Luc A.  Despins  (LD 5141)
David R.  Gelfand  (DG 1185)
Susheel Kirpalani   (SK 8926)
MILBANK,  TWEED, HADLEY & M~CLOY LLP
1 Chase Manhattan Plaza
New York,  New York   10005
(212)  530-5000
Counsel for the Official Committee
of Unsecured Creditors

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------x
In re:

ENRON CORP.,  et al.,

		 Debtors.
-------------------------------------x
THE OFFICIAL COMMITTEE OF UNSECURED:
CREDITORS OF ENRON CORP.,   et al.
on behalf of ENRON CORP,   et al.,
		 Plaintiff

					Case No.  01-16034 (AJG)
					Jointly Administered

					 Adversary Proceeding
					 No. 03-02075  (AJG)

     -against-

KENNETH L. LAY AND LINDA P. LAY,
	       Defendants.
------------------------------------x

A~NDED COMPlAINT TO AVOID CERTAIN PRE-PETITION LOAN P~ND ANNUITY
	       TRANSACTIONS AS FRAUDULENT TRANSFERS

	  Plaintiff The Official Committee of Unsecured

Creditors (the "Committee,")  of Enron Corp.  ("Enron"), debtor in

possession in the above captioned cases,  and its affiliated

debtors and debtors in possession  (collectively the "Debtors"),

by and through its undersigned counsel, hereby alleges as and

for its amended complaint  (the "Complaint")  against defendants

Kenneth L. Lay ("Lay"), Enron's former chief executive and



chairman of its board of directors and Linda P.    Lay ("Mrs.

Lay"),   Lay's wife at all times relevant to the Complaint

(collectively the "Lays")

			  NATURE OF ACTION

	   1.   This action seeks the recovery of transfers of

over $80 million to Lay and Mrs.   Lay.  Between May 3,  1999 and

November 27,  2001, Lay used Enron common stock to repay over $94

million in cash loans he received from Enron pursuant to a

revolving loan facility.    Over $74 million of those repayments

made by Lay in Enron common stock   (the "Loan Transfers")

occurred within one year of the Debtors'   commencement of the

Bankruptcy Cases on December 2,   2001 (the "Petition Date") .  Lay

continued to draw such cash loans from Enron until one week

before the Petition Date.    The tendering of Enron's own stock to

repay loans taken in cash was not a fair exchange for Enron.

Each of these purported "repayments" by Lay in Enron stock was a

fraudulent transfer subject to avoidance under federal

bankruptcy and state law for the benefit of the Debtors'

estates.

	   2.   Tn addition to the Loan Transfers,  on September

21,  2001, little more than two months before the Petition Date,

the Lays temporarily assigned to Enron their interest in two

annuity contracts in exchange for $10 million in cash belonging

to Enron  (the "Annuity Transfers") .  The Annuity Transfers were

				   2



fraudulent transfers subject to avoidance for the benefit of the

Debtors'  estates.

	   3.   The Loan Transfers and the Annuity Transfers the

Lays received from Enron constitute transfers of property of The

Debtors'  estates.  It is within the exclusive jurisdiction of

the Bankruptcy Court to order the Lays to disgorge these

illegitimate gains.   Accordingly,  the Committee brings this

action seeking return of Enron's property to the Debtors'

estates for the benefit of the Debtors'   creditors.

			    THE PARTIES

	   4.   The Debtors.   Enron is a corporation organized

under the laws of Oregon with its principal place of business at

1400 Smith Street,  Houston,  Texas.  Commencing on the Petition

Date and from time to time thereafter,   the Debtors filed

voluntary petitions for relief under 11 U.S.C  101-1330 as

amended  (the "Bankruptcy Code") .  The Debtors and approximately

3,500 of their direct and indirect subsidiaries employ

approximately 25,000 individuals in their energy operations.

The Debtors continue to operate their business and manage their

property as debtors in possession pursuant to sections 1107 (a)

and 1108 of the Bankruptcy Code.

	   5.   Creditors' Committee.   On December 12, 2001,  the

United States Trustee appointed the Committee,   which appointment

was amended from time to time thereafter.    The Committee

				  3



represents the interests of all of the Debtors'   unsecured

creditors in these bankruptcy cases.    Among other things,  it is

statutorily authorized to investigate the Debtors'    assets and

liabilities and the operation of its businesses,   all with the

goal of maximizing recoveries for unsecured creditors.

	   6.   Lay is a United States citizen residing at 2001

Kirby Drive,  Suite 1240,  Houston, Texas, 77019.  From December

9,  1996 until February 1,  2001, Lay served as Enron's Chairman

and Chief Executive Officer.    From February 2001 until August

14,  2001, Lay served as Enron's Chairman.   From August 14,  2001

until January 23,   2002, Lay again served as Enron's Chairman and

Chief Executive Officer.

	   7.   Mrs.  Lay is a United States citizen residing at

2001 Kirby Drive,   Suite 1240, Houston, Texas, 77019.  Mrs.  Lay

is currently Lay's wife.    Lay and Mrs. Lay were husband and wife

on all dates relevant to the Complaint.

		       JURISDICTION AND VENUE

	   8.   This adversary proceeding is commenced pursuant

to sections 105,  544,  548 and 550 of the Bankruptcy Code,

sections 270 to 281 of the N.Y.   Debtor and Creditor Law and

Federal Rule of Bankruptcy Procedure 7001.

	   9.   This Court has jurisdiction over this adversary

proceeding pursuant to 28 U.S.C.    157 and 1334 as the claims

or causes of action arise under the Bankruptcy Code,   or are

				  4



 related to the voluntary petitions for relief filed by Enron

 under chapter 11 of the Bankruptcy Code.   In particular,  the

 claims or causes of action in this adversary proceeding concern

 Enron's power, as a debtor in possession cloaked with the rights

 of a trustee,  to avoid the fraudulent transfers and obligations

 to the defendants of assets rightfully belonging to the Debtors'

 estates.  The Committee,  given its unique statutory role and the

 circumstances of this case, was expressly authorized by the

 Court to commence and prosecute this action.

	   10.  Venue lies properly in this district pursuant to

 28 U.S.C.  1409(a) because this adversary proceeding arises in

 or is related to the Bankruptcy Cases pending in this district.

			     BACKGROUND

 I.   THE LOAN TRANSFERS

 The Loan Agreement

	   11.  On September 1,  1989, Lay and Enron entered into

 a loan commitment agreement  (the "Loan Agreement," attached as

 Exhibit ("Ex.") A).

