any.
                                   (v)
      Determination of Consideration.   For purposes of this Section B(5)(d), the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as
follows:
                                     
         (1)         Cash and property.   Such consideration shall:
                                     
                        (A)         insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Corporation excluding amounts paid or payable for accrued interest or accrued dividends;
                                     
                        (B)         insofar as it consists of property other than cash, be
computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors; and
                                     
                        (C)         in the event Additional Shares of Common Stock are issued
together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by
the Board of Directors.
                                     
         (2)         Options and Convertible Securities.   The consideration per share received by the Corporation for Additional Shares of Common Stock
deemed to have been issued pursuant to Section B(5)(d)(iv), relating to Options and Convertible Securities shall be determined by dividing:
                                     
                        (A)         the total amount, if any, received or receivable by the
Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein
designed to protect against dilution or any other adjustment) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the
exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by
                                     
                        (B)         the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision contained therein
 9

  designed to protect against the dilution or any other adjustment) issuable upon the exercise of such Options or conversion or exchange of such Convertible Securities.

                    (e)        Adjustments for Stock Dividends and for
Combinations or Subdivisions of Common Stock.   In the event that the Corporation at any time, from time to time after the Issue Date shall (i) declare or pay any dividend or make a distribution on its Common Stock payable in Common
Stock or in any right to acquire Common Stock for no consideration, (ii) effect a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by stock split, reclassification or otherwise), (iii) combine or
consolidate its outstanding Common Stock into a lesser number of shares of Common Stock, or (iv) effect any other reclassification of its Common Stock, then the Conversion Price for the Series D Preferred Stock in effect immediately prior to such
event shall, concurrently with the effectiveness of such event, be proportionately decreased or increased, as appropriate, so that the holder of any share of Series D Preferred Stock thereafter surrendered for conversion shall be entitled to receive
the number and kind of shares of Common Stock that such holder would have owned or have been entitled to receive after the happening of any of the events described above had such share been converted immediately prior to the record date in the case
of a dividend or distribution or the effective date in the case of a subdivision, combination or reclassification. An adjustment made pursuant to this Section B(5)(e) shall become effective immediately after the opening of business on the business
day next following the record date in the case of a dividend or distribution and shall become effective immediately after the opening of business on the business day next following the effective date in the case of a subdivision, combination or
reclassification. Adjustments in accordance with this Section B(5)(e) shall be made whenever any event listed above shall occur. In the event that the Corporation shall declare or pay, without consideration, any dividend on the Common Stock payable
in any right to acquire Common Stock for no consideration, then the Corporation shall be deemed to have made a dividend payable in Common Stock in an amount of shares equal to the maximum number of shares issuable upon exercise of such rights to
acquire Common Stock.
                     (f)        Adjustments for
Reclassification and Reorganization.   If the Common Stock issuable upon conversion of the Series D Preferred Stock shall be changed into the same or a different number of shares of any other class or classes of stock, whether by
capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares provided for in Section B(5)(e)), the Conversion Price then in effect shall, concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted so that the Series D Preferred Stock shall be convertible into, in lieu of the number of shares of Common Stock which the holders would otherwise have been entitled to receive, a number of shares of such
other class or classes of stock equivalent to the number of shares that would have been subject to receipt by the holders upon conversion of the Series D Preferred Stock into Common Stock immediately before that change.
                     (g)        No Impairment.   The Corporation will not,
by amendment of its Certificate of Incorporation, this Certificate of Designation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section B(5) and in the taking of all such
action as
 10

  may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series D Preferred Stock against impairment. If the Corporation shall take any action
affecting the Common Stock, other than an action described in this Section B(5), that in the opinion of the Board of Directors materially adversely affects the conversion rights of the holders of the shares of Series D Preferred Stock, the
Conversion Price shall be adjusted, to the extent permitted by law, in such manner, if any, and at such time, as the Board of Directors may in good faith determine to be equitable in the circumstances; provided that the provisions of this
Section B(5)(g) shall not affect any rights the holders of Series D Preferred Stock may have at law or in equity, and provided, further, that no such adjustment shall increase the Conversion Price or decrease the number of shares of
Common Stock issuable upon conversion of a share of Series D Preferred Stock.
                     (h)
       Certificates as to Adjustments.   Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to Section B(5), the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Series D Preferred Stock a certificate executed by the Corporation’s Chief Executive Officer or Chief Financial Officer
setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of Series D Preferred Stock, furnish or
cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Price for the Series D Preferred Stock at the time in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received upon the conversion of the Series D Preferred Stock. If the Corporation shall have designated a transfer agent, it shall also promptly file with such transfer agent an
officer’s certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
                     (i)        Issue Taxes.   The Corporation shall pay
any and all issue, transfer and other taxes that may be payable in respect of any issue or delivery of shares of Common Stock or securities or other property on conversion of Series D Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in a name other than that of the holder of the Series D Preferred Stock to be converted in connection with any such
conversion.
                     (j)        Reservation of Common
Stock Issuable Upon Conversion.   The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series D
Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series D Preferred Stock; and if at any time the number of authorized but unissued shares
of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series D Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this
Certificate.
 11

