EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement") is made by and between ENRON CORP. ("Company") and KENNETH L. LAY ("Employee").

W I T N E S S E T H:

WHEREAS, Company presently employs Employee pursuant to an Employment Agreement made effective as of September 1, 1989, as the same has heretofore been amended from time to time (the "Prior Employment Agreement"); and

WHEREAS, Company is desirous of continuing to employ Employee in an executive capacity on the terms and conditions, and for the consideration, hereinafter set forth and Employee is desirous of continuing in the employ of Company on such terms and conditions and for such consideration;

NOW, THEREFORE, for and in consideration of the mutual promises, covenants and obligations contained herein, Company and Employee agree as follows:

ARTICLE 1: EMPLOYMENT AND DUTIES

1.1 Employment; Effective Date. Company agrees to employ Employee and Employee agrees to be employed by Company, beginning as of December 9, 1996 (the "Effective Date"), and continuing for the period of time set forth in Article 2 of this Agreement, subject to the terms and conditions of this Agreement.

1.2 Position. During the term of employment under this Agreement, Company shall employ Employee in the position of Chairman and Chief Executive Officer of Company, or in such other executive positions as the parties mutually may agree.

1.3 Duties and Services. Employee agrees to serve in the position referred to in paragraph 1.2 and to perform diligently and to the best of his abilities the duties and services appertaining to such office as reasonably directed by Company. Employee's employment shall also be subject to the policies contained in Company's Conduct of Business Affairs booklet and other similar documents, all as amended from time to time.

1.4 Other Interests. Employee agrees, during the period of his employment by Company, to devote his full business time, energy and best efforts to the business and affairs of Company and its affiliates and not to engage, directly or indirectly, in any other business, investment, or activity that interferes with Employee's performance of Employee's duties hereunder, is contrary to the interests of Company or any of its affiliates, or requires any significant portion of Employee's business time.

1.5 Duty of Loyalty. Employee acknowledges and agrees that Employee owes a fiduciary duty of loyalty, fidelity and allegiance to act at all times in the best interests of Company and to do no act which would injure the business, interests, or reputation of Company or any of its subsidiaries or affiliates. In keeping with these duties, Employee shall make full disclosure to Company of all business opportunities pertaining to Company's business and shall not appropriate for Employee's own benefit business opportunities concerning the subject matter of the fiduciary relationship.

1.6 Conflicts of Interest. It is agreed that any direct or indirect interest in, connection with, or benefit from any outside activities, particularly commercial activities, which interest might in any way adversely affect Company or any of its affiliates, involves a possible conflict of interest. In keeping with Employee's fiduciary duties to Company, Employee agrees that Employee shall not knowingly become involved in a conflict of interest with Company or any of its affiliates, or upon discovery thereof, allow such a conflict to continue. Moreover, Employee agrees that Employee shall disclose to Company's General Counsel any facts which might involve such a conflict of interest that has not been approved by Company's Board of Directors (the "Board of Directors"). Company and Employee recognize that it is impossible to provide an exhaustive list of actions or interests which constitute a "conflict of interest." Moreover, Company and Employee recognize there are many borderline situations. In some instances, full disclosure of facts by Employee to Company's General Counsel may be all that is necessary to enable Company or its affiliates to protect its interests. In others, if no improper motivation appears to exist and the interests of Company or its affiliates have not suffered, prompt elimination of the outside interest will suffice. In still others, it may be necessary for Company to terminate the employment relationship. Employee agrees that Company's determination as to whether a conflict of interest exists shall be conclusive. Company reserves the right to take such action as, in its judgment, will end the conflict.

ARTICLE 2: TERM AND TERMINATION OF EMPLOYMENT

2.1 Term. Unless sooner terminated pursuant to other provisions hereof, Company agrees to employ Employee for the period (the "Term") beginning on the Effective Date and ending on December 31, 2001, and thereafter for such period, if any, as may be agreed upon in writing by Employee and Company.

2.2 Company's Right to Terminate. Notwithstanding the provisions of paragraph 2.1, Company shall have the right to terminate Employee's employment under this Agreement at any time prior to the expiration of the Term for any of the following reasons:

(i) upon Employee's death;

(ii) upon Employee becoming "Permanently Disabled," which, for purposes of this Agreement, shall mean Employee's becoming disabled so as to entitle him to benefits beyond 18 months of disability under Company's Long-Term Disability Plan;

(iii) for "Cause," which, for purposes of this Agreement, shall mean termination by action of the Board of Directors because of Employee's (A) conviction of a felony, (B) willful refusal without proper legal cause to perform Employee's duties and responsibilities which remains uncorrected for seven days following written notice to Employee by Company of such breach, (C) willfully engaging in conduct that he knows or should know may be materially injurious to Company or any of its affiliates, (D) involvement in a conflict of interest as referenced in paragraph 1.6 for which Company makes a determination to terminate the employment of Employee which remains uncorrected for 30 days following written notice to Employee by Company of such breach, (E) material breach of any material provision of this Agreement or corporate code or policy which remains uncorrected for 30 days following written notice to Employee by Company of such breach, or (F) violation of the Foreign Corrupt Practices Act or other applicable United States law as proscribed by paragraph 6.2; or

(iv) for any other reason whatsoever, in the sole discretion of the Board of Directors.

