THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Dynegy Inc. (DYN)

4/3/2006 Proxy Information

Chevron Corporation

General. Prior to our sale of our midstream natural gas business, DMSLP, which was completed in October 2005, we engaged in significant transactions with Chevron, including purchases and sales of natural gas and natural gas liquids, joint ownership of certain gas processing assets and certain contractual arrangements. During 2005 we recognized aggregate sales to Chevron of $1.2 billion and aggregate purchases from Chevron of $1 billion. Through DMSLP, we owned a 63% interest in Versado Gas Processors, LLC, a joint venture in which Chevron purchased and processed natural gas in the portion of the mature Permian Basin located in Southeast New Mexico. Versado was sold as part of the sale of DMSLP. We also had a contractual right to process substantially all of Chevron’s gas in North America and certain refinery services contracts with various Chevron refineries that, as a result of the sale of DMSLP, are no longer applicable to Dynegy. In addition, we hold a 50% ownership in a joint venture that holds our Black Mountain power generation facility in Nevada, Nevada Cogeneration Associates #2, in which Chevron is also an investor. During the year ended December 31, 2005, our portion of the net income from that joint venture was approximately $5 million.

Series B Exchange. In August 2003, we consummated a restructuring of the $1.5 billion in Series B Mandatorily Convertible Redeemable Preferred Stock, which we refer to as the “Series B preferred stock,” previously held by CUSA. Pursuant to the restructuring, which we refer to as the “Series B Exchange,” CUSA exchanged its Series B preferred stock for the following:

• A $225 million cash payment;

• 8 million shares of our Series C preferred stock; and

• $225 million principal amount of our Junior Unsecured Subordinated Notes due 2016, which we refer to as the “junior notes.”

In the third quarter of 2004, we made $81 million in payments on the junior notes, and in October 2004 we paid approximately $125 million to redeem the outstanding balance of the junior notes.

The shares of Series C preferred stock generally are convertible into Class B common stock, at the holder’s option, at a price of $5.78 per share. The dividend rate on the Series C preferred stock is 5.5% per annum, payable in February and August of each year, but we may defer payments for up to 10 consecutive semi-annual periods. On each of February 11, 2004, August 11, 2004, February 11, 2005, August 11, 2005 and February 11, 2006 we made the semi-annual dividend payment on the Series C preferred stock of $11 million.

Additionally, we may cause the Series C preferred stock to be converted into shares of our Class B common stock at any time the closing price of our Class A common stock exceeds 130% of the conversion price then in effect for at least 20 trading days within any period of 30 consecutive trading days prior to such conversion.

As part of the Series B Exchange, we also renegotiated certain prepayment arrangements with Chevron such that Chevron returned to us approximately $40 million in pre-payments relating to our commodity purchase obligations and reduced our prepayment obligation from one month to one week.

For a complete description of the Series B Exchange, please read our Annual Report on Form 10-K for the year ended December 31, 2003, as amended, and the agreements we entered into with CUSA in connection with the Series B Exchange incorporated by reference therein.

Shareholder Agreement. In connection with the Series B Exchange, we and CUSA amended and restated our former shareholder agreement. This amended and restated shareholder agreement, among other things, contains changes to give effect to CUSA’s acquisition of the Series C preferred stock. Also, we agreed not to take any action that would cause CUSA’s ownership interest in our voting stock to exceed 40% of our outstanding voting securities. With respect to the Series C preferred stock, only shares of common stock issued upon an optional conversion by CUSA are counted in calculating the 40% threshold. CUSA also waived its pre-emptive rights in respect of any issuances of equity in connection with our August 2003 recapitalization and with respect to up to $250 million in issuances of qualified capital stock. CUSA continues to have pre-emptive rights with respect to other equity issuances we might make, including issuances of common stock pursuant to our employee benefit plans.

For a complete description of the amended and restated shareholder agreement, please read our Annual Report on Form 10-K for the year ended December 31, 2005, as amended, and the amended and restated shareholder agreement incorporated by reference therein.