	   12.  Pursuant to the terms of the Loan Agreement,

 Enron agreed "to make Advances to  LiLay] . . . in an aggregate

 amount not to exceed at any time the amount of   [$2.5 million]

 * . . ."  Loan Agreement  2.01.   The Loan Agreement also

 provided that Lay ".  . . may borrow, prepay .  . . and reborrow

				  5



under this section 2.01"   (the "Revolving Loan Facility") .  Id.

	   13.  Between February 10,  1997, through November 27,

2001  (the "Loan Period"),  Lay received cash from Enron under the

Revolving Loan Facility totaling $106,803,116.

Amendments to the Loan Agreement

	   14.  The Loan Agreement was first amended on February

28,  1994 (the "1994 Amendment")  to increase the maximum

allowable balance under the Revolving Loan Facility from

$2,500,000 to $4,000,000.

	   15.  The Loan Agreement was also modified on May 3,

1999  (the "1999 Amendment")  to enable Lay to "repay" any

outstanding balance on the Revolving Loan Facility "either in

cash and/or shares of common stock of Enron Corp."

	   16.  Pursuant to the 1999 Amendment,  Lay repaid

$94,025,000 of his total borrowings under the Revolving Loan

Facility by repeatedly conveying shares of Enron stock to Enron.

In addition, Lay maintains a balance of over $7 million on the

Revolving Loan Facility for which he has made no repayment,   by

cash,  stock or other means.

	   17.  On November 4,  2001, less than one month before

the Petition Date,  the Loan Agreement again was amended again to

increase the maximum allowable balance under to Revolving Loan

Facility from $4,000,000 to $7,500,000   (the "2001 Amendment").

Despite the fact that the 2001 Amendment was not executed until

				  6



November 4,   2001, Lay began obtaining loans over the $4,000,000

limit in August 2001.

	   18.  In the year preceding the Petition Date,   Enron

was in financial distress.

	   19.  Omitted.

	   20.  Omitted.

	   21.  Omitted.

	   22.  On August 14,  2001, Jeffrey Skilling resigned as

CEO of Enron after serving approximately six months in that

capacity.   Lay replaced Skilling as CEO of Enron the same day.

	   23.  Omitted.

	   24.  Omitted.

	   25.  Omitted.

	   26.  Throughout the year preceding the Petition Date,

Lay continued to use the Revolving Loan Facility to take out

enormous cash loans from Enron while purportedly "repaying" such

loans by conveying large amounts of Enron's overvalued stock

back to Enron.

	   27.  On October 25,  2001 and October 26, 2001, Lay

made a combined $2,825,000 worth of "repayments" under the

Revolving Loan Facility.   These were the final repayments that

Lay made under the Loan Agreement.    Lay received cash advances

totaling $2,525,000 as a result of transactions executed from

November 1,   2001 through November 27, 2001.

				  7



Lay's Use of Enron Stock To Make Payments

	   28.  From the time of the 1999 Amendment,  when the

Loan Agreement was amended to enable Lay to "repay" Enron with

stock,  Lay made all of his loan "repayments" under the Revolving

Loan Facility with Enron stock.

	   29.  Lay made 26 separate "repayments" to Enron with

Enron stock.   These 26 payments correspond to $94,025,000 of the

money Lay was advanced through the Revolving Loan Facility.

Transactions In The Year Preceding Enron's Bankruptcy

	   30.  Of the 26 total Revolving Loan Facility

transactions that Lay repaid in Enron stock,   22 were tendered

during the one-year period immediately preceding the Petition

Date.   In the aggregate, these 22 payments corresponded to

$81,525,000 that Lay drew down on the Revolving Loan Facility

during the one-year period.

	   31.  On December 21,  2000, Lay received $4,000,000 in

cash from Enron under the Revolving Loan Facility.

	   32.  On December 28,  2000, Lay conveyed to Enron

47,270 shares of Enron stock to repay $4,000,000 of debt owed to

Enron under the Revolving Loan Facility.

	   33.  On January 25,  2001, Lay received $4,000,000 in

cash from Enron under the Revolving Loan Facility.

	   34.  On February 1,  2001, Lay conveyed to Enron 50,768

shares of Enron stock to repay $4,000,000 of debt owed to Enron

				  8



under the Revolving Loan Facility.

	  35.   On March 23,  2001, Lay received $1,100,000 in

cash from Enron under the Revolving Loan Facility.

	  36.   On April 5, 2001, Lay received $950,000 in cash

from Enron under the Revolving Loan Facility.

	  37.   On April 19,  2001, Lay received $1,950,000 in

cash from Enron under the Revolving Loan Facility.

	  38.   On April 27,  2001, Lay conveyed to Enron 62,992

shares of Enron stock to repay $4,000,000 of debt owed to Enron

under the Revolving Loan Facility.

	  39.   On May 3,  2001, Lay received $4,000,000 in cash

from Enron under the Revolving Loan Facility.

	  40.   On May 14, 2001,  Lay conveyed to Enron 68,085

shares of Enron stock to repay $4,000,000 of debt owed to Enron

under the Revolving Loan Facility.

	  41.   On May 23, 2001, Lay received $4,000,000 in cash

from Enron under the Revolving Loan Facility.

	  42.   On May 25, 2001, Lay conveyed to Enron 75,472

shares of Enron stock to repay $4,000,000 of debt owed to Enron

under the Revolving Loan Facility.

	  43.   On June 11, 2001, Lay received $4,000,000 in cash

from Enron under the Revolving Loan Facility.

	  44.   On June 12, 2001, Lay conveyed to Enron 79,412

shares of Enron stock to repay $4,000,000 of debt owed to Enron

				  9



under the Revolving Loan Facility.

	  45.   On June 15, 2001,  Lay received $4,000,000 in cash

from Enron under the Revolving Loan Facility.

	  46.   On June 19, 2001,  Lay conveyed to Enron 86,618

shares of Enron stock to repay $4,000,000 of debt owed to Enron

under the Revolving Loan Facility.

	  47.   On June 22, 2001,  Lay received $4,000,000 in cash

from Enron under the Revolving Loan Facility.

	  48.   On June 22, 2001,  Lay conveyed to Enron 89,127

shares of Enron stock to repay $4,000,000 of debt owed to Enron

under the Revolving Loan Facility.