2.3 Employee's Right to Terminate. Notwithstanding the provisions of paragraph 2.1, Employee shall have the right to terminate his employment under this Agreement at any time prior to the expiration of the Term for any of the following reasons:

(i) for "Good Reason," which for purposes of this Agreement shall mean termination by Employee within 60 days of and in connection with or based upon (A) a transfer or assignment from Employee's present position to a position which involves an overall substantial and material reduction in the nature or scope of Employee's duties and responsibilities, (B) a reduction in Employee's annual base salary as established pursuant to paragraph 3.1 (including subsequent increases) or the failure to continue Employee's participation in any incentive compensation or employee benefit plan or program (except a compensation or benefit plan or program that is substantially comparable to an existing compensation or benefit plan or program) in which Employee is participating or is eligible to participate prior to such reduction (other than as a result of the expiration of such plan or program), in each case other than as part of a general program to reduce compensation or employee benefits on a proportional basis relative to other employees of Company, (C) a permanent change and relocation of Employee from the city in which Employee was serving immediately prior to the time of such change to a place which is more than 50 miles away from such location, (D) a Change of Control (as such term is defined in paragraph 7.6 hereof), or (E) a material breach by Company of any material provision of this Agreement which remains uncorrected for 30 days following written notice of such breach by Employee to Company; or

(ii) for any other reason whatsoever, in the sole discretion of Employee.

2.4 Notice of Termination; Delegation to Board of Directors. If Company or Employee desires to terminate Employee's employment hereunder at any time prior to expiration of the Term pursuant to paragraph 2.2 or 2.3, respectively, it or he shall do so by giving written notice to the other party that it or he has elected to terminate Employee's employment hereunder and stating the effective date and reason for such termination; provided that no such action shall alter or amend any other provisions hereof or rights arising hereunder; and, provided further, that Company shall consult in good faith with Employee and provide a reasonable opportunity for Employee to be heard prior to terminating Employee's employment hereunder for Cause. It is expressly acknowledged and agreed that the decision as to whether Cause exists for termination of the employment relationship by Company is delegated to the Board of Directors for determination. If Employee disagrees with the decision reached by the Board of Directors, then the dispute will be limited to whether the Board of Directors reached its decision in good faith.

ARTICLE 3: COMPENSATION

3.1 Base Salary. During the period beginning on the Effective Date and ending on December 31, 1996, Employee shall receive an annual base salary equal to $990,000. Thereafter, during the period of this Agreement, Employee shall receive a minimum annual base salary equal to $1,200,000. Employee's base salary shall be reviewed annually and may be increased annually and from time to time by the Board of Directors (or the Compensation Committee of such Board) in its sole discretion and, after any such change, Employee's new level of base salary shall be Employee's base salary for purposes of this Agreement until the effective date of any subsequent change. Employee's annual base salary shall be paid in equal installments in accordance with Company's standard policy regarding payment of compensation to executives; provided, however, that Employee hereby irrevocably elects and agrees that any base salary payable to Employee pursuant to this paragraph 3.1 in excess of $1,000,000 during any taxable year of Company shall be deferred under Company's 1994 Deferral Plan. Any amounts deferred under Company's 1994 Deferral Plan pursuant to this paragraph 3.1 shall be subject to all of the terms and conditions of such plan, including, without limitation, the time of payment provisions thereof.

3.2 Incentive Compensation. While Employee is actively employed under this Agreement, Employee shall be entitled to participate in the long term and annual incentive plans under Company's Executive Compensation Program, as the same is currently or hereinafter maintained by Company for its executives. As of the Effective Date, such program includes the award of stock options, awards under Company's Performance Unit Plan, and bonus opportunities under Company's Annual Incentive Plan.

3.3 Other Employee Benefits. While employed by Company, Employee shall be allowed to participate, on the same basis generally as other employees of Company, in all general employee benefit plans and programs, including improvements or modifications of the same, which on the Effective Date or thereafter are made available by Company to Company's employees of Employee's office. Such benefits plans, and programs may include, without limitation, medical, health, and dental care, life insurance, disability protection, and pension plans. Nothing in this Agreement is to be construed or interpreted to provide greater rights, participation, coverage, or benefits under such benefit plans or programs than provided to similarly situated employees pursuant to the terms and conditions of such benefit plans and programs.

3.4 Changes Permitted. Company shall not by reason of paragraphs 3.2 and 3.3 be obligated to institute, maintain, or refrain from changing, amending, or discontinuing, any of such benefit plans or programs, so long as such actions are similarly applicable to covered employees generally. Unless specifically provided for in a written plan document adopted by the Board of Directors, none of the benefits or arrangements described in this Article shall be secured or funded in any way, and each shall instead constitute an unfunded and unsecured promise to pay money in the future exclusively from the general assets of Company.