Registration Rights Agreements. In connection with the Series B Exchange, we and CUSA amended and restated our former registration rights agreement and entered into two new registration rights agreements, one covering the Series C preferred stock and the other covering the junior notes. The former registration rights agreement was amended and restated to, among other things, cover the common stock issuable upon conversion of the Series C preferred stock. The two new registration rights agreements, among other things, grant the holders of Series C preferred stock specified resale rights, exchange offer rights and shelf registration rights for their securities. In May 2004 we filed, and in August 2004 the SEC declared effective, a registration statement on Form S-3 covering the resale of the Series C preferred stock and the junior notes issued in connection with the Series B Exchange. As noted above, in October 2004 we redeemed all outstanding junior notes, and the registration rights agreement relating to those notes expired by its terms.

Conflicts of Interest. Chevron, one of the world’s largest integrated energy companies, is involved in every aspect of the energy industry, from oil and gas exploration and production to transportation, refining and retail marketing, as well as chemicals manufacturing and sales and power production. Chevron’s present operations and its pursuit of future opportunities may overlap with our operations and strategy. There are no contractual limits on Chevron’s ability to compete with us. Conflicts of interest may arise between Chevron, its affiliates and us as we each pursue business opportunities.

We have procedures in place designed to mitigate any such conflicts of interest. Under Article IV, Section E(3) of our Audit and Compliance Committee charter, our Audit and Compliance Committee is responsible for reviewing and approving potential conflicts of interest between or among affiliated shareholders, management and Dynegy. The Audit and Compliance Committee delegates its authority on these matters to the full Board from time to time, and it did so in connection with the Series B Exchange. Additionally, for transactions involving Chevron, the representatives of Chevron serving on our Board are recused from the Board’s decision-making process with respect to the consummation of any such transactions. All of our directors, including the representatives of Chevron serving on our Board, are subject to our Code of Business Conduct and Ethics, which requires disclosure to the Board of potential conflicts of interest and recusal from deliberation and voting on matters that could raise an actual or potential conflict of interest.

Transactions with Directors and Executive Officers

General. We engaged in certain transactions with directors and executive officers or their immediate family members in 2005. Following is a description of these transactions.

Dynegy Inc. Short-Term Executive Stock Purchase Loan Program. In July 2001, we established the Dynegy Inc. Short-Term Executive Stock Purchase Loan Program pursuant to which eligible employees, including certain of our officers, were loaned funds to acquire Class A common stock through market purchases. We terminated this program as it related to new loans effective June 30, 2002. The notes bear interest at the greater of 5% or the applicable federal rate as of the loan date, are full recourse to the participants and matured on December 19, 2004. At December 31, 2005, an aggregate of approximately $8 million, which included accrued and unpaid interest, was owed to us under this program. We are actively pursuing, through litigation and otherwise, repayment of the past due amounts owed to us under these loans.

Alec G. Dreyer Relocation Loan. In connection with our February 2000 merger with Illinova Corporation and the execution of his employment agreement with us, Mr. Dreyer, our former Executive Vice President, Generation, received a $300,000 loan from us to assist him with his relocation to Houston. The loan bore interest at 6.5% per annum, was secured by bonus payments payable to Mr. Dreyer following the date thereof and was payable in five annual installments of $60,000 through March 1, 2005. Mr. Dreyer received bonus payments for 2001, 2002, 2003 and 2004 in sufficient amounts to satisfy the then owing annual installments under this loan, and the final installment was paid in March 2005. There are currently no amounts outstanding under this loan. The highest amount outstanding under this loan in 2005, including accrued interest, was $63,900.

Advancement of Legal Expenses. The Board of Directors previously approved, and during 2005 we advanced, amounts to cover the legal expenses of some of our current and former directors and executive officers relating to their involvement in investigations and litigation matters affecting us. For 2005, payments of approximately $171,000 in the aggregate were made with respect to the legal expenses incurred by Messrs. Bayless, Stewart and Mr. Dienstbier, who retired from our Board of Directors in May 2004.

Fees Paid to Law Firm of Immediate Family Member of Barry J. Galt. We have engaged the law firm of Johnson Deluca Kennedy & Kurisky, P.C. (formerly Johnson Finkel Deluca & Kennedy, P.C.) to provide legal services for us in connection with certain collections claims and other routine matters, including claims involving breach of contract, personal injury and property damage. During 2004 and 2005, we paid Johnson Deluca fees of approximately $444,000 and $540,800, respectively, in exchange for such services. Thomas D. Kennedy, a member of Johnson Deluca, is the son-in-law of Barry J. Galt, one of our retiring directors. Mr. Galt was not involved in our engagement of Johnson Deluca, which we initially engaged before Mr. Galt joined our Board, and has no direct or indirect material interest in these transactions. The Board considered this relationship in making an affirmative determination as to Mr. Galt’s independence under the applicable NYSE and SEC standards. Please see “Corporate Governance—Affirmative Determinations Regarding Director Independence and Other Matters” above for further discussion of the Board’s independence determinations.

