January 18, 1999




George W. Miraben
Illinova Corporation
500 South 27th Street
Decatur, Illinois 62521

Dear Mr. Miraben:

This  letter  is  to  confirm  the  terms  of  your   employment  with  Illinova
Corporation.

1.   Salary.  Your  annual base  salary  will be  $325,000,  subject to periodic
     review to determine whether an increase is ------ appropriate.

2.   Bonus.  You will be  entitled to  participate  in the  Executive  Incentive
     Compensation  Plan. Your bonus under the Executive  Incentive  Compensation
     Plan will be $130,000  (which is 40% of your salary) if the target level of
     performance is achieved,  and your bonus will be $195,000  (which is 60% of
     your salary) at the maximum achievement level.

3.   Long-Term  Incentive Award. For 1999, your entire long-term incentive award
     will be in the form of a stock option,  the terms of which are reflected in
     the enclosed  stock option  agreement.  After 1999,  50% of your  long-term
     incentive award will be made as a stock option grant, and the remaining 50%
     will be made as performance share grant.

4.   Supplemental   Pension.   In  lieu  of   participation   in  the  Company's
     Supplemental Executive Retirement Plan, you will be covered by the enclosed
     Supplemental Pension Plan.

5.   Retention Agreement. You will be covered by the enclosed Employee Retention
     Agreement, which provides benefits in the event of a Change in Control.

6.   Loan.  To  compensate  you for amount you have  foregone by leaving  Tucson
     Electric Power Company to join Illinova  Corporation,  you will be entitled
     to a loan from the Company of $250,000. The terms of the loan are reflected
     in the enclosed letter and promissory note.

7.   Lump Sum Death Benefits.  If your death should occur while you are employed
     by the Company, your surviving spouse (or, if she does not survive you, the
     beneficiary designated by you) will be entitled to a lump sum death benefit
     of two times the amount of your salary  plus your target  bonus at the time
     of your  death.  In lieu of  receiving  this lump sum death  benefit,  your
     surviving  spouse may elect to receive the surviving  spouse  benefit under
     the  Supplemental  Pension Plan. (If your spouse does not survive you, only
     the death benefit described in this paragraph is payable.  The Supplemental
     Pension Plan does not provide for other survivor benefits.)

8.   Termination.  You may resign  from the  Company at any time for any reason,
     and the Board of Directors of the Company may terminate your  employment at
     any time for any reason. At the time of your termination of employment, you
     (or  your  estate)  will  be  entitled  to the  compensation  and  benefits
     specified in this letter and the enclosed material, as well as to the other
     benefits  you earned  while  employed  by the  Company,  to the extent such
     compensation and benefits are payable on your termination of employment.

         If the  foregoing  reflects  your  understanding  of the  terms of your
agreement  with the Company,  please so indicate by signing and returning a copy
of this  letter  to the  undersigned,  along  with a signed  copy of each of the
enclosures.

                                                     Very truly yours,

                                                     ILLINOVA CORPORATION



                                                     ---------------------------
                                                     Charles E. Bayless

Accepted and agreed to this
18th Day of January, 1999



-------------------------
    George W. Miraben


<PAGE>


George W. Miraben
Illinova Corporation
500 South 27th Street
Decatur, Illinois 62521

Dear Mr. Miraben:

This letter is to confirm our verbal  agreement that Illinova  Corporation  (the
"Company")  will  loan  you  $250,000.00.  The  Company  is  making  the loan to
compensate  you for amounts you have foregone by leaving  Tucson  Electric Power
Company to join the Company. As a condition of receiving the loan, you must sign
and return one copy of this letter and the enclosed promissory note.

As indicated in the  promissory  note,  20% of the principal  amount of the loan
will be forgiven on each of the first through fifth anniversaries of February 2,
1999, if you are employed by the Company on such  anniversary.  Also, as of each
such  anniversary,  the entire  amount of  interest  accrued on the  outstanding
principal during the prior one-year period shall be forgiven.

As of each  anniversary,  the amount of the forgiveness of principal or interest
on that  date  will  be  taxable  income  to you as of each  date on  which  the
forgiveness  occurs. You will become entitled to a tax gross-up payment from the
Company in an amount equal to the aggregate of the additional Federal, state and
local income taxes payable by you by reason of the  forgiveness  of the interest
amount (but not by reason of the  forgiveness of the principal  amount),  and by
reason of your receipt of the gross-up payment.

If, prior to February 2, 2004,  your employment is terminated by the Company for
reasons  other than Cause (as  defined in the  attached  promissory  note),  the
amount of any  outstanding  balance of principal  and interest will be forgiven,
and you will become entitled to a tax gross-up payment in an amount equal to the
aggregate of the additional Federal, state and local income taxes payable by you
by reason of the  forgiveness  of the interest  amount (but not by reason of the
forgiveness  of the  principal  amount),  and by reason of your  receipt  of the
gross-up payment.  However,  if your employment is terminated (i) by the Company
for Cause, or (ii) by reason of your death, disability, or voluntary resignation
then the amount of any outstanding balance of principal and interest will become
immediately due and payable. Furthermore, if termination of employment occurs at
any time without  cause or with good reason,  as those terms are defined in your
Employee Retention  Agreement (whether or not such agreement is then in effect),
while there is a remaining  balance under this agreement,  then such outstanding
balance  of  principal  and  interest  shall be  forgiven,  and you will  become
entitled to a tax  gross-up  payment  from the Company in an amount equal to the
aggregate of the additional Federal, state and local income taxes payable by you
by reason of the  forgiveness  of the interest  amount (but not by reason of the
forgiveness  of the  principal  amount),  and by reason of your  receipt  of the
gross-up payment. After termination of your employment,  if amounts are due from
you to repay the loan,  and such  amounts  are  otherwise  unpaid,  the  Company
retains the right to offset such liability  against amounts otherwise due to you
from the Company.

If the foregoing reflects your understanding of the terms of your agreement with
the Company,  please so indicate by signing and  returning a copy of this letter
to the undersigned, along with a signed copy of each of the enclosures.

                                                     Very truly yours,

                                                     Illinova Corporation


                                                     By:________________________
                                                        Charles E. Bayless


Accepted and agreed to this
18th day of January, 1999.


----------------------------
George W. Miraben



<PAGE>


                                 PROMISSORY NOTE

                                                                   $250,000.00


                                                               February 2, 1999
                                                               Decatur, Illinois


FOR VALUE  RECEIVED,  the  undersigned,  George W. Miraben,  an individual  (the
"Employee"),  promises to pay to the order of Illinova Corporation,  an Illinois
corporation (the "Company"), on the date on which the Employee's employment with
the Company  terminates (the "Maturity Date"),  the principal sum of $250,000.00
and any accrued  interest on this Note,  subject to the  provisions of this Note
relating to forgiveness of such obligations.

This Note evidences obligations in connection with a loan made by the Company to
the Employee as part of the inducement to the Employee to become employed by the
Company.