3.5 Stock Option Grant Agreements. Contemporaneously with the execution of this Agreement, Company shall issue to Employee a Stock Option Grant Agreement substantially in the form attached hereto as Exhibit A pursuant to which Employee shall be awarded as of the Effective Date an option under Company's 1991 Stock Plan (the "1991 Stock Plan") to purchase 637,500 shares of Company's common stock at a purchase price per share equal to the Fair Market Value (as such term is defined in the 1991 Stock Plan) of a share of such stock on the Effective Date. On January 3, 1997, Company shall issue to Employee a Stock Option Grant Agreement substantially in the form attached hereto as Exhibit A pursuant to which Employee shall be awarded on such date an option under the 1991 Stock Plan to purchase 637,500 shares of Company's common stock at a purchase price per share equal to the Fair Market Value (as such term is defined in the 1991 Stock Plan) of a share of such stock on such date.

3.6 Split Dollar Agreement. Contemporaneously with the execution of this Agreement, Company, Employee, and the KLL & LPL Family Partnership, Ltd. shall execute and enter into the Split Dollar Agreement attached to this Agreement as Exhibit B.

ARTICLE 4: PROTECTION OF INFORMATION

4.1 Disclosure to Employee. Company shall disclose to Employee, or place Employee in a position to have access to or develop, trade secrets or confidential information of Company or its affiliates; and/or shall entrust Employee with business opportunities of Company or its affiliates; and/or shall place Employee in a position to develop business good will on behalf of Company or its affiliates.

4.2 Disclosure to and Property of Company. All information, ideas, concepts, improvements, discoveries, and inventions, whether patentable or not, which are conceived, made, developed, or acquired by Employee, individually or in conjunction with others, during Employee's employment by Company (whether during business hours or otherwise and whether on Company's premises or otherwise) which relate to Company's business, products, or services (including, without limitation, all such information relating to corporate opportunities, research, financial and sales data, pricing terms, evaluations, opinions, interpretations, acquisition prospects, the identity of customers or their requirements, the identity of key contacts within the customer's organizations or within the organization of acquisition prospects, or marketing and merchandising techniques, prospective names, and marks) shall be disclosed to Company and are and shall be the sole and exclusive property of Company. Moreover, all documents drawings, memoranda, notes, records, files, correspondence, manuals, models, specifications, computer programs, E-mail, voice mail, electronic databases, maps and all other writings or materials of any type embodying any of such information, ideas, concepts, improvements, discoveries, and inventions are and shall be the sole and exclusive property of Company. Upon termination of Employee's employment by Company, for any reason, Employee promptly shall deliver the same, and all copies thereof, to Company.

4.3 No Unauthorized Use or Disclosure. Employee will not, at any time during or after Employee's employment by Company, make any unauthorized disclosure of any confidential business information or trade secrets of Company or its affiliates, or make any use thereof, except in the carrying out of Employee's employment responsibilities hereunder. Affiliates of the Company shall be third party beneficiaries of Employee's obligations under this paragraph. As a result of Employee's employment by Company, Employee may also from time to time have access to, or knowledge of, confidential business information or trade secrets of third parties, such as customers, suppliers, partners, joint venturers, and the like, of Company and its affiliates. Employee also agrees to preserve and protect the confidentiality of such third party confidential information and trade secrets to the same extent, and on the same basis, as Company's confidential business information and trade secrets.

4.4 Ownership by Company. If, during Employee's employment by Company, Employee creates any work of authorship fixed in any tangible medium of expression which is the subject matter of copyright (such as videotapes, written presentations, or acquisitions, computer programs, E- mail, voice mail, electronic databases, drawings, maps, architectural renditions, models, manuals, brochures, or the like) relating to Company's business, products, or services, whether such work is created solely by Employee or jointly with others (whether during business hours or otherwise and whether on Company's premises or otherwise), Company shall be deemed the author of such work if the work is prepared by Employee in the scope of Employee's employment; or, if the work is not prepared by Employee within the scope of Employee's employment but is specially ordered by Company as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, or as an instructional text, then the work shall be considered to be work made for hire and Company shall be the author of the work. If such work is neither prepared by Employee within the scope of Employee's employment nor a work specially ordered that is deemed to be a work made for hire, then Employee hereby agrees to assign, and by these presents does assign, to Company all of Employee's worldwide right, title, and interest in and to such work and all rights of copyright therein.

4.5 Assistance by Employee. Both during the period of Employee's employment by Company and thereafter, Employee shall assist Company and its nominee, at any time, in the protection of Company's worldwide right, title, and interest in and to information, ideas, concepts, improvements, discoveries, and inventions, and its copyrighted works, including without limitation, the execution of all formal assignment documents requested by Company or its nominee and the execution of all lawful oaths and applications for applications for patents and registration of copyright in the United States and foreign countries.

4.6 Remedies. Employee acknowledges that money damages would not be sufficient remedy for any breach of this Article by Employee, and Company shall be entitled to enforce the provisions of this Article by specific performance and injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Article, but shall be in addition to all remedies available at law or in equity to Company, including the recovery of damages from Employee and his agents involved in such breach and remedies available to Company pursuant to other agreements with Employee.