SHAREHOLDER RETURN PERFORMANCE PRESENTATION

The performance graph shown on the following page was prepared by Research Data Group, Inc., using data from the Research Data Group’s database for use in this proxy statement. As required by applicable rules of the SEC, the graph was prepared based upon the following assumptions:

1. One hundred dollars ($100) was invested in Dynegy Class A common stock, the S&P 500, the 2005 Peer Group (as defined below) and the 2004 Peer Group (as defined below) on December 31, 2000.

2. The returns of each component company in the 2005 Peer Group and the 2004 Peer Group are weighed based on the market capitalization of such company at the beginning of the measurement period.

3. Dividends are reinvested on the ex-dividend dates.

Our peer group for the fiscal year ended December 31, 2005, which we refer to as the “2005 Peer Group,” comprises AES Corporation; Calpine Corporation; Duke Energy Corporation; El Paso Corporation; NRG Energy, Inc.; and Reliant Energy, Inc. Our peer group for the fiscal year ended December 31, 2004, which we refer to as the “2004 Peer Group,” comprises AES Corporation; Aquila Inc.; Calpine Corporation; Duke Energy Corporation, El Paso Corporation; NRG Energy, Inc. and Reliant Energy, Inc. (formerly Reliant Resources, Inc.).

For our 2005 Peer Group, we eliminated Aquila. We effected this change in an attempt to better reflect our current industry peers based on the comparability of each company’s size, asset profile and business focus and strategy. Our 2005 business operations were focused primarily in two areas of the energy industry: power generation and natural gas liquids. Because of our diverse business strategy, our 2005 Peer Group includes companies that compete with us in one or more lines of business.

4/14/2005 Proxy Information

We engaged in certain transactions with directors and executive officers or their immediate family members in 2004. Following is a description of these transactions.

4/14/2005

Dynegy Inc. Short-Term Executive Stock Purchase Loan Program. In July 2001, we established the Dynegy Inc. Short-Term Executive Stock Purchase Loan Program pursuant to which eligible employees, including certain of our officers, were loaned funds to acquire Class A common stock through market purchases. We terminated this program as it related to new loans effective June 30, 2002. The notes bear interest at the greater of 5% or the applicable federal rate as of the loan date, are full recourse to the participants and matured on December 19, 2004. At December 31, 2004, an aggregate of approximately $8 million, which included accrued and unpaid interest, was owed to us under this program. We are actively pursuing, through litigation and otherwise, repayment of the past due amounts owed to us under these loans.

Alec G. Dreyer Relocation Loan. In connection with our February 2000 merger with Illinova and the execution of his employment agreement with us, Mr. Dreyer received a $300,000 loan from us to assist him with his relocation to Houston. The loan bore interest at 6.5% per annum, was secured by bonus payments payable to Mr. Dreyer following the date thereof and was payable in five annual installments of $60,000 through March 1, 2005. Mr. Dreyer received bonus payments for 2001, 2002, 2003 and 2004 in sufficient amounts to satisfy the then owing annual installments under this loan, and the final installment was paid in March 2005. There are currently no amounts outstanding under this loan. The highest amount outstanding under this loan in 2004, including accrued interest, was $127,800. See “Summary Compensation Table” above for further discussion.

Advancement of Legal Expenses. The Board of Directors previously approved, and during 2004 we advanced, amounts to cover the legal expenses of some of our current and former directors and executive officers relating to their involvement in investigations and litigation matters affecting us. For 2004, payments of approximately $330,000 in the aggregate were made with respect to the legal expenses incurred by Messrs. Bayless and Stewart and Mr. Dienstbier, who retired from our Board of Directors in May 2004.