The unpaid  principal  amount of this Note from time to time  outstanding  shall
bear  interest at a rate per annum  (based upon a 365/366 day year) equal to the
applicable  Federal rate as of February 2, 1999, as  determined  for purposes of
section  1274(d) of the Internal  Revenue Code of 1986,  as amended,  compounded
annually.  After the Maturity Date, any unpaid and unforgiven  principal  amount
and  accrued  unforgiven  interest on the unpaid  principal  amount of this Note
shall be payable on demand.

As of each of the first five one-year  anniversaries of February 2, 1999, if the
Employee  is employed by the  Company on such  anniversary,  an amount  equal to
$50,000.00 of the principal amount due under this Note, together with the amount
of interest  that has accrued with respect to the entire  unpaid  principal  and
interest  amount  since the  preceding  February  2, shall be  forgiven.  If the
Employee's  employment with the Company  terminates  prior to December 31, 1999,
and such  termination  is the  result of being  discharged  by the  Company  for
reasons  other  than  Cause,  any  remaining  principal  and  interest  shall be
forgiven.  If the Employee's employment with the Company terminates (i) prior to
December  31, 1999 by the Company for Cause,  (ii) prior to December 31, 1999 by
reason of the Employee's death,  disability,  voluntary resignation or any other
reason,  except by the Company other than for Cause,  or (iii) for any reason on


                                       1
<PAGE>

or after  December 31, 1999,  then any remaining  principal  and interest  shall
become  due and  payable  on the date of such  termination  of  employment.  For
purposes of this Note, the term "Cause" shall mean:

     (a)  the  Employee's   conviction  of  any  criminal  violation   involving
     dishonesty, fraud, or breach of trust,

     (b) the Employee's  willful engagement in any misconduct in the performance
     of the Employee's duty that materially injures the Company,

     (c)  the  Employee's  performance  of  any  act  which,  if  known  to  the
     shareholders or regulators of the Company or any of its subsidiaries, would
     materially  and adversely  affect the business of the Company or any of its
     subsidiaries, or

     (d) the  Employee's  willful  and  substantial  nonperformance  of assigned
     duties;  provided that such nonperformance has continued more than ten days
     after the Company has given written  notice of such  nonperformance  and of
     its  intention  to  terminate  the  Employee's  employment  because of such
     nonperformance.

Notwithstanding  the foregoing,  if termination of employment occurs at any time
without  cause or with good  reason,  as those terms are  defined in  Employee's
Employee  Retention  Agreement,  while there is a remaining  balance  under this
promissory note, then such  outstanding  balance of principal and interest shall
be forgiven.

Subject to the other terms and conditions  hereof,  the Employee may voluntarily
prepay all or any portion of the unpaid and unforgiven  principal amount of this
Note from time to time  outstanding  and any  accrued  and  unforgiven  interest
thereon, without premium or penalty.

All payment of principal of and interest on this Note shall be payable in lawful
currency  of the United  States of America at  Decatur,  Illinois  or such other
place as the Company shall  designate to the Employee in writing,  in cash or by
check.  If  payment  hereunder  falls due on a day  which is either a  Saturday,
Sunday or any other day on which banks in Decatur,  Illinois  are not  generally
open for business to the public (i.e., not a "Business Day"), then such due date
shall be extended to the  immediately  succeeding  Business Day, and  additional
interest shall accrue and be payable for the period of any such extension.

                                       2
<PAGE>

The  Employee  agrees that if any of the  following  events of default  (each an
"Event of Default") shall occur and be continuing:

          (i) default in the  performance or observance of any other  agreements
          of the Employee contained herein, or
          (ii) the  institution of any bankruptcy,  insolvency,  receivership or
          similar proceeding relating to the Employee or his assets, and if such
          case or proceeding  is not commenced by the Employee,  it is consented
          to  or   acquiesced  in  by  the  Employee  or  remains  for  60  days
          undismissed;

then the Company may declare this Note and all unpaid and  unforgiven  principal
of and interest on this Note and all accrued  costs,  expenses and other amounts
under  this  Note  be due and  payable,  whereupon  all  unpaid  and  unforgiven
principal  of and  interest on this Note and all such  costs,  expense and other
amounts shall immediately become due and payable following such declaration.

The Employee hereby represents and warrants to the Company as of the date hereof
(i) that this Note is the legally valid and binding  obligation of the Employee,
enforceable against the Employee in accordance with its terms, and (ii) that the
execution,  delivery  and  performance  by the  Employee  of this  Note does not
conflict  with or contravene  (a) any law,  rule or regulation  binding upon the
Employee or affecting  any of the  employee's  assets,  (b) any provision of any
contract,  instrument or agreement binding upon the Employee or affecting any of
the Employee's assets, or (c) any writ, order,  judgment,  decree or decision of
any court or governmental instrumentality binding upon the Employee or affecting
any of the Employee's assets.

All notices,  certificates and other communications  ("Notices") hereunder shall
be in writing and may be either delivered  personally,  by nationally recognized
express  courier for  overnight  delivery,  or by  facsimile  (with  request for
assurance of receipt in a manner  appropriate with respect to  communications of
that  type,  provided  that  a  confirmation  copy  is  concurrently  sent  by a
nationally recognized express courier for overnight delivery) or mailed, postage
prepaid, by certified or registered mail, return receipt requested, addressed as
follows:

                                         If to the Company: Illinova Corporation
                                         500 South 27th Street


                                       3
<PAGE>

                                         Decatur, Illinois 62521
                                         Attention:  General Counsel

                                         If to the Employee: George W. Miraben
                                         Illinova Corporation
                                         500 South 27th Street
                                         Decatur, Illinois 62521

All  notices  hereunder  shall be in  writing  (including,  without  limitation,
facsimile  transmission)  and shall be sent to the Employee or the  Company,  as
appropriate,  at such party's  address shown above,  or at such other address as
such party may,  by written  notice  received by the other  party  hereto,  have
designated  as its or his address for such  purpose.  Notices  sent by facsimile
transmission  shall be deemed to have been given five days after the date mailed
by  registered  or certified  mail,  postage  prepaid;  and notices sent by hand
delivery shall be deemed to have been given when received.

This  Note has  been  made and  delivered  at  Decatur,  Illinois  and  shall be
construed in  accordance  with and governed by the internal laws of the State of
Illinois. Wherever possible, each provision of this Note shall be interpreted in
such  manner as to be  effective  and valid  under  applicable  law,  but if any
provision of this Note shall be prohibited by or invalid under  applicable  law,
such provision  shall be ineffective to the least extent of such  prohibition or
invalidity,  without  invalidating  the  remainder  of  such  provision  or  the
remaining provisions of this Note.

IN WITNESS  WHEREOF,  the Employee has caused this Note to be executed as of the
day and year first above written.