ARTICLE 5: NON-COMPETITION OBLIGATIONS

5.1 In General. As part of the consideration for the compensation and benefits to be paid to Employee hereunder; to protect the trade secrets and confidential information of Company and its affiliates that have been and will in the future be disclosed or entrusted to Employee, the business good will of Company and its affiliates that has been and will in the future be developed in Employee, or the business opportunities that have been and will in the future be disclosed or entrusted to Employee by Company and its affiliates; and as an additional incentive for Company to enter into this Agreement, Company and Employee agree to the non-competition obligations hereunder: Employee will not, directly or indirectly for Employee or for others, in any geographic area or market where Company or any of its affiliates are conducting any business as of the date of termination of the employment relationship or have during the previous 12 months conducted such business:

(i) engage in any business similar or related to or competitive with the business conducted by Company or any of its affiliates as described under Company's "Business Unit Highlights" on page one of the Enron Corp. 1995 Annual Report to Shareholders and Customers (the "Core Business of Company");

(ii) render advice or services to, or otherwise assist, any other person, association, or entity who is engaged, directly or indirectly, in any business similar or related to or competitive with the Core Business of Company;

(iii) transact any business in any manner pertaining to suppliers or customers of Company or any of its affiliates which, in any manner, would have, or is likely to have, an adverse effect upon Company or any of its affiliates; or

(iv) induce any employee of Company or any of its affiliates to terminate his or her employment with Company or any of its affiliates, or hire or assist in the hiring of any such employee by any person, association, or entity not affiliated with Company.

These non-competition obligations shall extend until (A) the expiration of the Term if termination of the employment relationship is by Employee for Good Reason or by Company for any reason whatsoever other than death, Cause or Employee's becoming Permanently Disabled or (B) two years after termination of the employment relationship if such relationship is terminated for any reason not encompassed by clause (A) of this sentence. If Company abandons a particular aspect of the Core Business of Company, that is, ceases such aspect of its business with the intention to permanently refrain from such aspect of its business, then this post-employment non-competition covenant shall not apply to such former aspect of Company's business.

5.2 Enforcement and Remedies. Employee understands that the restrictions set forth in paragraph 5.1 may limit Employee's ability to engage in certain businesses anywhere in the world during the period provided for above, but acknowledges that Employee will receive sufficiently high remuneration and other benefits under this Agreement to justify such restriction. Employee acknowledges that money damages would not be sufficient remedy for any breach of this Article by Employee, and Company shall be entitled to enforce the provisions of this Article by terminating any payments then owing to Employee under this Agreement and/or to specific performance and injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Article, but shall be in addition to all remedies available at law or in equity to Company, including, without limitation, the recovery of damages from Employee and Employee's agents involved in such breach and remedies available to Company pursuant to other agreements with Employee.

5.3 Reformation. It is expressly understood and agreed that Company and Employee consider the restrictions contained in this Article to be reasonable and necessary to protect the proprietary information of Company. Nevertheless, if any of the aforesaid restrictions are found by a court having jurisdiction to be unreasonable, or overly broad as to geographic area or time, or otherwise unenforceable, the parties intend for the restrictions therein set forth to be modified by such courts so as to be reasonable and enforceable and, as so modified by the court, to be fully enforced.

ARTICLE 6: STATEMENTS CONCERNING COMPANY; UNITED STATES FOREIGN CORRUPT PRACTICES ACT AND OTHER LAWS

6.1 Statements Concerning Company. Employee shall refrain, both during the employment relationship and after the employment relationship terminates, from publishing any oral or written statements about Company, any of its affiliates, or any of such entities' officers, employees, agents or representatives that are slanderous, libelous, or defamatory; or that disclose private or confidential information about Company, any of its affiliates, or any of such entities' business affairs, officers, employees, agents, or representatives; or that constitute an intrusion into the seclusion or private lives of Company, any of its affiliates, or any of such entities' officers, employees, agents, or representatives; or that give rise to unreasonable publicity about the private lives of Company, any of its affiliates, or any of such entities' officers, employees, agents, or representatives; or that place Company, any of its affiliates, or any of such entities' officers, employees, agents, or representatives in a false light before the public; or that constitute a misappropriation of the name or likeness of Company, any of its affiliates, or any of such entities' officers, employees, agents, or representatives. A violation or threatened violation of this prohibition may be enjoined by the courts. The rights afforded the Company and its affiliates under this provision are in addition to any and all rights and remedies otherwise afforded by law.

6.2 United States Foreign Corrupt Practices Act and Other Laws. Employee shall at all times comply with United States laws applicable to Employee's actions on behalf of Company, including specifically, without limitation, the United States Foreign Corrupt Practices Act, generally codified in 15 U.S.C. 78 (the "FCPA"), as the FCPA may hereafter be amended, and/or its successor statutes. If Employee pleads guilty to or nolo contendere or admits civil or criminal liability under the FCPA or other applicable United States law, or if a court finds that Employee has personal civil or criminal liability under the FCPA or other applicable United States law, or if a court finds that Employee committed an action resulting in Company or any of its affiliates having civil or criminal liability or responsibility under the FCPA or other applicable United States law with knowledge of the activities giving rise to such liability or knowledge of facts from which Employee should have reasonably inferred the activities giving rise to liability had occurred or were likely to occur, such action or finding shall constitute "Cause" for termination under this Agreement unless the Board of Directors determines that the actions found to be in violation of the FCPA or other applicable United States law were taken in good faith and in compliance with all applicable policies of Company.