Fees Paid to Law Firm of Immediate Family Member of Barry J. Galt. We have engaged the law firm of Johnson Deluca Kennedy & Kurisky, P.C. (formerly Johnson Finkel Deluca & Kennedy, P.C.) to provide legal services for us in connection with certain collections claims and other routine matters, including claims involving breach of contract, personal injury and property damage. During 2003 and 2004, we paid Johnson Deluca fees of approximately $280,000 and $444,000, respectively, in exchange for such services. Thomas D. Kennedy, a member of Johnson Deluca, is the son-in-law of Barry J. Galt, one of our directors. Mr. Galt was not involved in our engagement of Johnson Deluca, which we initially engaged before Mr. Galt joined our Board, and has no direct or indirect material interest in these transactions. The Board considered this relationship in making an affirmative determination as to Mr. Galt’s independence under the applicable NYSE and SEC standards.

Mr. Wilcox was named President of ChevronTexaco Exploration and Production Company and Vice President of ChevronTexaco Corporation in January 2002. We conduct a significant amount of business with ChevronTexaco and its affiliates. For 2004, ChevronTexaco was the only customer that accounted for 10% or more of our consolidated revenues (17%) and consolidated cost of sales (22%). During 2004, our marketing business recognized net purchases from ChevronTexaco of $23 million. Our other businesses, primarily natural gas liquids, recognized aggregate sales to ChevronTexaco of $1.1 billion and aggregate purchases from ChevronTexaco of $1.1 billion. Following are descriptions of our business relationships with ChevronTexaco and its affiliates.

Mr. Sheppard has served as Assistant Treasurer of ChevronTexaco Corp. since October 2001. We conduct a significant amount of business with ChevronTexaco and its affiliates. For 2004, ChevronTexaco was the only customer that accounted for 10% or more of our consolidated revenues (17%) and consolidated cost of sales (22%). During 2004, our marketing business recognized net purchases from ChevronTexaco of $23 million. Our other businesses, primarily natural gas liquids, recognized aggregate sales to ChevronTexaco of $1.1 billion and aggregate purchases from ChevronTexaco of $1.1 billion. Following are descriptions of our business relationships with ChevronTexaco and its affiliates.

4/8/2004 Proxy Information

Daniel L. Dienstbier served as interim Chief Executive Officer of Dynegy from May 2002 until October 2002 and as President of Northern Natural Gas Company, which was a Dynegy subsidiary, from February 2002 until May 2002.

ChevronTexaco Corporation

General. We conduct a significant amount of business with ChevronTexaco and its affiliates. For 2003, ChevronTexaco was the only customer that accounted for 10% or more of our consolidated revenues (16%) and consolidated cost of sales (22%). During 2003, our marketing business recognized net purchases from ChevronTexaco of $300 million. Our other businesses, primarily natural gas liquids, recognized aggregate sales to ChevronTexaco of $900 million and aggregate purchases from ChevronTexaco of $800 million. Following are descriptions of our business relationships with ChevronTexaco and its affiliates.

Natural Gas Marketing. In connection with our ongoing exit from third-party risk management aspects of the marketing and trading business, we agreed with ChevronTexaco in early 2003 to terminate our natural gas purchase agreement and to provide for an orderly transition of responsibility for marketing ChevronTexaco’s domestic natural gas production. This agreement did not affect our contractual agreements with ChevronTexaco relative to its U.S. natural gas processing and the marketing of its domestic natural gas liquids, which are further described below. The cancellation of the agreement was effective January 1, 2003. In connection with the termination of the natural gas purchase agreement, we paid $13 million to ChevronTexaco. As part of the transition, we also provided scheduling, accounting and reporting services to ChevronTexaco through June 2003. In connection with the termination of the transition agreement, ChevronTexaco paid us $13.5 million in September 2003 as final settlement for the net payable and receivable balances.

Natural Gas Liquids. We also engage in other transactions with ChevronTexaco, including purchases and sales of natural gas and natural gas liquids. We also own a 63% interest in Versado Gas Processors, LLC, a joint venture with ChevronTexaco which purchases and processes natural gas in the portion of the mature Permian Basin located in Southeast New Mexico. We have a contractual right to process substantially all of ChevronTexaco’s gas in North America. During 2003, ChevronTexaco gas accounted for 46% of the total volume of gas we processed. We also have refinery services contracts with various ChevronTexaco refineries that require us to obtain, on behalf of the refineries, natural gas liquids feedstocks that each refinery requires on a daily basis and which allow us to market excess liquefied petroleum gas produced during the refining process. These agreements extend through August 2006. In 2003, approximately 32% of our natural gas liquids sales were made to ChevronTexaco or one of its affiliates pursuant to these refinery agreements and pursuant to an agreement we have with Chevron Phillips Chemical Company. In the latter agreement, we supply a significant portion of Chevron Phillips Chemical’s natural gas liquids feedstock needs in the Texas Gulf Coast area.