	  49.   On June 26, 2001,  Lay received $4,000,000 in cash

from Enron under the Revolving Loan Facility.

	  50.   On June 26, 2001,  Lay conveyed to Enron 90,518

shares of Enron stock to repay $4,000,000 of debt owed to Enron

under the Revolving Loan Facility.

	  51.   On June 27, 2001,  Lay received $4,000,000 in cash

from Enron under the Revolving Loan Facility.

	  52.   On June 27, 2001,  Lay conveyed to Enron 85,616

shares of Enron stock to repay $4,000,000 of debt owed to Enron

under the Revolving Loan Facility.

	  53.   On June 28, 2001,  Lay received $4,000,000 in cash

from Enron under the Revolving Loan Facility.

	  54.   On June 28, 2001,  Lay conveyed to Enron 82,747



	  Enron stock to repay $4,000,000 of debt owed to Enron

	  Revolving Loan Facility.

	  55.  On June 29,  2001, Lay received $4,000,000 in cash

from Enron under the Revolving Loan Facility.

	  56.  On July 26,  2001, Lay conveyed to Enron 85,397

shares of Enron stock to repay $4,000,000 of debt owed to Enron

under the Revolving Loan Facility.

	  57.  On July 27,  2001, Lay received $4,000,000 in cash

from Enron under the Revolving Loan Facility.

	  58.   On August

			 20,  2001, Lay conveyed to Enron 110,345

shares of

under the

shares

under

 of

the

cash from

shares of

under the

cash from

shares

under

 of

the

Enron stock to repay $4,000,000 of debt owed to Enron

Revolving Loan Facility.

59.   On August 21, 2001, Lay received $4,000,000 in

Enron under the Revolving Loan Facility.

60.   On August 23, 2001, Lay conveyed to Enron 108,254

Enron stock to repay $4,000,000 of debt owed to Enron

Revolving Loan Facility.

61.   On August 24, 2001, Lay received $4,000,000 in

Enron under the Revolving Loan Facility.

62.   On August 24, 2001, Lay conveyed to Enron 110,041

Enron stock to repay $4,000,000 of debt owed to Enron

Revolving Loan Facility.

63.   On August

28,  2001, Lay received $4,000,000 in

cash from Enron under the Revolving Loan Facility.

				11



	  64.  On August 30,   2001, Lay conveyed to Enron 112,676

shares of Enron stock to repay $4,000,000 of debt owed to Enron

under the Revolving Loan Facility.

	  65.  On August 31,   2001, Lay received $4,000,000 in

cash from Enron under the Revolving Loan Facility.

	  66.  On September 4,  2001, Lay conveyed to Enron

114,286 shares of Enron stock to repay $4,000,000 of debt owed

to Enron under the Revolving Loan Facility.

	  67.  On September 6,  2001, Lay received $4,000,000 in

cash from Enron under the Revolving Loan Facility.

	  68.  On October 23,  2001, Lay conveyed to Enron 75,796

shares of Enron stock to repay $1,500,000 of debt owed to Enron

under the Revolving Loan Facility.

	  69.  On October 24,  2001, Lay received $3,500,000 in

cash from Enron under the Revolving Loan Facility.

	  70.  On October 24,  2001, Lay conveyed to Enron

103,585 shares of Enron stock to repay $1,700,000 of debt owed

to Enron under the Revolving Loan Facility.

	  71.  On October 25,  2001, Lay received $1,500,000 in

cash from Enron under the Revolving Loan Facility.

	  72.  On October 25,  2001, Lay conveyed to Enron 33,369

shares of Enron stock to repay $550,000 of debt owed to Enron

under the Revolving Loan Facility.

	  73.  On October 26,  2001, Lay received $2,000,000 in

				12



cash from Enron under the Revolving Loan Facility.

	   74.  On October 26,  2001, Lay conveyed to Enron

147,727 shares of Enron stock to repay $2,275,000 of debt owed

to Enron under the Revolving Loan Facility.

	   75.  On November 1,  2001, Lay received $1,000,000 in

cash from Enron under the Revolving Loan Facility.

	   76.  On November 9,  2001, Lay received $525,000 in

cash from Enron under the Revolving Loan Facility.

	   77.  On November 27,  2001, Lay received $1,000,000 in

cash from Enron under the Revolving Loan Facility.

	   78.  Every Revolving Loan Facility payment that Lay

tendered to Enron during the one-year period prior to the

Petition Date consisted of Enron common stock.     Lay did not make

any payments to Enron under the Revolving Loan Facility with

cash during this time.

II.   THE A1~U4UITY TRANSFERS

	   79.  On September 21,  2001, the Lays entered into a

"Purchase,  Sale and Reconveyance Agreement"  (the "Annuity

Agreement")   with Enron.  See Annuity Agreement Ex. B.

	   80.  Pursuant to the Annuity Agreement,  Enron paid $10

million in cash to the joint checking account of the Lays via

wire transfer.

	   81.  Tn consideration of the $10 million payment from

Enron,  the Lays were obligated to transfer their interests in

				 13



two annuity contracts   (the "Annuity Contracts")  to Enron for a

period of time to end on December 31,   2005.

	   82.  As estimated by Enron in internal documents

proposing different potential transactions with the Lays,     the

Annuity Contracts had a collective value of $4,691,567 as of

September 21,  2001.   The Annuity Agreement therefore represented

a windfall of more than $5,308,433 over and above Enron's own

belief in the market value of the Annuity Contracts.

	   83.  Enron purportedly entered into the Annuity

Agreement with the Lays because of Lay's continued value to

Enron,  despite the fact that Lay's continued employment with

Enron was of no value.

	   84.  The Annuity Contracts were both issued by

Manulife NA.   Lay owned the Annuity Contract numbered 002105676.

Mrs.  Lay owned the Annuity Contract numbered 002155712.

			    COUNT I

	 Avoidance and Recovery of the Loan Transfers
		   as a Fraudulent Transfer

 (pursuant to 11 U.S.C.   544,  548(a) (1) (B) and 550(a) (1), N.Y.
   Deb.  & Cred. Law  270 to 281 and/or other applicable law)

	   85.  The Committee repeats and realleges the foregoing

allegations as if set forth fully herein.

	   86.  The Loan Transfers to Lay constituted a transfer

of an interest in property of the Debtors.

	   87.  The Loan Transfers to Lay were for the benefit of

				  14



Lay.

	   88.  Enron received less than reasonably equivalent

value for the Loan Transfers.