                                                     ---------------------------
                                                     George W. Miraben


                                       4
<PAGE>
                              ILLINOVA CORPORATION
                            SUPPLEMENTAL PENSION PLAN


         The Supplemental Pension Plan (the "Plan") is adopted effective January
18, 1999. The Plan is established and maintained by Illinova Corporation for the
purpose  of  providing   benefits  for  the  Participant,   George  W.  Miraben.
Accordingly,  Illinova  Corporation hereby adopts the Plan pursuant to the terms
and provisions set forth below:

                                    ARTICLE I

                                   Definitions

         Wherever  used  herein the  following  terms  shall  have the  meanings
hereinafter set forth:

         1.1 "Accrued Vested Benefit" of the Participant  shall have the meaning
determined in accordance with Section 3.1.

               1.2 "Board" means the Board of Directors of the Company.

               1.3 "Cause" means:

               (a)  the  Participant's  conviction  of  any  criminal  violation
               involving dishonesty, fraud, or breach of trust,

               (b)  the  Participant's  engagement  in  any  misconduct  in  the
               performance of the Participant's duty that materially injures the
               Company,

               (c) the  Participant's  performance of any act which, if known to
               the  shareholders  or  regulators  of the  Company  or any of its
               subsidiaries,  would materially and adversely affect the business
               of the Company or any of its subsidiaries, or

               (d) the Participant's  willful and substantial  nonperformance of
               assigned duties provided that such  nonperformance  has continued
               more than ten days after the Company has given written  notice of
               such  nonperformance  and  of  its  intention  to  terminate  the
               Participant's employment because of such nonperformance.

               1.4 "Code"  means the Internal  Revenue Code of 1986,  as amended
          from time to time, and any regulations relating thereto.



                                       1
<PAGE>




               1.5   "Company"   means   Illinova   Corporation,   an   Illinois
          corporation,  or, to the extent  provided in Section 7.8 any successor
          corporation or other entity  resulting from a merger or  consolidation
          into or with the Company or a transfer or sale of substantially all of
          the assets of the Company.

               1.6  "Earnings" of the  Participant  for any calendar month means
          the  Participant's  accrued  salary and bonus for that month and,  for
          this  purpose,  shall include any portion of such salary or bonus that
          would  otherwise have been includible for the month but is contributed
          by  the  Company  on  behalf  of  the  Participant   pursuant  to  the
          Participant's   election   under  a   "qualified   cash  or   deferred
          arrangement"  (as defined in section  401(k) of the Code) that is part
          of any qualified  profit sharing plan  maintained by the Company.  For
          purposes of this definition,  the Participant's bonus for any month is
          the bonus amount  earned under the  Executive  Incentive  Compensation
          Plan (or any other  successor  plan providing for an annual bonus) for
          that month. For each calendar year the annual bonus shall be deemed to
          be earned  evenly  during each of the months in which the  Participant
          was employed by the Company during that year.

               1.7  "Final   Average   Earnings"   means  the   average  of  the
          Participant's  monthly  Earnings  during the 36  consecutive  calendar
          months that  produces the highest  average and that occurs  during the
          last 60 calendar  months  ending with the calendar  month in which the
          Participant's   employment  with  the  Company   terminates.   If  the
          Participant  total employment  period with the Company is less than 36
          calendar  months,  his Final Average  Earnings  shall be determined by
          averaging  (on a calendar  month basis) the  Earnings  received by him
          from the Company during his entire period of employment.

               1.8 "Normal  Retirement Date" means the first day of the calendar
          month  coinciding  with  or  next  following  the  Participant's  65th
          birthday.

               1.9 "Participant" means George W. Miraben.

               1.10 "Plan" means the Illinova  Corporation  Supplemental Pension
          Plan.

                                       2
<PAGE>

               1.11 "Qualified Plan" means the Illinois Power Company Retirement
          Income Plan for Salaried Employees or any successor plan.

               1.12  "Qualified  Plan  Retirement  Benefit"  means  the  benefit
          payable to a Participant  pursuant to the Qualified  Plan by reason of
          his  termination  of employment  with the Company for any reason other
          than death.

               1.13 "Qualified Plan Surviving  Spouse Benefit" means the benefit
          payable to the  Surviving  Spouse of the  Participant  pursuant to the
          Qualified  Plan in the  event of the death of the  Participant  at any
          time prior to commencement of payment of his Qualified Plan Retirement
          Benefit.

               1.14 "Supplemental  Retirement Benefit" means the benefit payable
          to the  Participant  pursuant to the Plan by reason of his termination
          of employment with the Company for any reason other than death.

               1.15  "Surviving  Spouse"  means a person  who is  married to the
          Participant  at the date of his death and for at least one year  prior
          thereto.

               1.16  "Supplemental  Surviving  Spouse Benefit" means the benefit
          payable to a Surviving Spouse pursuant to the Plan.

               1.17  The  Participant's  "termination"  of  employment  with the
          Company shall be deemed to occur on the day immediately  following the
          date on which he is last employed by the Company.

               1.18 Words in the masculine gender shall include the feminine and
          the  singular  shall  include  the  plural,  and  vice  versa,  unless
          qualified  by the context.  Any headings  used herein are included for
          ease of reference only, and are not to be construed so as to alter the
          terms hereof.

                                   ARTICLE II
                                   Eligibility

         The Participant shall be eligible to receive a Supplemental  Retirement
Benefit to the extent  provided in Article III of the Plan.  If the  Participant
dies prior to commencement of payment of his Qualified Plan Retirement  Benefit,
the  Surviving  Spouse  of the  Participant  shall  be  eligible  to  receive  a
Supplemental  Surviving  Spouse Benefit to the extent  provided in Article IV of
the Plan.


                                       3
<PAGE>

                                   ARTICLE III
                         Supplemental Retirement Benefit

         3.1  Amount.  The  Supplemental   Retirement  Benefit  payable  to  the
Participant  in the form of a straight  life  annuity  over the  lifetime of the
Participant  only,  commencing on his Normal Retirement Date, shall be a monthly
amount equal to the excess of the amount  described  in  paragraph  (a) over the
amount described in paragraph (b) below:

                  (a)  the Participant's Accrued Vested Benefit;

                                      LESS

                  (b)  the  monthly  amount  of the  Qualified  Plan  Retirement
                  Benefit  actually   payable  to  the  Participant   under  the
                  Qualified Plan.

         The amounts  described  in (a) and (b) shall be computed as of the date
of termination of employment of the Participant  with the Company in the form of
a straight  life  annuity  payable  over the  lifetime of the  Participant  only
commencing on his Normal Retirement Date.