ARTICLE 7: EFFECT OF TERMINATION ON COMPENSATION

7.1 In General. If Employee's employment hereunder shall terminate upon expiration of the Term or if such employment shall be terminated by Employee or by Company prior to the expiration of the Term for any reason whatsoever, then, upon such termination, regardless of the reason therefor, all compensation and all benefits to Employee hereunder shall terminate contemporaneously with the termination of such employment, except that if Employee's employment is Involuntarily Terminated (as such term is defined in paragraph 7.6 hereof) prior to the expiration of the Term, then Employee shall be entitled to receive the following benefits although Employee's active employment shall cease:

(i) All payments of the annual base salary under paragraph 3.1 (in the amount in effect on the date Employee's employment is Involuntarily Terminated) and bonus payments under Company's Annual Incentive Plan (based upon Employee's most recent bonus payment amount received prior to the date Employee's employment is Involuntarily Terminated) at such time and in such manner as if Employee's employment had continued through the Term;

(ii) Employee may participate in the incentive compensation programs provided for in paragraph 3.2 (excluding Company's Annual Incentive Plan, which is covered in clause (i) above) as if Employee's employment had continued through the Term;

(iii) Employee shall be provided coverage for the remainder of the Term essentially equivalent to that under Company's Contributory and Non-Contributory Life Insurance, Health and long-term disability plans for active employees (using Employee's annual base salary pursuant to paragraph 3.1 as the compensation base where relevant); and

(iv) Employee or Employee's surviving spouse shall be provided additional pension payments in the amount that Employee or his surviving spouse would have received under Company's Retirement Plan, Supplemental Retirement Plan, and Pension Plan for Deferral Plan Participants had Employee's employment continued through the Term.

Company reserves the right to provide the benefits and payments referred to in paragraphs 7.1(ii), 7.1(iii), and 7.1(iv) by making substantially equivalent payments to or purchasing substantially equivalent benefits for Employee under arrangements other than the plans referred to in said paragraphs if, in Company's sole discretion, the tax or compliance status of such plans may otherwise be jeopardized. Such equivalent payments shall be a liability of Company, shall be paid exclusively from the general assets of Company, and shall be an unfunded and unsecured promise to pay money in the future, unless Company elects to otherwise fund or secure such payments.

7.2 Certain Additional Payments by Company. Notwithstanding anything to the contrary in this Agreement, in the event that any payment or distribution by Company to or for the benefit of Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties, are hereinafter collectively referred to as the "Excise Tax"), Company shall pay to Employee an additional payment (a "Gross-up Payment") in an amount such that after payment by Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed on any Gross-up Payment, Employee retains an amount of the Gross-up Payment equal to the Excise Tax imposed upon the Payments. Company and Employee shall make an initial determination as to whether a Gross-up Payment is required and the amount of any such Gross-up Payment. Employee shall notify Company immediately in writing of any claim by the Internal Revenue Service which, if successful, would require Company to make a Gross-up Payment (or a Gross- up Payment in excess of that, if any, initially determined by Company and Employee) within five days of the receipt of such claim. Company shall notify Employee in writing at least five days prior to the due date of any response required with respect to such claim if it plans to contest the claim. If Company decides to contest such claim, Employee shall cooperate fully with Company in such action; provided, however, Company shall bear and pay directly or indirectly all costs and expenses (including additional interest and penalties) incurred in connection with such action and shall indemnify and hold Employee harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of Company's action. If, as a result of Company's action with respect to a claim, Employee receives a refund of any amount paid by Company with respect to such claim, Employee shall promptly pay such refund to Company. If Company fails to timely notify Employee whether it will contest such claim or Company determines not to contest such claim, then Company shall immediately pay to Employee the portion of such claim, if any, which it has not previously paid to Employee.

7.3 Offset of Severance Benefits. Any amount payable to Employee pursuant to this Article shall be offset against any amounts to which Employee may otherwise be entitled under any and all severance plans and policies of Company or its affiliates presently in effect or which may be hereafter adopted or amended.

7.4 No Duty to Mitigate Losses. Employee shall have no duty to find new employment following the termination of his employment under circumstances which require Company to pay any amount to Employee pursuant to this Article. Any salary or remuneration received by Employee from a third party for the providing of personal services (whether by employment or by functioning as an independent contractor) following the termination of his employment under circumstances pursuant to which paragraphs 7.1 or 7.2 apply shall not reduce Company's obligation to make a payment to Employee (or the amount of such payment) pursuant to the terms of any such paragraph.

7.5 Incentive and Deferred Compensation. This Agreement governs the rights and obligations of Employee and Company with respect to Employee's base salary and certain perquisites of employment. Employee's rights and obligations both during the term of his employment and thereafter with respect to stock options, restricted stock, performance units, life insurance policies insuring the life of Employee, and other benefits under the plans maintained by Company shall be governed by the separate agreements, plans and other documents and instruments governing such matters; provided, however, that upon Employee's termination of employment hereunder for any reason whatsoever, the benefits payable to Employee under Company's 1988 Deferral Plan and the HNG Deferral Plan shall be paid, when distributable to Employee in accordance with the provisions of said plans, as if Employee had retired from Company.