	   89.  Enron was insolvent at the time of,  or was

rendered insolvent as a result of,   the Loan Transfers.

	   90.  As a direct and proximate result of the Loan

Transfers,  Enron and its respective creditors suffered losses

amounting to at least the value of the Loan Transfers.

	   91.  At the time of the Loan Transfers,  there were

creditors of Enron holding unsecured claims,   and insufficient

assets to pay Enron's liabilities in full.    To date creditors of

the Debtors holding unsecured claims still exist.

	   92.  The Debtors are entitled to avoid the Loan

Transfers pursuant to Sections  544 and 548(a) (1) (B) of the

Bankruptcy Code,  and N.Y. Debt.  Cred. Law  270 to 281 and/or

other applicable law.

	   93.  Pursuant to Section 550 of the Bankruptcy Code,

the Debtors may recover for the benefit of the Debtors'   estates

the value of Loan Transfers from the initial transferee,   from an

entity for whose benefit the Loan Transfers were made,   or from

any immediate or mediate transferee of such initial transferee.

				  15



			    COUNT II

      Avoidance and Recovery of the Annuity Transfers
		  as a Fraudulent Transfer
  (pursuant to 11 U.S.C.   544, 548(a) (1) (B) and 550(a) (1), N.Y.

   Deb. & Cred.  Law  270 to 281 and/or other applicable law)

	       The Committee repeats and realleges the foregoing

	       if set forth fully herein.

	  95.  The Annuity Transfers to the Lays and the

Partnership constituted a transfer of an interest in property of

the Debtors.

	  94.

allegations as

value for

insolvent

Trans fers,

amounting

equivalent

or became

	  96.   The Annuity Transfers to the Lays were for the

benefit of the Lays and the Partnership.

	  97.   Enron received less than reasonably

	  the Annuity Transfers.

	  98.   Enron was insolvent at the time of,

	  as a result of,  the Annuity Transfers.

	  99.   As a direct and proximate result of the Annuity

	   Enron and its respective creditors suffered losses

	  to at least the value of the Annuity Transfers.

	  100. At the time of the Annuity Transfers,   there were

creditors of Enron holding unsecured claims,   and insufficient

assets to pay Enron's liabilities in full.    To date, creditors

of Debtors holding unsecured claims still exist.

	  101.  The Debtors are entitled to avoid the Annuity

Transfers pursuant to Sections  544 and 548(a) (1) (B)of the of

				 16



the Bankruptcy Code,  N.Y.  Debt. Cred. Law  270 to 281,  and/or

other applicable law.

	   102. Pursuant to Section 550 of the Bankruptcy Code,

the Debtor may recover the benefit of the Debtors'    estates the

value of Loan Transfers from the initial transferee,    from an

entity for whose benefit the Loan Transfers were made,    or from

any immediate or mediate transferee of such initial transferee.

	   WHEREFORE, The Committee respectfully requests that

the Court enter judgment:

	   A.  Avoiding the Loan Transfers pursuant to 11 U.S.C.

 544,  458 and 550(a) (1), N.Y. Debt. & Cred. Law  270 to 281

and/or other applicable law.

	   B.  Avoiding the Annuity Transfers pursuant to 11

U.S.C.   544, 458 and 550(a) (1), N.Y. Debt. & Cred.  Law  270

to 281 and/or other applicable law.

	   C.  Awarding interest at the maximum legal rate

commencing from the time of the Complaint to the date of entry

of judgment heron.

	   D.  Awarding the cost of the suit herein.

	   E.  Awarding the reasonable and necessary attorney's

fees to the extent permitted by law,   through and including trial

and for any subsequent appeal.

	   F.  Granting such other and further relief as the

Court deems just and proper.

				 17



Dated:   March 13,2003

				    MILBANK,  TWEED, HADLEY,
				    & MCCLOY LLP

					  /5/ Susheel Kirpalani
				    Luc A. Despins  (LD 5141)
				    David R.  Gelfand  (DG 1185)
				    Susheel Kirpalani   (SK 8926)
				    One Chase Manhattan Plaza
				    New York,  NY  10005
				    (212) 530-5000

				    Counsel for the Official
				    Committee of Unsecured
				    Creditors

				  18



EXHIBIT A



- *                   r-.
		      I

						      Exhibit D

			LOAN COMIfITKEHT AGREF.HEHT

	   This Loan  Commitment Agreement  ("Agreement"),  and  made
     effective as of  ipteinber 1, 1989, is by and between EnrOll Corp.
     ("Company"  or  "Lender"), a  Delaware  corporation  having  its
     headquarters at  1400  Smith Street, Boustofl,., Texas 77002, and
     Kenneth L. Lay ("EmplOyO@" or "Borrower"), a.n individual currently
     residing in Houston, Harris County, Texas.

			    WITHESSETH

	   WHEREAS, Company and Employee are parties to that certain
     Employment Agreement entered into this date and made effective as
     of September 1, 1989, of which Employment Agreement this Agreement
     is a part and is incorporatod therein I

	   HOW, THEREFORE,  in consideration at the mutual  covenants
     herein contained and for other good and valuable consideration, the
     parties agree as follows;

				AJ&TICIAE I

		      DETINITIOHS AND ACCOUNTING TERIIS

	   SECTION 1.01.    Certain DefiflCd Terms. As  used in  this
     Agreement, the following terms shall have the following meanings
     (such meaning; to be equally applicable to both the singular and
     plural forms of the terms defined):

	   "~nn~" means an advance by the Lender to the Borrower
     pursuant to Article II.

	   "~QflT.~MJ3S" means a borrowing by the Borrower of an Advance
     made by the Lender, pursuant to Article II.

	   "Business DaY" means a day of the week, Monday through Friday,
     on which the offices of the Lender at 1400 Smith Street, Houston,
     Texas 7)002, are open for business.
	   ~ has the meaning specified in Section 2.01.

	   "Events of Defal21t has the meaning specified in Section 4.01.

	   "Loan Document" has the meaning specified in section 3.01.
	   "~jg~j" means a promissory note of the Borrower payable to the
     order of the Lender,   in substantially the form of Attachment A
     hereto, evidencing the aggregate indebtedness of the Borrower to
     the Lender resulting from the Advances made by the lander.



		  (~)                          (.

     "Notice of Barrowinci" has the meaning specified in Section
2 . 02.

     "Pledge Agreeluent" has the meaning specified in Section 3.01.