         The  Participant's  "Accrued  Vested  Benefit"  shall be  determined in
accordance with the following:

         (i) if the Participant's  employment with the Company  terminates prior
         to January  1, 2000 for any reason  except  circumstances  pursuant  to
         which benefits are owed under the Employee Retention  Agreement between
         the Company and  Participant,  whether or not such agreement is then in
         effect  ("Retention  Agreement"),  his Accrued  Vested Benefit shall be
         zero, and he shall not be entitled to any benefits under the Plan;

         (ii) if the Participant's employment with the Company terminates before
         December  31,  1999 as a  result  of  circumstances  pursuant  to which
         benefits are owed under the Retention Agreement,  or after December 31,
         1999 and prior to February 1, 2004,  by reason of his being  discharged
         by the Company without Cause or as a result of  circumstances  pursuant
         to which  benefits are owed under the  Retention  Agreement,  or if the
         Participant's  employment  with  the  Company  terminates  on or  after
         February  1, 2004 for any  reason,  the  Participant's  accrued  Vested
         Benefit  shall  be  equal  to 40% of the  Participant's  Final  Average
         Earnings as of the date of his termination of employment; and

                                       4
<PAGE>

         (iii) if the Participant's employment with the Company terminates after
         December  31, 1999 and prior to February 1, 2004,  and the  termination
         occurs for any reason  other than his being  discharged  by the Company
         without  Cause or under  circumstances  pursuant to which  benefits are
         owed under the Retention  Agreement,  the Participant's  Accrued Vested
         Benefit  shall  be  equal  to 40% of the  Participant's  Final  Average
         Earnings as of the date of his termination of employment, multiplied by
         the vesting  percentage  determined  in  accordance  with the following
         schedule:

--------------------------------------------------------------------------------
If the Participant's employment with            The vesting percentage shall be:
the Company terminates during this period:
--------------------------------------------------------------------------------
On or after February 1, 2000, and                                20%
      before February 1, 2001
--------------------------------------------------------------------------------
On or after February 1, 2001, and                                40%
      before February 1, 2002
--------------------------------------------------------------------------------
On or after February 1, 2002, and                                60%
      before February 1, 2003
--------------------------------------------------------------------------------
On or after February 1, 2003, and                                80%
      before February 1, 2004
--------------------------------------------------------------------------------
      After February 1, 2004                                     100%
--------------------------------------------------------------------------------


         3.2 Form of Benefit. The Supplemental Retirement Benefit payable to the
Participant  shall be paid in the same  form  under  which  the  Qualified  Plan
Retirement  Benefit is payable to the Participant.  The  Participant's  election
under the Qualified  Plan of any optional form of payment of his Qualified  Plan
Retirement  Benefit shall also be applicable to the payment of his  Supplemental
Retirement Benefit.

         3.3  Commencement of Benefit.  Payment of the  Supplemental  Retirement
Benefit to the  Participant  shall  commence  on the same date as payment of the
Qualified Plan  Retirement  Benefit to the Participant  commences.  Any election
under  the  Qualified  Plan  made  by  the  Participant   with  respect  to  the
commencement of payment of his Qualified Plan  Retirement  Benefit shall also be
applicable  with  respect to the  commencement  of  payment of his  Supplemental
Retirement Benefit.

         3.4 Approval of Company. Notwithstanding the provisions of Sections 3.2
and 3.3 above, an election made by the Participant under the Qualified Plan with
respect to the form of payment of his Qualified Plan  Retirement  Benefit or the
date for  commencement of payment thereof shall not be effective with respect to


                                       5
<PAGE>

the form of payment  or date for  commencement  of  payment of his  Supplemental
Retirement  Benefit  hereunder  unless such  election is  expressly  approved in
writing by the Company with respect to his Supplemental  Retirement  Benefit. If
the Company shall not approve such election in writing, then the form of payment
or date for commencement of payment of the Participant's Supplemental Retirement
Benefit shall be selected by the Company in its sole discretion. If benefits are
payable to the  Participant  under this Plan, but no benefits are payable to the
Participant  under the  Qualified  Plan,  the time and form of benefit  shall be
selected the the Participant,  subject to the consent of the Company, from among
the alternatives  that would be available under the Qualifed Plan (or such other
alternatives permitted by the Company).

         3.5 Actuarial  Equivalent.  A Supplemental  Retirement Benefit which is
payable in any form other than a straight  life annuity over the lifetime of the
Participant,  or which commences at any time prior to the  Participant's  Normal
Retirement  Date,  shall  be  the  actuarial   equivalent  of  the  Supplemental
Retirement  Benefit  set forth in Section  3.1 above as  determined  by the same
actuarial  adjustments as those  specified in the Qualified Plan with respect to
determination of the amount of the Qualified Plan Retirement Benefit.

                                   ARTICLE IV
                      Supplemental Surviving Spouse Benefit

         4.1 Amount. If the Participant dies either:

                  (i)  while employed by the Company; or

                  (ii) prior to  commencement  of  payment  of his  Supplemental
                  Retirement  Benefit under this Plan,  but after his employment
                  with the Company has terminated with an Accrued Vested Benefit
                  that is greater than zero;

then a Supplemental  Surviving Spouse Benefit is payable to his Surviving Spouse
as hereinafter provided. The monthly amount of the Supplemental Surviving Spouse
Benefit payable to a Surviving Spouse shall be equal to the excess of the amount
described in paragraph (a) over the amount described in paragraph (b) below:

                  (a) the monthly amount of the Qualified Plan Surviving  Spouse
                  Benefit to which the Surviving Spouse of the Participant would
                  have been entitled  under the Qualifed Plan, but determined by
                  applying  the  Surviving  Spouse  Benefit  provisions  of  the


                                       6
<PAGE>

                  Qualified  Plan as though  the amount of the  monthly  benefit
                  (payable in the form of a straight life annuity  commencing at
                  the   Participant's   Normal   Retirement   Date)   which  the
                  Participant had earned on the date of his death had been equal
                  to the amount of his  Accrued  Vested  Benefit  (as defined in
                  Section 3.1 of this Plan);

                                      LESS

                  (b) the monthly amount of the Qualifed Plan  Surviving  Spouse
                  Benefit  actually  payable to the  Surviving  Spouse under the
                  Qualified Plan.
         Notwithstanding  any other provision of the Plan, the surviving  Spouse
shall be  entitled  to  benefits  under this  Section 4.1 only if she waives all
rights to receive the lump sum death  benefits to which she would  otherwise  be
entitled  under the provisons of the January 13, 1999 letter to the  Participant
from  the  Company,  with  such  waiver  to be made  within  90 days  after  the
Participant's  death  in  accordance  with  the  procedures  established  by the
Company.

         4.2 Form and Commencement of Benefit.  A Supplemental  Surviving Spouse
Benefit  shall be payable  over the  lifetime  of the  Surviving  Spouse only in
monthly  installments  commencing on the date for commencement of payment of the
Qualified Plan Surviving  Spouse Benefit to the Surviving Spouse and termination
on the date of the last payment of the Qualified Plan  Surviving  Spouse Benefit
made before the Surviving Spouse's death.

                                    ARTICLE V
                           Administration of the Plan

         5.1 Administration by the Company. The Company shall be responsible for
the general  operation and  administration  of the Plan and for carrying out the
provisions thereof.

