<PAGE>

                                                                   EXHIBIT 10.11

                        SECOND SUPPLEMENTAL PLAN TO THE
                         DYNEGY INC. SEVERANCE PAY PLAN

I.  INTRODUCTION

     Dynegy Inc., a Delaware corporation (the "Company"), and its participating
subsidiaries and affiliated entities have heretofore established the Dynegy Inc.
Severance Pay Plan (the "Plan").  The Plan specifically contemplates that
certain plans may be designated as supplements to the Plan.  This Second
Supplemental Plan to the Dynegy Inc. Severance Pay Plan (the "Second
Supplemental Plan") is hereby established as a supplement to the Plan on behalf
of the Company and all of its subsidiaries and affiliates that participate in
the Plan.  The Second Supplemental Plan is intended to provide severance
benefits to certain selected officers and directors whose employment is
terminated on or after the date upon which a change in control of the Company
occurs.  Such severance benefits shall be in lieu of the severance benefits, if
any, that would otherwise be provided under the Plan upon such termination of
employment.

II.  DEFINITIONS AND CONSTRUCTION

     2.1 DEFINITIONS.  Where the following words and phrases appear in the
Second Supplemental Plan, they shall have the respective meanings set forth
below, unless their context clearly indicates to the contrary.

          (a) "BOARD" shall mean the Board of Directors of the Company.

          (b) "CHANGE IN CONTROL" shall mean the occurrence of any of the
     following events:

               (1) any "person" or "group" (as defined in or contemplated by
          Section 13(d)(3) or 14(d)(2) of the Exchange Act) is or becomes the
          "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
          directly or indirectly, of more than 50% of the total voting stock of
          the Company;

               (2) the Company is merged with or into or consolidated with
          another person and, immediately after giving effect to the merger or
          consolidation, (A) less than 50% of the total voting power of the
          outstanding voting stock of the surviving or resulting person is then
          "beneficially owned" (within the meaning of Rule 13d-3 under the
          Exchange Act) in the aggregate by (x) the stockholders of the Company
          immediately prior to such merger or consolidation, or (y) if a record
          date has been set to determine the stockholders of the Company
          entitled to vote with respect to such merger or consolidation, the
          stockholders of the Company as of such record date and (B) any
          "person" or "group" (as defined in or contemplated by Section 13(d)(3)
          or 14(d)(2) of the Exchange Act) is or has become the direct or
          indirect "beneficial owner" (as defined in Rule 13d-3 under the
          Exchange Act) of more than 50% of the voting power of the voting stock
          of the surviving or resulting person;
<PAGE>

               (3) the Company, either individually or in conjunction with one
          or more of its subsidiaries, sells, assigns, conveys, transfers,
          leases or otherwise disposes of, or the subsidiaries sell, assign,
          convey, transfer, lease or otherwise dispose of, all or substantially
          all of the properties and assets of the Company and the subsidiaries,
          taken as a whole (either in one transaction or a series of related
          transactions), to any person (other than the Company or a wholly owned
          subsidiary); or

               (4) the liquidation or dissolution of the Company;

     provided, however, that a "Change in Control" shall be deemed to have not
     occurred if Chevron Corporation or its subsidiaries and/or affiliates own,
     directly or indirectly, more than 50% of the total voting stock of the
     Company, so long as (i) Chevron Corporation, its subsidiaries or affiliates
     reduce their interest to less than a 50% interest either (x) within six
     months after the date they acquire a greater than 50% interest, or (y)
     within an extended period of up to two years after the date they acquire a
     greater than 50% interest if such extension is approved by the affirmative
     vote of at least 11 members of the Board (or such lesser or greater number
     of directors as may be required by Section 3.10(b) of the Company's Bylaws
     as such may be amended from time to time) prior to the end of the six-month
     period specified in clause (x) of this proviso, and (ii) Chevron
     Corporation does not materially alter the operations or management of the
     Company during such six-month or extended period.  In addition to the
     foregoing, a "Change in Control" shall be deemed to have occurred for all
     purposes of the Second Supplemental Plan (other than Sections 3.2 and 5.3)
     upon the occurrence of a Deemed Change in Control.