     "Termination Date" means the earlier date of (i) August 31,
1994,   (ii) termination of  Borrower's   employment   with lander
pursuant to Section i.ol(b), or (iii) Borrower'S death.

     SECTION 1.02.  ComDut&tiOfl of Time Periods.  In this Agreement
in the computation of periods of time from a specified date to.. a
aster specified date, the word "from" means "from aid inclldiflg"
and the word. "to" and "until" each means "to but *xcluding".

			   ARTICLE II

		 AMOUNTS AND TERMS OF THE ADVANCES

     SECTION 2.01.  2bL.24XID~tE.  The Lender agrees, conditioned
on the future performance of substantial employment services by
Borrower, and on the terms and conditions hereinafter set forth,
to make Advances to the Borrower (a "Borrowing") from time to time
on any Business Day during the period from the date hereof until
August 31, 1993 in an aggregate amount not to exceed at any tiiae
the  amount    of Two   Million  Five  Hundred   Thousand  Dollars
($2,500,000.00), as such amount may be reduced pursuant to Section
2.03   (such Lender's "Commitment").   within the   limits  of' the
Commitment, the Borrower may borrow, prepay pursuant to Sectiofl
2.06 and reborrow under this Section 2.01.

     SECTION 2.02.  Makina the Advances.  Each Borrowing shall be
made on notice, given not later than 11:00 A.M.    (NOUStOD, Texas
tixuel,  at least three Business Days prior to the date of the
proposed Borrowing by the Borrower,   to the lander.     Each such
notice   of a  Borrowing (a "Notice  of Borrowing")    shall be in
writing,    substantially in the  foru of    Attachment B  hereto,
specifying therein the requested (i) date of such Borrowing, and
(ii)   aggregate  amount of such  Doz-rowing.    Before 3:00  P.M.
(Houston,   Texas time) on the date of such Borrowing,    and upon
fulfillment of the applicable conditions set forth in Article III,
the Lender shall Advance the Borrowing funds to Borrower at the
Lender's address.

     SECTION 2.03.  ReductiOn of the Commitment.   The amount of the
Lender's commitment specified in Section 2.01 shall be reduced by
the amount of any prepayment made by Borrower pursuant to Section
2.06 after January 1, 1994, provided, however, that on the earlier
of  (i)  the Termination Date, or  (ii) Borrower's termination of
employment with the Lender f or any reason, the commitment of the
Lender shall be zero.

				 2



					      (

      SECTION 2.04. tRA!mifl~.  The Borrower shall repay the unpaid
principal amount of each Advance mad. by the Lender in accordance
with the Note made by the Borrower to the order of the Lender, in
no event later than August 31,. 1994.

      SECTION 2.05.   2.n~j.Zta.t. The Borrower shall pay interest,
compounded annually, on the unpaid principal and interest at:an
annual  rate   determined under   the  following formula  for each
Advance:   ~ - A x ATR, where "I" is the amount of interest. "A is
the amount of an Advance, and "Am" is the applicable federal rate
as defined under U.S.   Internal Revenue Code Section 1274(d)   in
effect at the date of    each Advance.    The Borrower shall mike
pa~ents of accrued interest with respect to each Advance on the
anniversary date of an kdvance, or at the election of Borrower on
the subsequent 31st day of December.

      SECTION 2.06.   ~              (a) ~n~iQz~.   There shall be
no mandatory prepayment of the Advances made by the Lender to the
Borrower.

      (b) ~pU~n&l.    The Borrower may, upon at learnt three Business
Days' notice to the Lender stating the proposed date and aggregate
principal amount of the prepayment, and if such notice is given the
Borrower shall, prepay such outstanding principal amounts of the
Advances,  together with accrued     interest to the date  of such
prepayment on the principal      amount prepaid without premium or
penalty,   or  at the  Borrower's   election, Borrower may make  a
prepayment of interest only.

      SECTION 2.07.   payments and Coinrrntations. (a) The Borrower
shall make each payment under any Loan Document not later than
31:00 A.14.  (Jiouston, Texas time)   on the day when due in U.S.
dollars to the Lender at its address referred to in section 5.02.

      (b)  All computations of interest pursuant to Section 2.05
shall be made on the basis of a year of 365 or 366 days, as the
case may be.

      (C) W~ienever any pay3nent hereunder or under the Notes shall
be stated to be due on a day other than a Business Day,       such
payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation
of payment of interest.

      SECTION 2.08.   Loan Intentions.   It is the intention of the
parties tbat all Advances made under this Loan Commitment Agreement
are made in full compliance with and conditioned upon u.s. Internal
Revenue Code Section 7872(f)(5) in effect as of such date.

				   3



					     (

      SECTION 2.09.  payment of Prior Loan.   Borrower consents,
directs and authorizes Lender to use the proceeds of the first
Advances made under this Agreement to pay the remaining balance of
principal   and  intereut due  Lender  under  that certain  Loan
Commitment Agreement between the parties dated as of May 15, 1987.
			   ARTICLE III

		      CONDITIONS OF LENDING

      SECTION 3.01.    Condition  Precedent  to Advances.    The
obligation of the Lender to make any Advance is subject to the
condition precedent that the Lender shall have received at least
three  Business  Days prior  to   the date  of such Advance  the
following, in form and substance satisfactory to the Lender:

      (a) A Note made by Borrower to the order of the Lender, and

      (b) A Pledge Agreement, making a pledge and assignment to the
Lender of Pledged Collateral having a present value and liquidity
reasonably acceptable to Lender, duly executed by the Borrower, in
substantially the form of Attachment C    (the "Pledge Agreement,
and,  together   with this  Agreement  and  the Note, the  "Loan
Documents"  and  individually a   "Loan Document"), together with
evidence that all actions in the opinion of the Lender, desirable
to perfect and protect the security interests created by the Pledge
Agreement have been or will be taken in a timely manner.

			    ARTICLE IV

			EVENTS OF DEFAUIJI!