         5.2 General Powers of  Administration.  All provisions set forth in the
Qualified  Plan with  respect  to the  administrative  powers  and duties of the
Company,  expenses of administration and procedures for filing claims shall also
be  applicable  with respect to the Plan.  The Company shall be entitled to rely
conclusively  upon all tables,  valuations,  certificates,  opinions and reports
furnished  by any  actuary,  accountant,  controller,  counsel  or other  person
employed or engaged by the Company with respect to the Plan.


                                       7
<PAGE>

                                   ARTICLE VI
                            Amendment or Termination.

         The  Plan  may be  amended  or  terminated  at any  time by the  Board,
provided  however  that,  notwithstanding  any other  provision of the Plan,  no
amendment  or  termination  that  would  adversely  affect  the  rights  of  the
Participant or his Surviving Spouse (including, without limitation, his right to
accrue  future  benefits)  may be made by the  Company  except  with the written
consent of the  Participant  (or,  in the event of his death,  with the  written
consent of the Surviving Spouse).




         ARTICLE VII
                               General Provisions

         7.1  Funding.  The Plan at all times shall be entirely  unfunded and no
provision  shall at any time be made with respect to  segregating  any assets of
the Company for payment of any benefits  hereunder.  No  Participant,  Surviving
Spouse or any other person shall have any interest in any  particular  assets of
the  Company by reason of the right to receive a benefit  under the Plan and any
such Participant, Surviving Spouse or other person shall have only the rights of
a general unsecured creditor of the Company with respect to any rights under the
Plan.

         7.2 General Conditions.  Except as otherwise expressly provided herein,
all terms and  conditions of the Qualified  Plan  applicable to a Qualified Plan
Retirement  Benefit or a Qualified Plan  Surviving  Spouse Benefit shall also be
applicable to a  Supplemental  Retirement  Benefit or a  Supplemental  Surviving
Spouse  Benefit  payable  hereunder.  Any Qualified Plan  Retirement  Benefit or
Qualified Plan Surviving Spouse Benefit,  or any other benefit payable under the
Qualified Plan, shall be paid solely in accordance with the terms and conditions
of the Qualified  Plan and nothing in this Plan shall operate or be construed in
any way to modify,  amend or affect the terms and  provisions  of the  Qualified
Plan.

         7.3 No  Guaranty  of  Benefits.  Nothing  contained  in the Plan  shall
constitute  a guaranty  by the  Company or any other  entity or person  that the
assets of the Company will be sufficient to pay any benefit hereunder.

                                       8
<PAGE>

         7.4 No Enlargement of the Employee Rights.  No Participant or Surviving
Spouse  shall have any right to a benefit  under the Plan  except in  accordance
with the terms of the Plan.  Establishment of the Plan shall not be construed to
give any Participant the right to be retained in the service of the Company.

         7.5 Spendthrift  Provision.  No interest of any person or entity in, or
right to  receive a benefit  under,  the Plan  shall be subject in any manner to
sale, transfer, assignment, pledge, attachment, garnishment, or other alienation
or  encumbrance of any kind; nor may such interest or right to receive a benefit
be taken, either voluntarily or involuntarily, for the satisfaction of the debts
of, or other  obligation  or claims  against,  such person or entity,  including
claims for  alimony,  support,  separate  maintenance  and claims in  bankruptcy
proceedings.


         7.6  Applicable  Law. The Plan shall be construed  and  administered
under the laws of the State of Illinois.


         7.7  Incapacity  of  Recipient.  If any  person  entitled  to a benefit
payment  under the Plan is deemed by the Company to be incapable  of  personally
receiving and giving a valid receipt for such  payment,  then,  unless and until
claim therefor shall have been made by a duly appointed  guardian or other legal
representative  of such person,  the Company may provide for such payment or any
part thereof to be made to any other  person or  institution  then  contributing
toward  or  providing  for the care and  maintenance  of such  person.  Any such
payment  shall be a  payment  for the  account  of such  person  and a  complete
discharge of any liability of the Company and the Plan therefor.


         7.8 Corporate Successors.  The Plan shall be binding upon, and inure to
the benefit of, the Company and its  successors  and assigns and upon any person
acquiring,  whether by merger,  consolidation,  purchase of assets or otherwise,
all or substantially all of the Company's assets and business, and the successor
shall be substituted for the Company under the Plan.


         7.9 Unclaimed Benefit. Each Participant shall keep the Company informed
of his current address and the current address of his spouse.  The Company shall
not be obligated to search for the whereabouts of any person. If the location of


                                       9
<PAGE>

the  Participant  is not made known to the Company  within three (3) years after
the date on which payment of the Participant's  Supplemental  Retirement Benefit
may first be made, payment may be made as though the Participant had died at the
end of the  three-year  period.  If,  within  one  additional  year  after  such
three-year  period has elapsed,  or within three years after the actual death of
the  Participant,  the Company is unable to locate any  Surviving  Spouse of the
Participant,  then the  Company  shall  have no  further  obligation  to pay any
benefit  hereunder to such  Participant or Surviving  Spouse or any other person
and such benefit shall be irrevocably forfeited.












7.10 Limitations on Liability.  Notwithstanding any of the preceding  provisions
of the Plan,  neither the Company  nor any  individual  acting as an employee or
agent of the Company  shall be liable to any  Participant,  former  Participant,
Surviving Spouse or any other person for any claim,  loss,  liability or expense
incurred in connection with the Plan.

         IN WITNESS WHEREOF,  the undersigned director of the Company, on behalf
of the Company, has executed this Plan to witness its adoption by the Company as
of January 18, 1999, and the  Participant  has executed this Plan to witness his
understanding that it reflects his agreement with the Company.


                                       10
<PAGE>

                                                     ILLINOVA CORPORATION



                                                     By:________________________


Accepted and agreed to this
18th day of January, 1999.


-------------------------
George W. Miraben



                                       11
<PAGE>

                              ILLINOVA CORPORATION
                           EMPLOYEE RETENTION AGREEMENT

     THIS EMPLOYEE RETENTION AGREENENT (the "Agreement") is entered into this 18
day of January 1999 by and between ILLINOVA CORPORATION, an Illinois corporation
(the "Company") and George W. Miraben (the "Employee).

     WHEREAS,  the  Company  desires  to retain the  services  of  Employee.  in
connection with any change in control of the Company;

     NOW, THEREFORE, in consideration of continued employment and for other good
and  valuable  consideration,  the receipt and  sufficiency  of which are hereby
acknowledged, the Company and the Employee agree as follows:
        

     1.  Change in Control  Benefits.  In the event of a  Termination  Event (as
defined below) the Company shall,  within 30 days of the Termination Event, make
a lump sum cash payment to the Employee equal to thirty-six  (36) months' salary
at the  greater of (I) the  Employee's  salary rate in effect on the date of the
Change in Control,  or (II) the Employee's  salary rate in effect on the date of
the  Termination  Event;  plus three times the latest  bonus  earned by Employee
during the three calendar years last preceding the Termination Event.