          (c) "CHANGE IN TERMS OF SERVICE" shall mean, the occurrence, on the
     date upon which a Change in Control occurs or within two years thereafter
     (one year thereafter in the case of a Deemed Change in Control), of any one
     or more of the following:

               (1) a significant reduction in the nature or scope of a Covered
          Individual's authorities or duties from those applicable to such
          Covered Individual immediately prior to the date on which a Change in
          Control occurs;

               (2) a reduction in a Covered Individual's annual base salary or
          target opportunity under any applicable bonus or incentive
          compensation plan or arrangement from that provided to such Covered
          Individual immediately prior to the date on which a Change in Control
          occurs;

              (3) a diminution in a Covered Individual's eligibility to
         participate in bonus, stock option, incentive award and other
         compensation plans which provide opportunities to receive compensation
         which are the greater of (A) the opportunities provided by the Employer
         (including its subsidiaries) for officers or directors, as applicable,
         with comparable duties or (B) the opportunities under any such plans
         under which such Covered Individual was participating immediately prior
         to the date on which a Change in Control occurs;

                                      -2-
<PAGE>

              (4) a diminution in benefits (including but not limited to
         medical, dental, life insurance, and long-term disability plans) and
         perquisites applicable to such Covered Individual from the greater of
         (A) the benefits and perquisites provided by the Employer (including
         its subsidiaries) to officers or directors, as applicable, with
         comparable duties or (B) the benefits and perquisites to which such
         Covered Individual was entitled immediately prior to the date on which
         a Change in Control occurs; or

              (5) a change in the location of a Covered Individual's principal
         place of employment by the Employer by more than 50 miles from the
         location where he was principally employed immediately prior to the
         date on which a Change in Control occurs.

         (d) "CHEVRON HOLDING PERIOD" shall mean any period during which a
    Change in Control is deemed to have not occurred solely pursuant to the
    provisions of Section 2.1(b) relating to the ownership, directly or
    indirectly, of more than 50% of the total voting stock of the Company by
    Chevron Corporation or its subsidiaries and/or affiliates.

         (e) "CODE" shall have the meaning assigned to such term in the Plan.

         (f) "COMMITTEE" shall mean the Compensation and Human Resources
    Committee of the Board.

         (g) "COMPANY" shall mean Dynegy Inc., a Delaware corporation.

         (h) "COMPENSATION" shall mean, with respect to each Covered Individual,
    the sum of (1) such Covered Individual's annual base salary and (2) such
    Covered Individual's aggregate annual target opportunity under all
    applicable cash bonus or incentive compensation plans or arrangements, in
    each case under clauses (1) and (2) above determined separately based upon
    the greater of the annual base salary or annual target opportunity under all
    applicable cash bonus or incentive compensation plans or arrangements, as
    applicable, paid at the rate in effect (A) immediately prior to the Change
    in Control, (B) 60 days prior to the date of such Covered Individual's
    Involuntary Termination, or (C) the date of such Covered Individual's
    Involuntary Termination.

         (i) "COVERED INDIVIDUAL" shall mean any individual who is participating
    in the Second Supplemental Plan pursuant to Article III.

         (j) "DEEMED CHANGE IN CONTROL" shall mean the consummation of the
    transactions contemplated in that certain Agreement and Plan of Merger dated
    as of June 14, 1999, by and among Illinova Corporation, Energy Convergence
    Holding Company, Energy Convergence Acquisition Corporation, Dynegy
    Acquisition Corporation, and the Company, as the same may be amended from
    time to time.

                                      -3-
<PAGE>

         (k) "DISABILITY" shall mean a disability entitling a Covered Individual
    to benefits under a group long-term disability plan maintained by the
    Employer.