      SECTION 4.01.  Events of Default.   If any of the following
events ("Events of Defallltm) shall occur and be continuing:
      (a) The Borrower shall fail to pay any principal of any Note
when the same becomes due and payable, or shall fail to pay any
interest on any Note for more than five days after the same becomes
due and payable: or

      (b) The exmployment of the Borrower with the Lender1 pursuant
to the Employment Agreement between the parties effective September
1,  1989, terminates  other than through Borrower's "Invol~untary
Termination", a~ defined in said Employment Agreement; or

      (c) The death of the Borrower;

then,  and  in any such event,  the Lender may by notice to the
Borrower,   declare a Note,  all  interest thereon and all other
amounts  payable  under this Agreement to be   forthwith due and
payable, without presentment, demand, protest or further notice of
any kind, all of which are hereby exDresslv waived by the Borrower?
				  4



  ~YJAfl~. bgl'iY3X. that in the event of an actual or deemed entry
of an order for relief with respect to the Borrower under the
Federal Bankruptcy Code,   (A) the obligation of the Lender to make
Advances shall autoz~atScally be ter-inDinated and (D) the Notes, all
such interest and all such amounts shall automatically become and
be du. and payable, without presentment, demand, protest or* any
notice of any kiWd, all of which are hereby expressly waived by the
Borrower.

			      ARTICLE V

			    H] SCEIJLANEOUS

      SECTION 5.01.   ).mendmefltS. Etc. No amendment or waiver of any
provision of any Loan Document, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Lender, and then such waiver
or consent shall be effective only in the specific instance and for
the specific purpose for which given.

      SECTION 5.02.   ~  j~iXjL~.  All notices and other communica-
tions  provided  for   hereunder shall     be  in writing (including
telegraphic, telex or cable communication) and mailed, telegraphed,
telexed, cabled or delivered, if to the Lender, at its address at
1400 Smith Street, Houston, Texas 77002, Attention: Treasurer; if
to the Borrower, at 3195 Inwood, Houston, Texas 77019, or at such
other address as shall be designated by either such party in a
written  notice  to    the  other party.       All such  notices and
communications shall, when mailed, telegraphed, telexed or cabled,
be  effective when     deposited in    the  mails, delivered to  the
telegraph company, confirmed by telex answerback or delivered to
the cable company, respectively.

      SECTION 5.03.   No Waiver? Remedies.     No failure on the part
of the Lender to exercise, and no delay in exercising, any right
under any Loan Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right by Lender
preclude any other or further exercise thereof or the exercise of
any other right.    The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law.

      SEC'flON s.oi~. Binding Effect? Governing Law.   This Agreement
and the Notes shall be governed by. and construed in accordance
with, the laws of the State of Texas.

      SECTION 5.05.   Nontransferflbilitv.   Notwithstanding any other
provision of a Loan Document to the contrary, in no event shall the
benefits of the interest arrangements of the Advances by the Lender
and the Borrowings by the Borrower be transferable.

				  5



		 I                         (

    IN W~ThESS WMThEOF  the parties have executed this AgretEent
es of the date first above written.

				  E?~1~OR CORP.

ATTEST:

Peggy B. )Ienchaca
VSc. President  Secretary

				  )~ENNETH L. LAY

8908073. PDK

			       6

4.e. %obA~b v~-a)bI~



EXHIBIT B



	    PURCHASE. SALE AND RECONVEYANCE AGREEMENT

     This Purchase and Sale Agreement (thc "Agreement"), effective as of September 21,
2001 (thc "Effective Date"), is made and entered into by and between Kenneth L. Lay (the
*'Executive") and Linda P. Lay (jointly, the *'Lays") and Enron Corp. (the "Company"), a
corporation organized under the laws of thc State of Oregon.

			       WITNESS ETH:

     WHEREAS, the Lays own (i) a variable annuity contract issued by the Manufactuict's
Life Insurance Company of North America, policy number 002105676, attached hereto as
Exhibit 1, and (ii) a variable annuity contract issued by the Manufacturer's Life Insurance
Company of North America, policy number 002155712, attached hereto as Exhibit 2
(hereinafter, both contracts will be referred to individually as the "Contract" and collectively as
the "Contracts"); and

     WHEREAS, the Executive is currently employed by the Company as Chairman of the
Board and Chief Executive Officer of the Company; and

     WHEREAS, the Executive's services have been, and the Company expects will continue
to be, of substantial value to the Company; am!

     WHEREAS, the Lays desire to transfer ownership of the Contracts to the Company for
consideration; and

     WIIEREAS, the Company desires to purchase the Contracts from the Layi for
consideration and to agree to reconvey such Contracts to the Executive upon the occurrence of
certain specified events, thereby encouraging the Executive to remain in the employment of the
Company;

     NOW, THEREFORE, it is agreed as follows:

     1.     Definitions. Where the following words and phrases appear in this Agreement,
they will have the respective meanings Set forth below unless their context clearly indicates to
the contrary:

	    1.1   Affihicie: Each trade or business (whether or not incorporated) which
     together with the Company would be deemed to be a "single employer" within the
     meaning of subsedions (b), (c), (in), or (o) of section 414 of the Internal Revenue Code
     of 1986, as amended, or any other entity designated by the Board of Directors of the
     Company as an "AffihiatC for purposes of this Agreement.

	    1.2   Disability: With respect to the Executive, such total and permanent
     disability as qualifies the Executive for benefits under the long-tenn or extended
     disability plan of the Company or Affiliate covering the Executive at the time. If no such
     long-term or extended disability plan covers the Executive at the time of the alleged
     disability, "Disability" will mean an inability to perform duties and services for the
     Company or an Affiliate by reason of a medically determinable physical or mental



impairment supported by medical evidence which in the opinion of the Board of
Directors of the Company can be expected to result in death or which can be expected to
last for a continuous period of not less than twelve months.

       1.3   Good Reason:   "Constructive termination" or "good reason" (or such
similar refcrencc) as dcfined in the Executive's employment agreement with the
Company and, in the absence of such employment agreement or such definition, "Good
Reason" will mean the occurrence of any of the following events without the Executivc's
wrinen consent: (i) a substantial and adverse change in the Executive's duties, control,
authority, status, or position with the Company or an Affiliate, or the assignment to the
Executive of any duties or responsibilities that are materially inconsistent with such status
or position, or a material reduction in the duties and responsibilities previously exercised
by the Executive associated with such position, or a loss of title, loss of significant
authority, power, or control associated with such position, or any removal of the
Executive from such position, except in connection with a Termination for Cause or
Disability or as a result of death; or (ii) any material reduction in the Executive's base
salary from the Company or an Affiliate, unless such reduction shall also apply to
similarly situated executives of the Company or an Affiliate and does not exceed ten
percent per year.