Additionally, we have the right to purchase or market substantially all of ChevronTexaco’s natural gas liquids pursuant to a Master Natural Gas Liquids Purchase Agreement that extends through August 31, 2006. In 2003, approximately 37% of the natural gas liquids we purchased for our wholesale propane and natural gas liquids marketing businesses was purchased from ChervonTexaco and its affiliates.

We believe that the transactions with ChevronTexaco and its affiliates discussed above were executed on terms that are fair and reasonable.

Equity Investments. We hold investments in joint ventures in which ChevronTexaco or its affiliates are also investors. These investments include a 22.9% ownership interest in Venice Energy Services Company, L.L.C., which holds a pipeline gathering system, a processing plant, a fractionator and an underground natural gas liquids storage facility in Louisiana; and a 50% ownership interest in Nevada Cogeneration Associates #2, which holds our Black Mountain power generation facility in Nevada. During the year ended December 31, 2003, our portion of the net income from these joint ventures was approximately $10 million.

Series B Exchange. In August 2003, we consummated a restructuring of the $1.5 billion in Series B Mandatorily Convertible Redeemable Preferred Stock, which we refer to as the Series B preferred stock, previously held by CUSA. Pursuant to the restructuring, which we refer to as the Series B Exchange, CUSA exchanged its Series B preferred stock for the following:

• a $225 million cash payment;

• $225 million principal amount of our Junior Unsecured Subordinated Notes due 2016, which we refer to as the junior notes; and

• 8 million shares of our Series C Convertible Preferred Stock due 2033 (liquidation preference of $50 per share), which we refer to as the Series C preferred stock.

The junior notes bear interest at a rate of 9.00% per annum during the first two years and a rate of 13.75% per annum thereafter, in each case compounded semi-annually and, at our option, payable in kind by issuance of additional junior notes. The junior notes are subject to mandatory and optional prepayment provisions. In September 2003, we used proceeds of approximately $2 million from the sales of certain non-strategic generation investments to redeem a portion of the junior notes as a result of which capacity under our revolving credit facility was reduced by approximately $2 million. Further, if we consummate the agreed sale of Illinois Power Company to Ameren Corp., we must use 75% of the net cash proceeds to prepay the junior notes. Please read our Annual Report on Form 10-K for the year ended December 31, 2003 for a discussion of our obligations to prepay the junior notes with the proceeds from asset sales, including the agreed sale of Illinois Power to Ameren Corp.

Subject to shareholder approval, the shares of Series C preferred stock generally are convertible into Class B common stock, at the holder’s option, at a price of $5.78 per share. If we have not obtained shareholder approval of the convertibility of the Series C preferred stock before August 11, 2004, the dividend rate on the Series C preferred stock will increase from 5.5% to 10% per annum until such time as we obtain shareholder approval or it is determined that such approval is not required under applicable regulations. These dividends are payable in February and August of each year, but we may defer payments for up to 10 consecutive semi-annual periods. On February 11, 2004, we made the first semi-annual dividend payment on the Series C preferred stock of $11 million, as a result of which capacity under our revolving credit facility was reduced by $11 million. Please read Proposal 2—“Approval of the Convertibility of our Series C Preferred Stock” for a discussion of the requirement that our shareholders approve the convertibility of the Series C preferred stock.

Additionally, following the third anniversary of the Lock-Up Period (as defined below), we may cause the Series C preferred stock to be converted into shares of our Class B common stock at any time the closing price of our Class A common stock exceeds 130% of the conversion price then in effect for at least 20 trading days within any period of 30 consecutive trading days prior to such conversion, provided that the shareholder approval described above is obtained. For purposes of the preceding sentence, the “Lock-Up Period” means the earlier of (a) February 11, 2005 and (b) the date 120 days after the consummation of one or more public or private sales of our qualified capital stock resulting in gross proceeds to us of at least $250 million. At any time after the tenth anniversary of the closing of the Series B Exchange, we may redeem all outstanding shares of Series C preferred stock for a redemption price equal to $50 per share plus accrued and unpaid dividends.