         (l) "EFFECTIVE DATE" shall mean February 8, 1999.

         (m) "EMPLOYER" shall mean the Company and each of its subsidiaries and
    affiliates that is treated as an Employer in accordance with the provisions
    of Section 5.2.

         (n) "EMPLOYMENT AGREEMENT" shall mean an employment agreement, if any,
    between the Employer and a Covered Individual.

         (o) "ERISA" shall have the meaning assigned to such term in the Plan.

         (p) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
    amended.

         (q) "INVOLUNTARY TERMINATION" shall mean, with respect to each Covered
    Individual, any termination of such Covered Individual's employment with the
    Employer which:

              (1) does not result from a voluntary resignation by such Covered
         Individual (other than a resignation pursuant to clause (2) of this
         Section 2.1(q)); or

              (2) results from a resignation by such Covered Individual on or
         before the date which is 60 days after the date the Covered Individual
         receives notice of a Change in Terms of Service;

     provided, however, that the term "Involuntary Termination" shall not
     include a Termination for Cause or any termination as a result of such
     Covered Individual's death or Disability.

         (r) "PLAN" shall mean the Dynegy Inc. Severance Pay Plan, as amended
    from time to time.

         (s) "PLAN ADMINISTRATOR" shall have the meaning assigned to such term
    in the Plan.

         (t) "SECOND SUPPLEMENTAL PLAN" shall mean the Second Supplemental Plan
    to the Dynegy Inc. Severance Pay Plan, as amended from time to time.

         (u) "TERMINATION FOR CAUSE" shall mean (1) with respect to a Covered
    Individual who has an Employment Agreement then in effect that defines the
    term "cause," any termination of such Covered Individual's employment with
    the Employer that the Committee determines constitutes "cause" under such
    Employment Agreement, and (2) with respect to each other Covered Individual,
    any termination of such Covered Individual's

                                      -4-
<PAGE>

    employment with the Employer based on a determination by the Committee that
    such Covered Individual (A) has been convicted of a misdemeanor involving
    moral turpitude or a felony, (B) has engaged in conduct which is materially
    injurious (monetarily or otherwise) to the Employer or any of its affiliates
    (including, without limitation, misuse of the Employer's or an affiliate's
    funds or other property), (C) has engaged in gross negligence or willful
    misconduct in the performance of such Covered Individual's duties, (D) has
    willfully refused without proper legal reason to perform such Covered
    Individual's duties and responsibilities, (E) has materially breached any
    material provision of any agreement between the Employer and such Covered
    Individual, or (F) has materially breached any material corporate policy
    maintained and established by the Employer that is of general applicability
    to Covered Individuals.

     2.2 NUMBER AND GENDER.  Wherever appropriate herein, a word used in the
singular shall be considered to include the plural and the plural to include the
singular.  The masculine gender, where appearing in the Second Supplemental
Plan, shall be deemed to include the feminine gender.

     2.3 HEADINGS.  The headings of Articles and Sections herein are included
solely for convenience and if there is any conflict between such headings and
the text of the Second Supplemental Plan, the text shall control.

III. PARTICIPATION

     3.1  PARTICIPATION.  The Committee, in its sole discretion, may select any
management or highly compensated employee of the Employer for participation in
the Second Supplemental Plan as a Covered Individual.  The Committee shall, at
the time determined by the Committee in its sole discretion, provide a written
notice to each individual who becomes a Covered Individual, which notice shall
specify the effective date upon which such individual became a Covered
Individual.