         Also in such  event the  Employee  and his or her  dependents,  if any,
shall, for thirty-six (36) months  following the Termination  Event or until the
Employee reaches 65 years of age, or is employed by another employer, if sooner,
continue to participate in any benefit plans of the Company which provide health
(including  medical  and  dental),  life  ordisability   insurance,  or  similar
coverage,  and if the Employee becomes 50 years of age prior to the beginning of
such  period  then  for so long  as the  Employee  is not  employed  by  another
employer, the Employee and dependents,  if any, shall continue to participate in
any benefit  plans of the Company  which  provide  health and life  insurance or
similar.  coverage  until the  Employee  becomes 55 years of age  whereupon  the
Employee and  dependents,  if any,  shall be eligible to participate in any such
benefits as are then extended


                                       1
<PAGE>



to  employees of the Company  electing  early  retirement  at age 55 on the same
terms and subject to the same  conditions as are  applicable to such  employees;
provided  that such  coverage  shall not be  furnished  if the  Employee  waives
coverage by giving written notice of waiver to the Company.  For purposes of all
incentive  and  retirement  plans of the  Company  The  Employee  shall be given
service  credit for all  purposes  for, and shall be deemed to be an employee of
the  Company  during,  the period  the  Employee  continues  to be  eligible  to
participate  in  benefit  plans  hereunder,  notwithstanding  the fact  that the
Employee is not an employee of the Company during such period; provided that, if
the  terms of any  such  plan do not  permit  such  credit  or  deemed  employee
treatment,  the Company  will make  payments and  distributions  to the Employee
outside  the plans in  amounts  substantially  equivalent  to the  payments  and
distributions,  the Employee  would have  received  pursuant to the terms of the
plans and  attributable  to such credit or deemed employee  treatment,  had such
credit or deemed employee  treatment been permitted pursuant to the terms of the
plans.  The Employee shall not be required to mitigate  damages by seeking other
employment or otherwise.  Except as specifically provided above with the respect
to the  Employee's  becoming  an  employee of another  employer,  the  Company's
obligations  under  this  section 2 shall not be reduced in any way by reason of
any  compensation  received by the Employee  from sources other than the Company
after the termination of the Employee's employment with the Company.

     Notwithstanding  any  provision  in this  Agreement  to the  contrary,  the
benefits under this paragraph 1 shall be in lieu of, and not in addition to, any
benefits to which the  Employee  might  otherwise  be  entitled  under any other
severance plan maintained by the Company.

     For purposes of this  paragraph 1 (including the defined terms used herein)
references to the "Company" shall include any subsidiary of the Company by which
the Employee is employed.

     2.   Definitions.
          (a)  For purposes of this Agreement:
               (i)  "Good Cause" shall mean:
                    (A) the  Employee's  conviction  of any  criminal  violation
                    involving dishonesty, fraud, or breach of trust.


                                       2
<PAGE>



                    (B) the Employee's  willful  engagement in any misconduct in
                    the  performance  of the  Employee's  duty  that  materially
                    injures the Company,
                    (C) the Employee's performance of any act, which if known to
                    the  shareholders or regulators of the Company or any of its
                    subsidiaries,  would  materially  and  adversely  affect the
                    business of the Company or any of its subsidiaries, or
                    (D) the Employee's willful and substantial nonperformance or
                    assigned  duties;  provided  that  such  nonperformance  has
                    continued  more than ten days  after the  Company  has given
                    written notice of such  nonperformance  and of its intention
                    to  terminate  the  Employee's  employment  because  of such
                    nonperformance.

               (ii) "Good Reason" shall exist if, without an Employee's  express
               written consent, the Company shall:

                    (A) reduce the salary of the Employee; or
                    (B) materially  reduce the amount of paid vacations to which
                    the Employee is entitled,  or the Employee's fringe benefits
                    and perquisites; or
                    (C) significantly change the nature or decrease the scope of
                    the Employee's authority; or
                    (D)  change by 50 miles or more the  principal  location  in
                    which the Employee is required to perform services.

               (iii)  "Change  in  Control"  shall  be  deemed  to  occur on the
               earliest of the existence of one of the following and the receipt
               of  all  necessary  regulatory   approvals  tberefore:
                    (A) The  acquisition  other  than from the  company,  by any
                    entity,   person  or  group  (including  all  Affiliates  or
                    Associates  of such entity,  person or group) of  beneficial
                    ownership,  as that term is defined in Rule 13d-3  under the
                    Securities  Exchange  Act of 1934,  of more  than 20% of the
                    outstanding  shares of capital stock of the Company entitled
                    to  vote  generally  in  the  election  of  directors,   but
                    excluding  for  this  purpose  any such  acquisition  by the
                    Company or any of its  subsidiaries or any employee  benefit
                    plan (or related trust) or the Company or its  subsidiaries,
                    or any  corporation  with respect to which,  following  such
                    acquisition,  more  than  80%  of,  respectively,  the  then
                    outstanding  shares of common stock of such  corporation and
                    the  combined  vote  power  of the then  outstanding  voting
                    securities of such corporation entitled to vote generally in
                    the  election  of  directors  is  then  beneficially  owned,
                    directly or indirectly,  by all or substantially  all of the
                    individuals and entities who



                                       3
<PAGE>
                    were the beneficial owners respectively, of the common stock
                    and voting  securities of the Company  immediately  prior to
                    such  acquisition in  substantially  the same  proportion as
                    their ownership,  immediately.  prior to such acquisition of
                    the then  outstanding  shares of common stock of the Company
                    or the combined voting power of the then outstanding  voting
                    securities of the Company  entitled to vote generally in the
                    election of directors, as the case may be;
                    (B)  The  effective  time  of a  reorganization,  merger  or
                    consolidation of the Company,  in each case, with respect to
                    which  all  or  substantially  all of  the  individuals  and
                    entities who were the respective  beneficial  owners. of the
                    common.   stock  and  voting   securities   of  the  Company
                    immediately   prior  to  such   reorganization,   merger  or
                    consolidation do not, following such reorganization,  merger
                    or consolidation, beneficially own, directly and indirectly,
                    more than 80% of respectively,  the then outstanding  shares
                    of common  stock or the  combined  voting  power of the then
                    outstanding voting securities  entitled to vote generally in
                    the  election  of  directors,  as the  case  may be,  of the
                    corporation  resulting from such  reorganization,  merger or
                    consolidation,  or of a complete  liquidation or dissolution
                    of the  Company  or of the  sale or other  disposition  of a
                    Substantial Portion of the Property of the Company, or
                    (C) The  election to the Board of  Directors of the Company,
                    of  directors  constituting  a majority of the number of the
                    directors in office unless such directors  were  recommended
                    for election by the existing Board of Directors.

               (iv) A  "Termination  Event"  means the date that the  Employee's
               employment with the Company terminates under one of the following
               circumstances:
                    (A) The  Employee's  employment is terminated by the Company
                    without Good Cause  within two (2) years  following a Change
                    in Control.
                    (B) The Employee voluntarily terminates employment with Good
                    Reason within two (2) years following a Change in Control.
                    (C) The  Employee's  employment  is  terminated  prior  to a
                    Change in Control at the request of a potential acquiror.