Further, until the earlier of (a) February 11, 2005 and (b) 120 days after one or more public or private sales of our qualified capital stock resulting in gross proceeds to us of at least $250 million, CUSA may not transfer its shares of Series C preferred stock, except to its affiliates.

As part of the Series B Exchange, we also renegotiated certain prepayment arrangements with ChevronTexaco such that ChevronTexaco returned to us approximately $40 million in pre-payments relating to our commodity purchase obligations and reduced our prepayment obligation from one month to one week.

For a complete description of the Series B Exchange, please read our Annual Report on Form 10-K for the year ended December 31, 2003 and the agreements we entered into with CUSA in connection with the Series B Exchange incorporated by reference therein.

Shareholder Agreement. In connection with the Series B Exchange, we and CUSA amended and restated our existing shareholder agreement. This amended and restated shareholder agreement, among other things, contains changes to give effect to CUSA’s acquisition of the Series C preferred stock. Also, we agreed not to take any action that would cause CUSA’s ownership interest in our voting stock to exceed 40% of our outstanding voting securities. With respect to the Series C preferred stock, only shares of common stock issued upon an optional conversion by CUSA are counted in calculating the 40% threshold. CUSA also waived its preemptive rights in respect of any issuances of equity in connection with our August 2003 recapitalization and with respect to up to $250 million in issuances of qualified capital stock. CUSA continues to have preemptive rights with respect to other equity issuances we might make, including issuances of common stock pursuant to our employee benefit plans. Please read Proposal 3—“Approval of Potential Issuance of Class B Common Stock under Preemptive Rights Granted to CUSA.”

For a complete description of the amended and restated shareholder agreement, please read our Annual Report on Form 10-K for the year ended December 31, 2003 and the amended and restated shareholder agreement incorporated by reference therein.

Registration Rights Agreements. In connection with the Series B Exchange, we and CUSA amended and restated our existing registration rights agreement and entered into two new registration rights agreements. The existing registration rights agreement was amended and restated to, among other things, cover the common stock issuable upon conversion of the Series C preferred stock and restricts CUSA’s ability to exercise its registration rights for a period of time following the Series B Exchange. The two new registration rights agreements, among other things, grant the holders of Series C preferred stock and junior notes specified resale rights, exchange offer rights and shelf registration rights for their securities.

Conflicts of Interest. ChevronTexaco, one of the world’s largest integrated energy companies, is involved in every aspect of the energy industry, from oil and gas exploration and production to transportation, refining and retail marketing, as well as chemicals manufacturing and sales and power production. ChevronTexaco’s present operations and its pursuit of future opportunities may overlap with our operations and strategy. There are no contractual limits on ChevronTexaco’s ability to compete with us. Conflicts of interest may arise between ChevronTexaco, its affiliates and us as we each pursue business opportunities.

We have procedures in place designed to mitigate any such conflicts of interest. Under Article IV, Section E(3) of our Audit and Compliance Committee charter, our Audit and Compliance Committee is responsible for reviewing and approving potential conflicts of interest between or among affiliated shareholders, management and Dynegy. The Audit and Compliance Committee delegates its authority on these matters to the full Board from time to time, and it did so in connection with the Series B Exchange. Additionally, for transactions involving ChevronTexaco, the representatives of ChevronTexaco serving on our Board are recused from the Board’s decision-making process with respect to the consummation of any such transactions. All of our directors, including the representatives of ChevronTexaco serving on our Board, are subject to our Code of Business Conduct and Ethics, which requires disclosure to the Board of potential conflicts of interest and recusal from deliberation and voting on matters that could raise an actual or potential conflict of interest.

Transactions with Directors and Executive Officers

General. We engaged in certain transactions with directors and executive officers or their immediate family members in 2003. Following is a description of these transactions.