7.6 Certain Defined Terms. For purposes of this Agreement, the following terms shall have the meanings ascribed to them below:

(i) "Beneficial Owner" shall be defined by reference to Rule 13(d)-3 under the Securities Exchange Act of 1934, as in effect on September 1, 1989; provided, however, and without limitation, any individual, corporation, partnership, group, association or other person or entity which has the right to acquire any Voting Stock at any time in the future, whether such right is contingent or absolute, pursuant to any agreement, arrangement or understanding or upon exercise of conversion rights, warrants or options, or otherwise, shall be the Beneficial Owner of such Voting Stock.

(ii) "Change of Control" shall mean (A) Company merges or consolidates with any other corporation (other than one of Company's wholly owned subsidiaries) and is not the surviving corporation (or survives only as the subsidiary of another corporation), (B) Company sells all or substantially all of its assets to any other person or entity, (C) Company is dissolved, (D) any third person or entity (other than the trustee or committee of any qualified employee benefit plan of Company) together with its affiliates and associates shall become, directly or indirectly, the Beneficial Owner of at least 30% of the Voting Stock of Company, or (E) the individuals who constitute the members of the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority thereof, provided that any person becoming a director whose election or nomination for election by Company stockholders was approved by a vote of at least 80% of the directors comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of Company in which such person is named as a nominee for director, without objection to such nomination) shall be, for purposes of this clause (E), considered as though such person were a member of the Incumbent Board.

(iii) "Involuntarily Terminated" shall mean termination of Employee's employment with Company (A) by Company for any reason whatsoever except for Cause or upon Employee's death or becoming Permanently Disabled or (B) by Employee for Good Reason.

(iv) "Voting Stock" shall mean all outstanding shares of capital stock of Company entitled to vote generally in elections for directors, considered as one class; provided, however, that if Company has shares of Voting Stock entitled to more or less than one vote for any such share, such reference to a proportion of shares of Voting Stock shall be deemed to refer to such proportion of the votes entitled to be cast by such shares.

7.7 Liquidated Damages. In light of the difficulties in estimating the damages for an early termination of this Agreement, Company and Employee hereby agree that the payments, if any, to be received by Employee pursuant to paragraph 7.1 or paragraph 7.2 shall be received by Employee as liquidated damages.

ARTICLE 8: MISCELLANEOUS

8.1 Notices. For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to Company to: Enron Corp. 1400 Smith Street Houston, Texas 77002 Attention: Corporate Secretary

If to Employee to: Mr. Kenneth L. Lay 2121 Kirby Drive, #137 Houston, Texas 77019

or to such other address as either party may furnish to the other in writing in accordance herewith, except that notices of changes of address shall be effective only upon receipt.

8.2 Applicable Law. This Agreement is entered into under, and shall be governed for all purposes by, the laws of the State of Texas, excluding any conflict-of-law rule or principle that might refer the construction of this Agreement to the laws of another State or country. The parties agree that this Agreement is to be at least partially performed in Houston, Harris County, Texas.

8.3 No Waiver. No failure by either party hereto at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

8.4 Severability. It is a desire and intent of the parties that the terms, provisions, covenants and remedies contained in this Agreement shall be enforceable to the fullest extent permitted by law. If any such term, provision, covenant, or remedy of this Agreement or the application thereof to any person, association, or entity or circumstances shall, to any extent, be construed to be invalid or unenforceable in whole or in part, then such term, provision, covenant, or remedy shall be construed in a manner so as to permit its enforceability under the applicable law to the fullest extent permitted by law. In any case, the remaining provisions of this Agreement or the application thereof to any person, association, or entity or circumstances other than those to which they have been held invalid or unenforceable, shall remain in full force and effect.

8.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

8.6 Withholding of Taxes and Other Employee Deductions. Company may withhold from any benefits and payments made pursuant to this Agreement all federal, state, city and other taxes as may be required pursuant to any law or governmental regulation or ruling and all other normal employee deductions made with respect to Company's employees generally.

8.7 Headings. The paragraph headings have been inserted for purposes of convenience and shall not be used for interpretive purposes.

8.8 Gender and Plurals. Wherever the context so requires, the masculine gender includes the feminine or neuter, and the singular number includes the plural and conversely.

8.9 Affiliate. As used in this Agreement, the term "affiliate" shall mean any entity which owns or controls, is owned or controlled by, or is under common ownership or control with, Company.

8.10 Cooperation by Employee. Employee shall cooperate with Company by furnishing any and all information requested by Company, taking such physical examinations as Company may deem necessary, and taking such other relevant action as may be requested by Company in order to facilitate the acquisition and maintenance of the life insurance policy on the life of Employee that is subject to the Split Dollar Agreement referenced in paragraph 3.6.

8.11 Assignment. This Agreement shall be binding upon and inure to the benefit of Company and any successor of Company, by merger or otherwise. Except as provided in the preceding sentence, this Agreement, and the rights and obligations of the parties hereunder, are personal and neither this Agreement, nor any right, benefit, or obligation of either party hereto, shall be subject to voluntary or involuntary assignment, alienation or transfer, whether by operation of law or otherwise, without the prior written consent of the other party.