                                       4
<PAGE>

     For purposes of the  foregoing,  a  termination  will not be deemed to have
occurred  solely  because of the transfer of the Employee from one subsidiary of
the Company to another.


     (b) For purposes of the foregoing,  (i)  "Affiliate"  or "Associate"  shall
have the meaning set forth in Rule 12b-2 under the  Securities  Exchange  Act of
1934; and (ii)  "Substantial  Portion of the Property of the Company" shall mean
80% of the aggregate  book value of the assets of the Company and its Affiliates
and Associates as set forth on the most recent  balance  sheet.  of the Company,
prepared on a  consolidated  basis,  but its  regularly  employed,  independent,
certified public accountant.
     (c) Notwithstanding the foregoing, a Change, in Control shall not be deemed
     to occur for the  Employee  by virtue of any  transaction  in which such an
     Employee  is a  participant  in  a  group  effecting  an  acquisition  that
     constitutes  a Change in Control if, after such  acquisition,  the Employee
     holds an equity interest in the entity that has made the acquisition.
     3.  Litigation  Expenses.  The  Company  shall  pay  to  the  Employee  all
out-of-pocket  expenses,  including attorneys' fees, incurred by the Employee in
connection with any claim or legal action or proceeding involving the Agreement,
whether brought by the Employee or by or on behalf of the Employee or by another
party;  provided,  however,  the Company  shall not be  obligated  to pay to the
Employee  out-of-pocket  expenses,  including  attorneys' fees,  incurred by the
Employee in any claim or legal action or  proceeding  in which the Employee is a
party adverse to the Company if the Company prevails in such  litigation.  If so
requested by the Employee,  such  expenses  shall be advanced to the Employee as
they are  incurred  from time to time during the  pendency of such claim,  legal
action or  proceeding;  provided that if the proviso of the  preceding  sentence
becomes  applicable,  the Employee shall, within ten (10) days after the Company
has prevailed,  repay all advanced  amounts with interest from the date or dates
on which they were  advanced at the rate  described  in the next  sentence.  The
Company shall pay  prejudgment  interest on any money  judgment  obtained by the
Employee,  calculated  at the  published  prime  interest  rate  charged  by the
Company's principal banking connection, as in effect from time to time, from the
date that payment(s) to the Employee should have been made under the Plan.

                                       5
<PAGE>

     4. Post-termination  Payment Obligations Absolute. The Company's obligation
to pay the Employee the amounts and to make the other arrangements  provided for
herein to be paid and made after  termination of the Employee's  employment with
the Company shall be absolute and unconditional and shall not be affected by any
circumstances,   including  without  limitation,   any  set-off,   counterclaim,
recoupment,  defense  or other  right  that the  Company  may have  against  the
Employee  or anyone  else.  The Company  hereby  waives any  contract  formation
defenses  that it may have with  respect to the Employee  Retention  program and
this Agreement.

     5.  Withholding.  The Company  may  withhold  from any  payment  that it is
required  to make  under  the Plan  amounts  sufficient  to  satisfy  applicable
withholding requirements under any federal, state, or local law.

     6. Successors. The obligations of the Company provided for in the Agreement
shall be the  binding  legal  obligations  of any  successor  to the  Company by
purchase, merger,  consolidation,  or otherwise.  Rights under the Agreement may
not be assigned  by the.  Employee.  during the  Employee's  life,  and upon the
Employee's  death will ensure to the benefit of the Employee's  heirs,  legatees
and the legal representatives of the Employee's estate.

     7.   Interpretation.   The  validity,   interpretation,   construction  and
performance  of the  Agreement  shall be  governed  by the laws of the  State of
Illinois.  The invalidity of  unenforceability of any provision of the Agreement
shall not effect the validity or enforceability of any other provision.

     8. Amendment and  Termination.  This agreement may be amended or terminated
by the Board of Directors of the Company,  provided that from and after the date
of a Change in  Control  or during  any  period  of time  when the  Company  has
knowledge that any third person has taken steps reasonably  calculated to effect
a Change in  Control  until  twelve  (12)  months  after the  third  person  has
abandoned or terminated  the efforts to effect Change in Control,  the Agreement
may not be  terminated  and may not be  amended  'in  amended  in a manner  that
adversely affects the rights of the Employee.



                                       6
<PAGE>
     9. Tax Documents.  This paragraph  shall apply if all or any portion of the
payments and benefits  provided to an Employee under the Agreement,  any benefit
(including  any such plan adopted in the  future),  would  otherwise  constitute
"excess  parachute  payments" within the meaning of Section 280G of the Internal
Revenue  Code of I986 as  amended  (the  "Code"),  that are  subject  to the tax
imposed by Section 4999 of the Code (or similar tax and/or assessment). If after
the  application of such tax and/or  assessment,  the amount of such payment and
benefits would be less than if the payment and benefits had been,  reduced to an
amount that would result in there being no excess  parachute  payments then such
payments and benefits shall be so reduced (the minimum extent  necessary so that
no excess parachute payments result). If reduction is necessary  hereunder,  the
Employee  shall  elect  which of the  payments  and  benefits  shall be reduced.
Determination of whether payments and benefits would constitute excess parachute
payments, and the amount of reduction so that no excess parachute payments shall
exist,  shall be made, at the Company's expense,  by the independent  accounting
firm employed by the Company  immediately  prior to the occurrence of any change
of control of the Company which will result in the imposition of such tax.

     IN  WITNESS  WHEREOF,  the  Company  and the  Employee  have  executed  the
Agreement on and as of the 18 day of January,  1999.  This Agreement  supersedes
and  replaces  any prior  agreement  between  the  company  and the  undersigned
regarding this subject



                                                            ILLINOVA CORPORATION


                                                            By:
                                                               -----------------



                                                               -----------------
                                                                Employee




                                       7
<PAGE>

                              NON-QUALIFIED STOCK OPTION AGREEMENT
                                      ILLINOVA CORPORATION
                           1992 LONG-TERM INCENTIVE COMPENSATION PLAN



THIS  AGREEMENT,  entered  into as of the 18th day of January,  1999 (the "Grant
Date") by and  between  ILLINOVA  CORPORATION,  an  Illinois  corporation,  (the
"Company") and George M. Miraben (the "Employee"),


                                   WITNESSETH THAT:

WHEREAS, the Company maintains the Illinova Corporation 1992 Long-Term Incentive
Compensation  Plan (the "Plan"),  which is incorporated and forms a part of this
Agreement, for the benefit of key employees of the Company and its Subsidiaries;

WHEREAS, to induce the Employee to accept employment by the Company, the Company
has agreed to grant to the Employee the option described in this Agreement; and

WHEREAS,  the  Employee  and the  Company  desire to enter  into this  Agreement
reflecting the award of such option;

NOW,  THEREFORE,  IT IS AGREED,  by and between the Company and the  Employee as
follows:


                                   SECTION ONE
                                      GRANT

Subject to the terms and conditions of the Plan and this Agreement, the Employee
is hereby awarded an option to purchase  30,000 shares of Stock (the  "Option").
The Option is not  intended,  and shall not be treated,  as an  incentive  stock
option (as that term is used in Section 422 of the Code).