Dynegy Inc. Short-Term Executive Stock Purchase Loan Program. In July 2001, we established the Dynegy Inc. Short-Term Executive Stock Purchase Loan Program pursuant to which eligible employees, including certain of our officers, were loaned funds to acquire Class A common stock through market purchases. We terminated this program as it related to new loans effective June 30, 2002. The notes bear interest at the greater of 5% or the applicable federal rate as of the loan date, are full recourse to the participants and mature on December 19, 2004. At December 31, 2003, an aggregate of approximately $8 million, which included accrued and unpaid interest, was owed to us under this program.

In connection with our October 2002 restructuring, we offered to forgive 50% of the outstanding balance under loans established through this program effective as of January 15, 2003, April 15, 2003, July 15, 2003 or October 15, 2003, at the particular employee’s election, in exchange for the payment of related federal income taxes by the particular employee. In order to provide incentives to those employees with outstanding loans under this program to remain with us post-restructuring, we agreed to forgive one-half of the remaining balance of each of their loans on or before December 31, 2003 and to forgive the then remaining balance under each such loan on or before December 19, 2004, subject to achievement of specified employment objectives. For employees terminated as part of the restructuring, the remaining balance outstanding under each loan matures and is due and payable on December 19, 2004. Interest rates charged under these loans remain unchanged.

Two of our Named Executive Officers, R. Blake Young and Alec G. Dreyer, had outstanding loans under this program during 2003. In September 2003, Mr. Young paid the full amount of $642,536 outstanding under his loan, which included accrued interest. On January 15, 2003, we forgave 50% of the $166,720 balance outstanding under Mr. Dreyer’s loan, including accrued interest, and on October 15, 2003, we forgave the remaining balance. In connection with this forgiveness, which is permitted by Section 402 of the Sarbanes-Oxley Act, Mr. Dreyer remitted $50,998 for payment of his resulting federal income tax obligations and executed a release relating to any claims he might have under the loan program. The loan amounts set forth above in this paragraph with respect to Messrs. Dreyer and Young represent the largest aggregate amount of such indebtedness outstanding during 2003.

Alec G. Dreyer Relocation Loan. In connection with our February 2000 merger with Illinova and the execution of his employment agreement with us, Mr. Dreyer received a $300,000 loan from us to assist him with his relocation to Houston. The loan bears interest at 6.5% per annum, is secured by bonus payments payable to Mr. Dreyer following the date thereof and is payable in five annual installments of $60,000 through March 1, 2005 or, if earlier, 10 days after the termination of his employment. Mr. Dreyer received bonus payments for 2001, 2002, 2003 and 2004 in sufficient amounts to satisfy the then owing annual installments under this loan. The highest amount outstanding under this loan in 2003, including accrued interest, was $180,000; the current balance is approximately $60,000. See “Summary Compensation Table” above for further discussion.

Advancement of Legal Expenses. The Board of Directors previously approved, and during 2003 we advanced, amounts to cover the legal expenses of some of our current and former directors and executive officers relating to their involvement in investigations and litigation matters affecting us. For 2003, payments of approximately $300,000 in the aggregate were made with respect to the legal expenses incurred by Messrs. Bayless, Dienstbier, Stewart and Watson and J. Otis Winters, who served as a director from January – May 2003, and payments totaling approximately $26,416 were made to cover legal expenses incurred by Stephen Furbacher, one of our Executive Vice Presidents.

Fees Paid to Law Firm of Immediate Family Member of Barry J. Galt. We have engaged the law firm of Johnson Finkel Deluca & Kennedy, P.C. to provide legal services for us in connection with certain collections claims and other routine matters, including claims involving breach of contract, personal injury and property damage. During 2003, we paid Johnson Finkel fees of approximately $280,000 in exchange for such services. Thomas D. Kennedy, a member of Johnson Finkel, is the son-in-law of Barry J. Galt, one of our directors. Mr. Galt was not involved in our engagement of Johnson Finkel, which we initially engaged before Mr. Galt joined our Board, and has no direct or indirect material interest in these transactions. The Board considered this relationship in making an affirmative determination as to Mr. Galt’s independence under the applicable NYSE and SEC standards. Please see “Corporate Governance—Affirmative Determinations Regarding Director Independence and Other Matters” above for further discussion of the Board’s independence determinations.

4/25/2003 Proxy Information

Transactions with Directors and Executive Officers

We engaged in certain transactions with directors and executive officers in 2002. Following is a description of these transactions, including loans made to executive officers for the purchase of our Class A common stock pursuant to the Dynegy Inc. Short-Term Executive Stock Purchase Loan Program and in a December 2001 private placement.