8.12 Term. This Agreement has a term co-extensive with the Term as provided in paragraph 2.1. Termination shall not affect any right or obligation of any party which is accrued or vested prior to such termination. Without limiting the scope of the preceding sentence, the provisions of Articles 4, 5, and 6 shall survive any termination of the employment relationship and/or of this Agreement.

8.13 Entire Agreement. Except as provided in (i) written company policies promulgated by Company dealing with issues such as securities trading, business ethics, governmental affairs and political contributions, consulting fees, commissions or other payments, compliance with law, investments and outside business interests as officers and employees, reporting responsibilities, administrative compliance, and the like, (ii) the written benefits, plans, and programs referenced in paragraphs 3.2 and 3.3, and (iii) any signed written agreements contemporaneously or hereafter executed by Company and Employee (including, but not limited to, the Split Dollar Agreement and the Stock Option Grant Agreements referenced in Article 3), this Agreement constitutes the entire agreement of the parties with regard to such subject matters, and contains all of the covenants, promises, representations, warranties, and agreements between the parties with respect to Employee's employment relationship with Employer and the term and termination of such relationship, and replaces and merges previous agreements and discussions pertaining to the employment relationship between Employer and Employee. Specifically, but not by way of limitation, the Prior Employment Agreement is hereby canceled and Employee hereby irrevocably waives and renounces all of Employee's rights and claims under the Prior Employment Agreement. Notwithstanding the preceding provisions of this paragraph 8.13, except as provided in paragraph 8.14, the execution of this Agreement shall not affect the rights of the parties pursuant to (A) the stock options and restricted stock previously awarded to Employee and currently outstanding under any and all stock plans maintained by Company, (B) the previous awards to Employee that are currently outstanding under Company's Performance Unit Plan, (C) that certain Split Dollar Life Insurance Agreement and related Collateral Agreement between Company and the KLL & LPL Family Partnership, Ltd. dated as of April 22, 1994, (D) that certain Loan Commitment Agreement between Company and Employee made effective as of September 1, 1989, as amended from time to time by amendments to the Prior Employment Agreement (the "Loan Commitment Agreement"), and (E) Section 2 of the Houston Natural Gas Corporation and Subsidiaries Executive Supplemental Benefit Agreement between Employee and Houston Natural Gas Corporation dated November 12, 1984 (the "HNG ESBA". Further, the execution of this Agreement shall not affect Employee's previous waiver, renouncement, and forfeiture of any and all of his rights to benefits under the Enron Executive Supplemental Survivor Benefits Plan, the Houston Natural Gas Corporation and Subsidiaries Executive Post-Retirement Salary Continuation Agreement between Employee and Houston Natural Gas Corporation dated July 1, 1985, and the HNG ESBA (excluding all rights as described under the terms and provisions of Section 2 of the HNG ESBA). Each party to this Agreement acknowledges that no representation, inducement, promise or agreement, oral or written, has been made by either party, or by anyone acting on behalf of either party, which is not embodied herein, and that no agreement, statement, or promise relating to the employment of Employee by Company, which is not contained in this Agreement, shall be valid or binding. Any modification of this Agreement will be effective only if it is in writing and signed by the party to be charged.

8.14 Amendment to Loan Commitment Agreement. Effective as of the Effective Date, the Loan Commitment Agreement shall be and is hereby amended as follows: (i) the date "December 31, 2001" shall be substituted for the date "August 31, 1994" in each place such latter date appears in Sections 1.01 and 2.04 of the Loan Commitment Agreement; (ii) the date "January 1, 2001" shall be substituted for the dates "February 8, 1999," and "January 1, 1994" in each place such latter dates appear in Sections 2.01 and 2.03 of the Loan Commitment Agreement; and (iii) all references to the Prior Employment Agreement in the Loan Commitment Agreement shall be deleted and references to this Agreement shall be substituted therefor.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 18th day of December, 1996, to be effective as of the Effective Date.

ENRON CORP.

By: CHARLES A. LeMAISTRE Name: Charles A. LeMaistre Title: Chairman, Compensation Committee of Board of Directors "COMPANY"

KENNETH L. LAY KENNETH L. LAY "EMPLOYEE"

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

This Agreement, made and entered into on this 21st day of August, 1990, and made effective as of September 1, 1989, by and between Enron Corp. ("Enron"), a Delaware corporation having its headquarters at 1400 Smith Street, Houston, Texas 77002, and Kenneth L. Lay ("Employee"), an individual residing in Houston, Texas, is an amendment to that certain Employment Agreement between the parties effective September 1, 1989 (the "Employment Agreement").