     3.2  CESSATION OF PARTICIPATION.  Within 60 days from and after the
expiration of the two-year period beginning on the date a Covered Individual
receives notice of his participation in the Second Supplemental Plan from the
Committee pursuant to Section 3.1, and within 60 days after each successive one-
year period of time thereafter that the Second Supplemental Plan is in effect,
the Committee shall have the right, in its sole discretion, to either continue
and extend such Covered Individual's participation in the Second Supplemental
Plan or terminate such Covered Individual's participation in the Second
Supplemental Plan.  The Committee shall notify such Covered Individual of such
Committee action within the 60-day time period mentioned above.  A Covered
Individual shall continue participation in the Second Supplemental Plan until
such participation is so terminated or the Second Supplemental Plan is
terminated pursuant to Section 5.3.  Failure of the Committee to take any action
within said 60 days shall be considered as an extension of such Covered
Individual's right to participate in the Second Supplemental Plan for an
additional one-year period of time.  Notwithstanding anything to the contrary
contained in this "sunset provision," if a Change in Control occurs while a
Covered Individual is a participant in the Second Supplemental Plan, then such
Covered Individual's participation in the Second Supplemental Plan shall not be
subject to termination under this "sunset provision," and such participation
shall continue for a period of two years after such Change in Control, and if
within said two years the contingency factors occur which

                                      -5-
<PAGE>

would entitle such Covered Individual to the benefits as provided herein, then
the Second Supplemental Plan shall remain in effect with respect to such Covered
Individual in accordance with its terms. If, within such two years after a
Change in Control, the contingency factors that would entitle such Covered
Individual to said benefits do not occur, thereupon this "sunset provision"
shall again be applicable with the 60-day time period for action by the
Committee to thereafter commence at the expiration of said two years after such
Change in Control and on each anniversary date thereafter. Further, a Covered
Individual's participation in the Second Supplemental Plan may not be terminated
during any Chevron Holding Period, and to the extent that a 60-day period
referred to in this Section 3.2 occurs during any Chevron Holding Period and
such Chevron Holding Period ends under circumstances which do not result in a
Change in Control, such 60-day period shall be temporarily suspended and shall
recommence upon the expiration of such Chevron Holding Period.

IV.  SEVERANCE BENEFITS

     4.1  SEVERANCE BENEFITS.  If the employment by the Employer or a successor
thereto of a Covered Individual shall be subject to an Involuntary Termination
that occurs on the date upon which a Change in Control occurs or within two
years thereafter (one year thereafter in the case of a Deemed Change in
Control), then such Covered Individual shall be entitled to receive, subject to
the provisions of Sections 4.2, 4.4, and 5.7, the following severance benefits:

          (a) a lump sum cash payment in an amount equal to 100% of such Covered
     Individual's Compensation, which amount shall be paid by the Employer to
     such Covered Individual on or before the fifth day after such Involuntary
     Termination;

          (b)  a lump sum cash payment (which shall be paid by the Employer at
     the same time the payment described in Section 4.1(a) is paid) in an amount
     equal to (1) the aggregate annual target opportunity under all applicable
     cash bonus or incentive compensation plans or arrangements that could have
     been earned by such Covered Individual for the fiscal year of the Company
     during which such Involuntary Termination occurs (determined as if all
     applicable goals and targets had been satisfied in full), multiplied by (2)
     a fraction, the numerator of which is the number of days during the period
     beginning on the first day of such fiscal year and ending on the date of
     such Involuntary Termination, and the denominator of which is 365;

          (c) all of the outstanding stock options and other equity based awards
     granted by the Employer to such Covered Individual shall become fully
     vested and immediately exercisable in full upon such Involuntary
     Termination, and all of such stock options that do not  constitute
     incentive stock options within the meaning of Section 422 of the Code shall
     remain exercisable for a period of three years thereafter or for such
     greater period as may be provided in the plan(s) or option agreement(s)
     pursuant to which such stock options were granted (but in no event shall
     any such stock option be exercisable after the expiration of the original
     term of such stock option);

          (d) such Covered Individual and those of his dependents (including his
     spouse) who were covered under the medical and life insurance benefit plans
     maintained by the