       1.4   Involuntarily Termination:   Termination by the Company of the
Executive's employment as an employee with the Company or an Affiliate at the election
of the Company or Affiliate, provided that such termination is not a Termination for
Cause. Involuntary termination shall not include a transfer of assignment or location
where the Executive is employed by or in the service of the Company or an Affiliate both
before and after the transfer.

       1.5   Termination for Cause:    "Termination for Cause" (or such similar
reference) as defined in the Executive's employment agreement with the Company and,
in the absence of such employment agreement or such definition, "Termination for
Cause" will mean Termination of the Executive's employment or service at the election
of the Company or an Affiliate because of the Executive's (i) conviction of a felony
relating to or in connection with the Company or the Company's business (which,
through lapse of time or otherwise, is not subject to appeal), (ii) willful refusal without
proper legal cause to perform the Executive's duties and responsibilities; or (iii) willful
engagement in conduct which the Executive has, or in the opinion of the Board of
Directors of the Company or the Affiliate for which the Executive is at the time
employed should have, reason to know is materially injurious to the Company or an
Affiliate. Such termination of employment or service will be effected by notice thereof
delivered by the Company or an Affiliate to the Executive and will be effective as of the
dante stated in such notice; provided, however, that if (i) such termination of employment
or service is because of the Executive's willful refusal without proper cause to perform
any one or more duties and responsibilities and (ii) within seven days following the date
of such notice the Executive ceases such refusal and uses all reasonable efforts to perform
such obligations, the termination of employment of service, if made, will not be for
cause.

				  2



     2.    Transfer of Ownershiv of the Contracts from the Lays to the ComDanv.
Subject to and in accordance  with the provisions, terms, and conditions specified in
Paragraphs 2.1 through 2.4 below, the Lays agree to transfer ownership of the Contracts to the
Company for consideration from the Company in the amount of FIVE MILLiON DOLLARS
(SS,OOO,OOO) PER CONTRACT (thc "Purchase Price"), which all parties agree constitutes the
fair market value of each Contract, and the Company agrees to tendcr the Purchase Price to the
Lays and to accept ownership of the Contracts; provided, however, that prior to or simultaneous
with the tender of the Purchase Price to the Lays, the Lays (i) filly and accurately complete the
Personal Information Change Form (Maintenance Form) attached hereto as Exhibit 3 for each of
the Contracts directing a change in ownership of such Contract to the Company and designati~g
the Company as sole and primary beneficiary to receive any death proceeds paid under the
Contracts, (ii) execute and submit such forms to the Company, and (iii) transfcr the originals and
all copies of the Contracts in their possession to the Company.

	   2.1   The Closing.   The closing of the purchase of the Contracts by the
     Company pursuant to this Section (the "Closing") will take place at the offices of the
     Company, 1400 Smith Street, Houston, Texas 77002, at - A.M., Houston time, on
     September 21, 2001, or on such other dare and at such hour and place as mutually agreed
     upon in writing by the Lays and the Company.

	   2.2   Payment of the Purchase Price.   The Company will deliver a certified
     check in the principal amount of the Purchase Price or wire funds in the principal amount
     of the Purchase Price to the Lays at the Closing, payable jointly to the Lays.

	   2.3   Representations and Warranties by the Lays.  The Lays represent and
     warrant to the Company as follows:

		 2.3.1 The Lays (i) have the legal capacity and authority to execute,
	   deliver, and perform this Agreement, (ii) are the sole legal and beneficial owners
	   of the Cornracts, (iii) have not granted or agreed to grant to any person any lien,
	   claim, charge, security interest, encumbrance or adverse claim on the Contracts,
	   and (iv) have not taken any other action which would result in the imposition of
	   any such lien, charge, security interest, encumbrance or adverse claim other than
	   as provided for in this Agreement.

		 2.3.2 Upon transfet of ownership of the Contracts to the Company, the
	   Company will have good title to the Contracts, free and clear of any liens,
	   charges, security intcrest.s, encumbrances or adverse claims whatsoever other than
	   as provided for in this Agreement.

		 2.3.3 This Agreement has been duly executed and delivered by the Lays
	   and constitutes the valid and binding obligations of the Lays enforceable against
	   the Lays in accordance with its terms.

		 2.3.4 The execution and delivery by the Lays of this Agreement does
	   not, and the consummation by the Lays of the transaction contemplated herein on
	   the part of the Lays will not violate, cause a default under, breach the icrms of, or

				       3



	   require the consent, authorization or approval of any other person under any
	   governing instrument or any loan agreement, mortgage, indenture, or other
	   contract or agreement to which the Lays or the Company or an Affiliate is a party,
	   by which the Lays or the Company or an Affiliate is bound, or to which the
	   properties of either are subject or under any franchise, license, or permit
	   applicable to either of them.

	   2.4   Representations of the Company. The Company hercby represents and
     warrants to the Lays as follows:

		 2.4.1 The Company has legal capacity and authority to execute and
	   perform this Agreement.

		 2.4.2 The execulion, delivery, and performance of this Agreement and
	   the transfer of ownership of the Contracts contemplated hereby will not conflict
	   with or result in a breach of any agreement, contract, statute, undertaking, or other
	   arrangement to which the Company or an Affiliate is a party or by which the
	   Company or an Affiliate is bound.

		 2.4.3 The Company is satisfactorily famni]iar with the Contracts and in
	   purchasing the Contracts, it has relied solely upon the judgment of the Company
	   and not upon any representations of any other person, other than those of the Lays
	   set forth hcretn.

		 2.4.4 The warranties and representations contained herein shall survive
	   the execution hereof.

     3.    Reconvevance of the Contracts to the Executive. Subject to and in accordance
with the provisions of Paragraphs 3.1 Througj~ 3.3 below, the Company agrees to transfer
ownership of the Contracts acquired by the Company pursuant to Section 2 of this Agreement to
the Executive upon the occurrence of the earlier of (i) the completion of a continuous period of
employment by the Executive with the Company extending from the EfTcctive Date to
December 31, 2005 or (ii) a termination of the Executive's employment due to (a) the
Executive's retirement from the Company or an Affiliate with the consent of a majority of the
members of the Board of Directors of the Company or the Affiliate for which the Executive is at
the time employed, (b) a Disability of the Executive, or (c) an involuntary Termination other
than a Termination for Cause, or (d) a termination for Good Reason.