Dynegy Inc. Short-Term Executive Stock Purchase Loan Program. In July 2001, we established the Dynegy Inc. Short-Term Executive Stock Purchase Loan Program pursuant to which eligible officers were loaned funds to acquire our Class A common stock through open market purchases. We terminated this program as it relates to new loans effective June 30, 2002. The notes bear interest at the greater of five percent or the applicable federal rate as of the loan date, are full recourse to the participants and mature on December 19, 2004. At December 31, 2002, an aggregate of approximately $12 million, which included accrued and unpaid interest, was owed to us under this program.

In connection with our organizational restructuring, we offered to forgive 50 percent of the outstanding balance under each loan established through the program to non-executive officers effective as of January 15, 2003, April 15, 2003, July 15, 2003 or October 15, 2003, at the officers' election. In order to provide incentives to those employees with outstanding loans under this program to remain with us post-restructuring, we have agreed to forgive one-half of the remaining balance of each of their loans on or before December 31, 2003 and to forgive the then-remaining balance under each such loan on or before December 19, 2004, subject to the participant's achievement of specified employment objectives. For employees terminated as part of the restructuring, the remaining balance outstanding under each loan matures and is due and payable on December 19, 2004. Interest rates charged under these loans remain unchanged.

Two of our former executive officers--Deborah A. Fiorito and Lawrence A. McLernon--had outstanding loans under this program during 2002. In connection with their departures from Dynegy in September 2002, these former executive officers' outstanding loans under this program were extended to September 2007. At December 31, 2002, the amounts outstanding under their respective loans under this program, including accrued interest, were $445,621 and $1,571,637. The highest amounts outstanding for each such loan during 2002, including accrued interest, were $445,621 and $1,595,165, respectively.

A third former executive officer, Hugh A. Tarpley, has an outstanding loan under this program that matures on December 19, 2004. At December 31, 2002, the amount outstanding under his loan, including accrued interest, was $126,887. The highest amount outstanding under his loan during 2002, including accrued interest, was $260,505.

December 2001 Equity Purchases. In December 2001, eight former executive officers and one current executive officer purchased Class A common stock from us in a private placement pursuant to Section 4(2) of the Securities Act of 1933. These executives received loans totaling approximately $24,000,000 from us to purchase the common stock at a price of $19.75 per share, the same price as the net proceeds per share received by us from a concurrent public offering. The loans initially bore interest at 3.25 percent per annum and are full recourse to the borrowers.

Alec G. Dreyer Relocation Loan. In connection with our merger with Illinova and the execution of his employment agreement with us, Mr. Dreyer received a $300,000 loan from us to assist him with his relocation to Houston. The loan bears interest at 6.5% per annum, is secured by bonus payments payable to Mr. Dreyer following the date thereof and is payable in five annual installments of $60,000 through March 1, 2005 or, if earlier, 10 days after the termination of his employment. Mr. Dreyer received bonus payments for 2000, 2001 and 2002 in sufficient amounts to satisfy the then owing annual installments under this loan. The highest amount outstanding under this loan in 2002, including accrued interest, was $240,000; the current balance is approximately $120,000.

Advancement of Legal Expenses. The Board of Directors previously approved the advancement of legal expenses to some of our former directors and executive officers relating to their involvement in various investigations and litigation matters affecting Dynegy. For 2002, payments for Mr. Watson and Patricia Eckert, a former director, were in amounts that did not exceed $60,000, while payments for Mr. Doty totaled approximately $181,000.

Special Director Payments to J. Otis Winters and Charles E. Bayless. In November 2002, we paid approximately $480,000 and $315,000, respectively, in additional director fees to Messrs. Winters and Bayless. The additional fees were paid in consideration of the unusual additional duties performed by Messrs. Winters and Bayless in carrying out their respective roles as our Lead Director and Audit and Compliance Committee Chairman, respectively. The Board requested that Messrs. Winters and Bayless assume these duties in consideration of their knowledge and expertise in such matters and the challenges facing management during 2002 and late 2001. These additional duties included oversight of and guidance to management in connection with various lawsuits and governmental investigations. We believe that the fees paid are at or below those that would have been paid to other persons performing similar services.