                                      -6-
<PAGE>

     Employer on the day prior to such Involuntary Termination shall continue to
     be covered under such plans throughout the 12-month period beginning on the
     date of such Involuntary Termination at a cost to such Covered Individual
     that is no greater than the lesser of (1) the cost of such coverage paid by
     such Covered Individual immediately prior to such Involuntary Termination
     or (2) the cost of such coverage paid by such Covered Individual
     immediately prior to the Change in Control; provided, however, that
     coverage under a particular medical or life insurance benefit plan shall
     immediately end upon such Covered Individual's obtainment of new employment
     and coverage under a similar welfare benefit plan maintained by such
     Covered Individual's new employer (with such Covered Individual being
     obligated hereunder to promptly report such new coverage to the Company).
     Nothing herein shall be deemed to adversely affect in any way the
     additional rights, after consideration of this extension period, of such
     Covered Individual and his eligible dependents to health care continuation
     coverage as required pursuant to Part 6 of Title I of ERISA; and

          (e) out-placement services in connection with obtaining new employment
     up to a maximum cost of $10,000 (which shall be paid directly by the
     Employer to the provider of such services).

     4.2  MITIGATION; BENEFITS UNDER EMPLOYMENT AGREEMENT.  Except as provided
in Section 4.1(d), a Covered Individual shall not be required to mitigate the
amount of any payment or benefit provided for in this Article IV by seeking
other employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Article IV be reduced by any compensation or benefit earned
by the Covered Individual as the result of employment by another employer or by
retirement benefits.  The benefits under the Second Supplemental Plan are in
addition to any other benefits to which a Covered Individual is otherwise
entitled; provided, however, that (a) the benefits under the Second Supplemental
Plan are not intended to duplicate the benefits to which a Covered Individual is
entitled under an Employment Agreement and (b) a Covered Individual who is
entitled to receive benefits under the Second Supplemental Plan shall not be
eligible to receive any benefits under the Plan, any other supplement thereto,
or any other severance benefit plan maintained by the Company or any of its
affiliates.  Nothing herein is intended to reduce any provision of a Covered
Individual's Employment Agreement to the extent that greater severance benefits
are provided for in such Employment Agreement than under the Second Supplemental
Plan.  In other words, a Covered Individual with an Employment Agreement in
effect as of the date of his termination of employment shall be entitled to
either the severance benefits specified in the Second Supplemental Plan or in
such Employment Agreement, whichever provides the greater benefit on a
provision-by-provision basis.

     4.3  INTEREST ON LATE PAYMENTS. If any cash payment provided for in Section
4.1 is not made when due, the Employer shall pay to the Covered Individual
interest on the amount payable from the date that such payment should have been
made under such Section until such payment is made, which interest shall be
calculated at the rate of 1% per month (with a partial month counting as a full
month).

     4.4  PARACHUTE PAYMENTS.  Anything to the contrary herein notwithstanding,
if a Covered Individual is a "disqualified individual" (as defined in Section
280G(c) of the Code), and the

                                      -7-
<PAGE>

severance benefits provided for in Section 4.1, together with any other payments
or benefits which the Covered Individual has the right to receive from the
Employer, would constitute a "parachute payment" (as defined in Section
280G(b)(2) of the Code), then the severance benefits provided hereunder
(beginning with any benefit to be paid in cash hereunder) shall be either (a)
reduced (but not below zero) so that the present value of such total amounts
received by the Covered Individual from the Employer will be one dollar ($1.00)
less than three times the Covered Individual's "base amount" (as defined in
Section 280G of the Code) and so that no portion of such amounts received by the
Covered Individual shall be subject to the excise tax imposed by Section 4999 of
the Code or (b) paid in full, whichever produces the better net after-tax
position to the Covered Individual (taking into account any applicable excise
tax under Section 4999 of the Code and any applicable income tax). The
determination as to whether any such reduction in the amount of the severance
benefits is necessary shall be made by the Committee in good faith. If a reduced
cash payment is made and through error or otherwise that payment, when
aggregated with other payments from the Employer (or its affiliates) used in
determining if a "parachute payment" exists, exceeds one dollar ($1.00) less
than three times the Covered Individual's base amount, the Covered Individual
shall immediately repay such excess to the Employer upon notification that an
overpayment has been made. Nothing in this Section shall require the Employer to
be responsible for, or have any liability or obligation with respect to, any
Covered Individual's excise tax liabilities under Section 4999 of the Code.