	   3.1   Effect of Termination of Employmeni. Except as provided by this Section
     and Section 4 below, a termination of the Executive's employment for any reason prior to
     December 31, 2005 will result in the complete, total and permanent termination of(i) all
     obligations of the Company arising under this Agreement to transfer ownership of the
     Cottmcts to the Executive, (ii) all obligations of the Company to pay proceeds of the
     Contracts pursuant to Section 4 of this Agreement, and (iii) any claims of the Lays to the
     Contracts.

	   3.2   Method of Reconveyance.  Pursuant to a transfer of ownership of the
     Contracts from the Company to the Executive in accordance with this Section, the

				    4



     Company will (i) transfer the originals and all copies of the Contracts in its possession to
     the Executive and (ii) fully and accurately complete a Personal Information Change Form
     (Maintenance Form) for each of the Contracts directing a change in owncrahip of such
     Contract to Executive and designating such person(s) as Executive may direct to receive
     any death proceeds paid under the Contract and (iii) submit such forms to Executive.

	    3.3   Considerazion for Reconveyance. No consideration will be paid by the
     Executive or any party pursuant to a transfer of ownership of the Contracts to the
     Executivc in accordance with this Section.

     4.     Deatb of Insured. Upon the death of either of the Lays while the Company owns
the Contracts and continues to have a potential obligation to reconvey them to Executive, the
Company agrees to pay all proceeds received under the Contracts as a result of the death of the
decedent to the Executive if the decedent is Linda P. Lay or Executive's estate if the decedent is
Kenneth L. Lay. No other benefits arc provided by this Agreement upon the death of either of
the Lays.

     5.     Annuity Payments. If the Company is the owner of a Contract at the Contract's
maturity date and either of the Lays receives under the Contract any annuity payment, he or she
shall within 30 days of receipt thereof pay to the Company the amount so received net of fedeml
and state income taxes.

     6.     No AsslenmenL Neither this Agreement nor any right created hereby may be
assigned by any of the parties (or their successors in interest) without the prior written agreement
of the panics. The Company may not assign, anticipate, sell, transfer, or otherwise encumber in
any manner, either voluntarily or involuntarily, the Contracts prior to December 31, 2005
without the written agreement of the Lays unless the Company's potential obligation to reconvey
the Contracts to Executive has terminated.

     7.     Bindln~ Effect. This Agreement will be binding upon and inure to the benefit of
the Company, its successor and assigns and the Lays and their heirs, executors, administrators,
and legal representatives.

     S.     Not a Contract of Employment. This Agreement will not be deemed to
constitute a contract of employment between the parties hereto, nor shall any provision hereof
restrict the right of the Company to discharge the Executive or restrict the right of the Executive
to terminate his employment.

     9.     Nature of AereenienL The benefits herein provided for are in addition to, and
not in lieu of, any other arrangement pursuant to which the Company may have made provisions
for the Lays, and no such arrangement shall affect or be affected by the pmvisions of this
Agreement. Nothing contained in this Agreement shall be construed to alter, abridge, or in any
manner affect the rights and privileges of the Lays to participate in any pension, thrift, profit
sharing, stock bonus, annuity or similar plan whic'h the Company may now or hereafter maintain.

     10.    ~jii~holdinofTax. Notwithstanding any provision in this Agreement to the
contrary, the Company is authorized to withhold from any amounts payable hereunder to the
Executive any tax required to be withheld by the federal or any state or local government. For

				    5



purposes of Sections 3 and 4 hereof, any amounts so withheld will be deemed to have been paid
to the Executive.

     11.    Effect on oilier Cosnnan~ Benefits and Perciulsites. This Agreement shall not
be construed to alter, abridge or in any manner affect the nghts, privileges, OT bcnchts provided
by any deferred compensation or retirement arrangerncnt, plan, prugrarn, perquisite, practice, or
policy which the Company may now or hereafier maintain.

     12.    Modification. This Agreement may not be modified, altered or amended in any
way except by a written instrument signed by the parties hereto or their respective successor or
assigns, and may not be otherwise terminated except as provided herein.

     13.    Governing Law. Except to the extent federal law applies and preempts state law,
the Agreement will be construed, enforced, and administered according to the laws of the state of
Texas, excluding any conflict-of-law rule or principle that might refer construction of the
Agreement to the laws of another slate or country. In the event of litigation relating to the
Agreement, such litigation must be brought in state or federal court residing in Houston, Hams
County, Texas, and each party to this Agreement and each person or entity claiming Tights of or
through a party to this Agreement irrevocably appoint the Secretary of State for the State of
Texas as agent for receipt of service of process in connection with such litigation.

     14.    Termination of As~reement. This Agreement will automatically terminate upon
the first to occur of (i) the rcconveyance of ownership of the Contracts to the Executive as
provided in Section 3 of this Agreement or (ii) termination of the Company's potential obligation
to reconvey the Contracts to Executivc.  This Agreement shall terminate as to either Contract
upon payment by the Company pursuant to Section 4 of a death benefit upon the death of the
insured under the Contract.

     15.    ArbitratIon. Any controversy, whether contractual or otherwise, arising out of or
related in any way to the Agreement, will be subject to final and binding arbitration in lieu of
litigation. Any such arbitration proceedings will be subject to the labor arbitration rules of the
American Arbitration Association and will be held in Houston, Texas before a single arbitrator
selected by the parties from the American Arbitration Association's employment law panel. In
deciding the substance of the parties' claims, the arbitrator will apply the substantive laws of the
state of Texas (excluding Texas cboicc-of.lisw principles that mig~n call for the application of
some other state's law). The arbitrator will not have the power to add to or ignore any of the
terms and conditions of the Agreement. 1-lu decision will not go beyond what is necessary for
the interpretation and application of the Agreement and obligations of the parties under the
Agreement. If any controversy regarding the Agreement is submitted to arbitration, the parties
and any persons or entities claiming through the parties agree that the arbitrator's decision will
be final and legally binding on all parties. The arbitration provisions of this paragraph will be
governed by the provisions of the Federal Arbitration Act.

     16.    Entire Agreement.      The     forejoing constitutes the entirc agreement and
understanding of the parties on the subject hereof and supersedes all prior agreements and
understandings relating to the subject matter hereof.

					     6



     ZN WITNESS WhEREOF, the Company has caused this Agreement o be executed by
its duly authorized officer and the Lays have set their hands this 2~  day of~flAe44!2OOI.

				     ENRON CORP.

				     By:____

				     Tide: V,c~.                       f~.cb&.*~t

					  NETH L. LAY

059902 2.DOC

				 7