                      (k)        Fractional
Shares.   No fractional shares of Common Stock shall be issued upon the conversion of any share or shares of Series D Preferred Stock. All shares of Common Stock (including fractions thereof) issuable upon conversion of more than one
share of Series D Preferred Stock by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the conversion would result
in the issuance of a fraction of a share of Common Stock, the Corporation shall, in lieu of issuing any fractional share, pay the holder otherwise entitled to such fraction a sum in cash equal to the fair market value of such fraction on the date of
conversion (as determined in good faith by the Board of Directors).
                     (l)               If:

                                    
   (i)         the Corporation shall declare a dividend (or any other distribution) on the Common Stock; or
                                     
   (ii)         the Corporation shall authorize the granting to the holders of the Common Stock as to such Common Stock of rights or warrants to subscribe for or purchase any shares of any class or
any other rights or warrants;
                                     
   (iii)         there shall be any subdivision, combination or reclassification of the Common Stock or any consolidation or merger to which the Corporation is a party and for which approval of any
shareholders of the Corporation is required, or the sale or transfer of all or substantially all of the assets of the Corporation as an entirety; or
                                     
   (iv)         there shall occur any Liquidation Event; or
                                     
   (v)         the Corporation or any subsidiary of the Corporation shall make any tender or exchange offer for all or any portion of the outstanding shares of Common Stock,
 then the Corporation shall cause to be filed with any transfer agent designated by the Corporation and shall cause to be mailed to the holders of shares of the Series D Preferred Stock at their addresses as shown on the stock
records of the Corporation, as promptly as possible, but at least ten (10) days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend (or such other
distribution), rights or warrants or tender or exchange offer or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights or warrants or tender or exchange
offer are to be determined or (B) the date on which such subdivision, combination, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up or other action is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property, if any, deliverable upon such subdivision, combination, reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of any distribution, right, warrant, tender offer, exchange offer, subdivision,
combination, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, winding up or other action, or the vote upon any of the foregoing.
 12

                  6.
              No Reissuance of Series D Preferred Stock.  No share or shares of Series D Preferred Stock acquired by the Corporation by reason of redemption,
purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue.
                 7.                 Modification or
Amendment.
                                    (a)
            Except as otherwise specifically provided herein, this Certificate of Designation may be amended by the Corporation in the same manner and with the same voting requirements as
is required to amend the Certificate of Incorporation.
                                    (b)
            If the Corporation shall issue any class or series of Preferred Stock (other than any Senior Securities approved pursuant to Section B(4)(c) herein) after the Issue Date
(“Additional Preferred”) that have any of the following preferences or rights, this Certificate of Designation shall be deemed to be amended, without any further action on the part of a holder of Series D Preferred Stock, to
incorporate the terms of such Additional Preferred solely with respect to such preferences or rights to the extent that such terms are more favorable, as determined in good faith by the Corporation’s Board of Directors, than the terms of this
Certificate of Designation:
                                     
                (i)         The right of such Additional Preferred to vote as a single class or series, or together with any other
class or series, on any matter other than the issuance of additional shares of such Additional Preferred or any modifications to the preferences or rights of such Additional Preferred;
                                     
                (ii)         The right of such Additional Preferred to treat or elect to treat any event not specified in Section 3(a)
herein as a Liquidation Event entitling such Additional Preferred to a distribution of its liquidation preference; or
                                     
                (iii)         The right of the holder of such Additional Preferred to receive, (x) upon the issuance of additional
shares of Common Stock, Options or Convertible Securities, (y) in the event of the consummation of a tender offer made by the Corporation for outstanding shares of Common Stock, or (z) upon distribution of assets or property of the Corporation or a
spin-off transaction, an adjustment to the conversion price or conversion rate relating to the conversion of such Additional Preferred into Common Stock pursuant to a formula other than the formula set forth in Section B(5)(d)(iii) or Sections
B(5)(e)-(h) herein; provided, however, that no change shall be made to this Certificate of Designation pursuant to this Section 7(b) with respect to the amount of the Minimum Price then in effect, the amount of the Conversion Price then in effect,
and the use of such amounts going forward as applicable inputs in any formula so as to preserve for the Corporation the threshold established under this Certificate of Designation below which antidiltution adjustments may be made and the price per
share from which antidilution adjustments are made; or
                                     
                (iv)         The right of such Additional Preferred to be redeemed at the option of the holder thereof; or

                                    
                (v)         The right of the holder of such Additional Preferred to receive dividends or other distributions;
or
 13

                                      
                (vi)         Any covenant contained in the certificate of designation for such Additional Preferred relating to the
operation, business, capitalization or sale of the Corporation; provided, however, to the extent any such covenant may be waived by the vote of such Additional Preferred together with any other class or series of Preferred Stock, all voting as one
class or series, then such covenants may be waived by the vote of the Series D Preferred Stock together with such Additional Preferred and any other class or series of Preferred Stock which have such covenants, all voting together as one class or
series, in accordance with the provisions of such Additional Preferred.
 14

           IN WITNESS WHEREOF, Corautus Genetics Inc. has caused this Certificate to be duly executed in its corporate name on this
29th day of July, 2003.

	 	CORAUTUS GENETICS INC.

	 	By:	  /s/ RICHARD E. OTTO

	 	 	Richard E. Otto
	 	 	Chief Executive Officer

 15

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