V.   GENERAL PROVISIONS

     5.1  RELATIONSHIP OF THE SECOND SUPPLEMENTAL PLAN TO THE PLAN.  The Second
Supplemental Plan and the severance benefits described herein shall be subject
to all of the terms and conditions of the Plan, including, without limitation,
the administrative provisions of the Plan; provided, however, that (a) the
provisions of Section III of the Plan (relating to eligibility), Section IV.E.
of the Plan (relating to rehired employees), and all provisions of the Plan
relating to the execution and delivery of a release as a condition to the
receipt of severance benefits shall not apply to the Second Supplemental Plan,
(b) the amount of the cash severance payment to be provided under the Second
Supplemental Plan shall be determined pursuant to Article IV hereof rather than
Section IV.A. of the Plan, (c) the Committee (rather than the Plan
Administrator) shall have the powers (including administrative powers) granted
to the Committee hereunder, and (d) should an inconsistency or conflict exist
between the specific terms of the Second Supplemental Plan and those of the
Plan, then the relevant terms of the Second Supplemental Plan shall govern and
control.

     5.2  OTHER PARTICIPATING EMPLOYERS.  Subject to the provisions of Section
5.3, each subsidiary and affiliate of the Company that participates in the Plan
shall participate in the Second Supplemental Plan as an Employer.  The
provisions of the Second Supplemental Plan shall be applicable with respect to
each Employer separately, and amounts payable hereunder shall be paid by the
Employer which employs the particular Covered Individual; provided, however,
that the determination of whether a Change in Control has occurred shall be made
based solely on Dynegy Inc.

     5.3  AMENDMENT AND TERMINATION.  The Second Supplemental Plan may not be
amended, terminated, or discontinued except as provided in this Section 5.3 or
in Section 5.7.  For

                                      -8-
<PAGE>

purposes of this Section 5.3, the termination of an Employer's participation in
the Plan (and, accordingly, but for the provisions of this Section 5.3, the
termination of such Employer's participation in the Second Supplemental Plan
pursuant to Section 5.2) shall be deemed to be an amendment to the Second
Supplemental Plan, but the commencement of participation by an Employer in the
Plan (and, accordingly, participation by such Employer in the Second
Supplemental Plan pursuant to Section 5.2) shall not be considered an amendment
to the Second Supplemental Plan. Within 60 days from and after the expiration of
the two-year period beginning on the Effective Date and within 60 days after
each successive one-year period of time thereafter that the Second Supplemental
Plan is in effect, the Board shall have the right to review the Second
Supplemental Plan, and, in its sole discretion, to either continue and extend
the Second Supplemental Plan, terminate the Second Supplemental Plan, and/or
amend the Second Supplemental Plan in any manner determined by the Board. The
Second Supplemental Plan shall remain in effect until so terminated and/or
amended by the Board. Failure of the Board to take any action within said 60
days shall be considered as an extension of the Second Supplemental Plan for an
additional one-year period of time. Notwithstanding anything to the contrary
contained in this "sunset provision," if a Change in Control occurs while the
Second Supplemental Plan is in effect, then the Second Supplemental Plan shall
not be subject to termination or amendment under this "sunset provision," and
the Second Supplemental Plan shall remain in force for a period of two years
after such Change in Control, and if within said two years the contingency
factors occur which would entitle a Covered Individual to the benefits as
provided herein, then the Second Supplemental Plan shall remain in effect with
respect to such Covered Individual in accordance with its terms. If, within such
two years after a Change in Control, the contingency factors that would entitle
a Covered Individual to said benefits do not occur, thereupon this "sunset
provision" shall again be applicable with the 60-day time period for action by
the Board to thereafter commence at the expiration of said two years after such
Change in Control and on each anniversary date thereafter. Further, the Second
Supplemental Plan may not be terminated or amended during any Chevron Holding
Period, and to the extent that a 60-day period referred to in this Section 5.3
occurs during any Chevron Holding Period and such Chevron Holding Period ends
under circumstances which do not result in a Change in Control, such 60-day
period shall be temporarily suspended and shall recommence upon the expiration
of such Chevron Holding Period.