<PAGE>




                                   SECTION TWO
                                   OPTION PRICE

The option price of each share of stock subject to the Option is $24.688.




                                   SECTION THREE
                         EXERCISE, EXPIRATION AND CANCELLATION
                                     OF OPTION

The option  shall be  exercisable  by the Employee at any time  subsequent  to a
Change in Control as defined in the  Employee  Retention  Agreement  between the
Company and the Employee  (whether or not such  agreement is then in effect) and
otherwise in accordance with the following schedule:

--------------------------------------------------------------------------------
If the Employee is employed through          The Option shall become exercisable
          the following date:                with respect to the following
                                             number of shares on and after that
                                             date:
--------------------------------------------------------------------------------
One-year anniversary of Grant Date              10,000 shares
--------------------------------------------------------------------------------
Two-year anniversary of Grant Date              10,000 shares
--------------------------------------------------------------------------------
Three-year anniversary of Grant Date            10,000 shares
--------------------------------------------------------------------------------

If the  Employee's  employment by the Company  continues  through the 9-1/2 year
anniversary of the Grant Date, then any portion of the Option herein granted and
not  previously   exercisable  shall  become   exercisable  on  such  9-1/2-year
anniversary.

The Option shall expire as to any unexercised portion on the earliest of:

    (a)          the tenth anniversary of the date first above written;

    (b)          the first anniversary of the Employee's death;

    (c)          five years following the Employee's date of retirement; or

    (d)          the date of the Employee's  Termination as defined in the Plan;
                 provided that if the Employee's  employment ceases because of a
                 Termination,  any exercise of the Option  occurring on or after
                 the Employee's  date of Termination  shall be void and shall be
                 ineffective.
<PAGE>

For purposes of this Agreement, the Employee's "date of retirement" shall be the
date of Retirement, Early Retirement or Disability Retirement as those terms are
defined in the Plan.

If the Employee exercises the Option with respect to a portion,  but not all, of
the shares of Stock subject  thereto,  the Option shall  thereafter  cease to be
exercisable  with respect to the shares of Stock for which it was exercised but,
subject  to the  terms  and  conditions  of the Plan and this  Agreement,  shall
continue to be  exercisable  with respect to the shares of Stock with respect to
which it was not exercised.

If the Employee's  Termination  occurs prior to the date on which any portion of
the Option has become exercisable, that portion of the Option shall be forfeited
upon  such  Termination.   Notwithstanding  the  foregoing  provisions  of  this
Agreement, the Option shall not become exercisable and shall be forfeited if the
Participant does not become an employee of the Company,  and the Option shall be
forfeited if the Participant  becomes an employee of the Company but voluntarily
resigns within 30 days after his initial date of employment.


                                   SECTION FOUR
                                 METHOD OF EXERCISE

Subject to the terms and conditions of the Plan and this  Agreement,  the Option
may be  exercised,  in whole or in part,  by  filing a written  notice  with the
Secretary  of the  Company at its  corporate  headquarters  prior to the date on
which the Option  expires or is otherwise  cancelled.  Such notice shall specify
the date as of which the  exercise is to occur and the number of shares of Stock
which  the  Employee  elects  to  purchase  and  shall be in such form and shall
contain such other  information  as the Secretary of the Company may  reasonably
require.  The election  shall be  accompanied by payment of the option price for
such shares of Stock  indicated by the  Employee's  election,  together with the
amount of any required  state,  federal or local  withholding  taxes  arising in
connection  with the purchase of such Stock.  Subject to the  provisions  of the
preceding  sentence and the terms of the Plan, payment shall be by cash or check
payable to the Company,  by delivery of shares of Stock having an aggregate Fair
Market Value  (determined as of the date of exercise) equal to the option price,
and if elected in accordance with this Section 4, the Employee's tax withholding
obligation for the shares of Stock,  indicated by the Employee's election,  or a
combination of both.


                                   SECTION FIVE
                                  TRANSFERABILITY

The Option shall not be  transferable  by the Employee other than by will or the
laws of  descent  and  distribution  and,  during the life of the  Employee,  is
exercisable only by the Employee or Employee's guardian or legal representative.

<PAGE>


                                   SECTION SIX
                           NOTICE OF DISPOSITION OF SHARES

The Employee  agrees to notify the Company  promptly in the event of disposal of
any shares of Stock  acquired  upon the  exercise  of the  Option,  including  a
disposal by sale, exchange, gift or transfer of legal title.



                                   SECTION SEVEN
                                  ADMINISTRATION

The  authority to manage and control the operation  and  administration  of this
Agreement  shall be vested in the  Committee,  and the Committee  shall have all
powers with respect to this  Agreement that it has with respect to the Plan. Any
interpretation  of this  Agreement by the  Committee and any decision made by it
with respect to the Agreement is final and binding on all persons.


                                   SECTION EIGHT
                                   PLAN GOVERNS

Notwithstanding  anything in this  Agreement to the contrary,  the terms of this
Agreement  shall be  subject  to the terms of the  Plan,  a copy of which may be
obtained by the Employee from the office of the Secretary of the Company. Unless
the context  clearly  implies or indicates the contrary,  a word, term or phrase
used or defined in the Plan is  similarly  used or defined for  purposes of this
Agreement.


                                   SECTION NINE
                                    AMENDMENT

This  Agreement  may be amended by written  agreement  of the  Employee  and the
Company, acting pursuant to authority from the Committee, without the consent of
any other person.


                                   SECTION TEN
                     CONTINUED EMPLOYMENT, RIGHTS AS SHAREHOLDER

This Agreement  does not constitute a contract of employment,  and does not give
the Employee the right to be employed by the Company or its  Subsidiaries.  This
Agreement  does not confer on the  Employee any rights as a  shareholder  of the
Company  prior to the date on which the  Employee  fulfills all  conditions  for
receipt of Stock pursuant to this Agreement and the Plan.
<PAGE>

                                   SECTION ELEVEN
                                   GOVERNING LAW

This Agreement  shall be construed and  administered in accordance with the laws
of the State of Illinois, without regard to the principles of conflicts of law.

IN WITNESS WHEREOF,  the parties have caused this Agreement to be executed as of
the day and year first above written.



                                                --------------------------------
                                                GEORGE W. MIRABEN




                                                ILLINOVA CORPORATION


                                                BY:_____________________________
                                                   CHARLES E. BAYLESS
                                                   CHAIRMAN, PRESIDENT AND CHIEF
                                                   EXECUTIVE OFFICER


ATTEST:



------------------------------------
LEAH MANNING STETZNER
CORPORATE SECRETARY