     5.4  CONTRACT OF EMPLOYMENT.  The adoption and maintenance of the Second
Supplemental Plan shall not be deemed to be a contract of employment between the
Employer and any person or to be consideration for the employment of any person.
Nothing herein contained shall be deemed to (a) give any person the right to be
retained in the employ of the Employer, (b) restrict the right of the Employer
to discharge any person at any time, (c) give the Employer the right to require
any person to remain in the employ of the Employer, or (d) restrict any person's
right to terminate his employment at any time.

     5.5 INDEMNIFICATION. If a Covered Individual shall obtain any money
judgment or otherwise prevail with respect to any litigation brought by such
Covered Individual or the Employer to enforce or interpret any provision
contained herein, the Employer, to the fullest extent permitted by applicable
law, hereby indemnifies such Covered Individual for his reasonable attorneys'
fees and disbursements incurred in such litigation and hereby agrees (a) to pay
in full all such fees and disbursements and (b) to pay prejudgment interest on
any money judgment obtained by such

                                      -9-
<PAGE>

Covered Individual from the earliest date that payment to such Covered
Individual should have been made under the Second Supplemental Plan until such
judgment shall have been paid in full, which interest shall be calculated at the
rate of 1% per month (with a partial month counting as a full month).

     5.6 PAYMENT OBLIGATIONS ABSOLUTE. Subject to the provisions of Section 5.7,
the Employer's obligation to pay a Covered Individual the amounts and to make
the arrangements provided herein 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 which the Employer or any
of its subsidiaries may have against such Covered Individual or anyone else. All
amounts payable by the Employer shall be paid without notice or demand.

     5.7 POOLING OF INTERESTS ACCOUNTING. Notwithstanding any other provision of
the Second Supplemental Plan to the contrary, in the event the consummation of a
Change in Control is contingent on using the pooling of interests accounting
methodology, the Board may make any modifications to the Second Supplemental
Plan to the extent necessary to preserve the use of pooling of interests
accounting, including, without limitation, any modification resulting in a
reduction of the benefits to be paid or provided hereunder to any Covered
Individual.

     5.8  WITHHOLDING.  Any benefits paid or provided pursuant to the Second
Supplemental Plan shall be subject to any required tax withholding.

     5.9  SEVERABILITY.  Any provision in the Second Supplemental Plan that is
prohibited or unenforceable in any jurisdiction by reason of applicable law
shall, as to such jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating or affecting the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

     5.10 EFFECT OF SECOND SUPPLEMENTAL PLAN. Except for benefits provided under
an Employment Agreement, the Second Supplemental Plan is intended to supersede
all prior oral or written policies of the Employer and all prior oral or written
communications to Covered Individuals with respect to the subject matter hereof,
and all such prior policies or communications are hereby null and void and of no
further force and effect. Further, the Second Supplemental Plan shall be binding
upon the Employer and any successor of the Employer, by merger or otherwise, and
shall inure to the benefit of and be enforceable by the Employer's Covered
Individuals. Any benefits paid or provided pursuant to the Second Supplemental
Plan shall be deemed to be a severance payment and not "compensation" for
purposes of determining benefits under the Employer's qualified plans (unless
and to the extent that any such qualified plan expressly provides otherwise).

                                      -10-
<PAGE>

     EXECUTED this ______ day of ___________________, 1999.

                                     DYNEGY INC.


                                     By:
                                        --------------------------------
                                     Michael B. Barton
                                     Vice President of Human Resources

                                      -11-