WHEREAS, the Employment Agreement incorporates the terms and provisions of a Stock Finance Agreement attached to the Employment Agreement a Exhibit C, as though recited therein in their entirety; and

WHEREAS, the parties desire to amend and clarify certain provisions of the Stock Finance Agreement;

NOW, THEREFORE, in consideration thereof and of the mutual covenants contained herein, the parties agree as follows:

1. Section 5.02 of the Stock Finance Agreement is deleted in its entirety and the following is substituted in its place:

"SECTION 5.02. Other Consideration. (a) Based On Average Purchase Price. When shares of Enron Corp. common stock are purchased with an Advance pursuant to the provisions of this Agreement, then in the event that the average purchase price paid for such shares is greater than Fifty Dollars per share:

(i) if before the Termination Date Borrower sells any of such shares, then within fifteen days following notification thereof by Employee to Company, Company shall pay Employee a cash payment in the amount equal to A where A = ((S1 x MV) + (S1 x D)) - ((S2 x MV) + (S2 x D)), where MV is the sales price, S1 is the number of shares sold divided by the total number of shares purchased pursuant to Section 2.02 of this Agreement multiplied by 100,000, S2 is the number of shares sold, and D is the aggregate amount of dividends paid on a share of such stock during the period from September 1, 1989 until the date of such sale by Borrower; and

(ii) if upon the Termination Date Borrower has not sold all of such shares, then within thirty days thereof Employee shall give notification of the number of unsold shares to Company and within fifteen days following its receipt of such notification, Company shall pay Employee a cash payment in the amount equal to A where A = ((S1 x MV) + (S1 x D)) - ((S2 x MV) + (S2 x D)), where MV is the closing price of such stock on the Termination Date, S1 is the number of shares not sold as of the Termination Date divided by the total number of shares purchased pursuant to Section 2.02 of this Agreement multiplied by 100,000, S2 is the number of such shares not sold, and D is the aggregate amount of dividends paid on a share of such stock during the period from September 1, 1989 until the Termination Date.

If such payment, in either event, is not paid within said fifteen days, Employee shall be entitled to interest thereon until the payment is paid, at an annualized rate of interest of nine and one half percent (9.5%).

(b) Example. For example, if before the Termination Date, Borrower sells 25,874 shares of stock at $55.00 per share, and the aggregate dividends paid on a share of stock since September 1, 1989 were $1.24, then Company would pay Borrower $117,305.46. If on the Termination Date there remained 33,333 shares not sold, the closing price per share was $65 per share, and the aggregate dividends paid on a share of stock since September 1, 1989 were $3.72, then Company would pay Borrower $184,657.47."

2. This Agreement is an amendment to the Employment Agreement, and the parties agree that all other terms, conditions and stipulations contained in the Employment Agreement shall remain in full force and effect and without any change or modification, except as provided herein.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

ENRON CORP.

By: CHARLES A. LeMAISTRE Title: Chairman, Compensation Committee of the Board of Directors

KENNETH L. LAY

KENNETH L. LAY Employee

</TEXT>

</DOCUMENT>

<DOCUMENT> <TYPE>EX-10.12 <SEQUENCE>3 <DESCRIPTION>SECOND AMENDMENT TO KEN LAY EMPLOYMENT AGREEMENT <TEXT>

Exhibit 10.12 SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

This Agreement, made and entered into on this 5th day of March, 1992, and made effective as of March 1, 1992, by and between Enron Corp. ("Enron"), a Delaware corporation having its headquarters at 1400 Smith Street, Houston, Texas 77002, and Kenneth L. Lay ("Employee"), an individual residing in Houston, Texas, is an amendment to that certain Employment Agreement between the parties effective September 1, 1989 (the "Employment Agreement").

WHEREAS, the Employment Agreement incorporates the terms and provisions of a Stock Finance Agreement attached to the Employment Agreement as Exhibit C, as though recited therein in their entirety; and

WHEREAS, the parties desire to amend a certain provision of the Stock Finance Agreement;

NOW, THEREFORE, in consideration thereof and of the mutual covenants contained herein, the parties agree as follows:

1. Section 2.04 of the Stock Finance Agreement is deleted in its entirety and the following is substituted in its place:

"SECTION 2.04. Interest. The Borrower shall pay interest, compounded annually, on the unpaid principal and interest at an annual rate of seven and five-tenths of one percent (7.5%)."

2. This Agreement is an amendment to the Employment Agreement, and the parties agree that all other terms, conditions and stipulations contained in the Employment Agreement, as amended by any prior amendments thereto, shall remain in full force and effect and without any change or modification, except as provided herein.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

ENRON CORP.

By: JOHN H. DUNCAN Title: Chairman, Executive Committee of Board

KENNETH L. LAY

KENNETH L. LAY Employee

</TEXT>

</DOCUMENT>

<DOCUMENT> <TYPE>EX-10.13 <SEQUENCE>4 <DESCRIPTION>THIRD AMENDMENT TO KEN LAY EMPLOYMENT AGREEMENT <TEXT>

Exhibit 10.13 THIRD AMENDMENT TO EMPLOYMENT AGREEMENT

This Agreement, made and entered into on this 10th day of August, 1993, and made effective as of August 10, 1993, by and between Enron Corp. ("Enron"), a Delaware corporation having its headquarters at 1400 Smith Street, Houston, Texas 77002, and Kenneth L. Lay ("Employee"), an individual residing in Houston, Texas, is an amendment to that certain Employment Agreement between the parties effective September 1, 1989 (the "Employment Agreement").

WHEREAS, the Employment Agreement incorporates the terms and provisions of a Stock Finance Agreement attached to the Employment Agreement as Exhibit C, as though recited therein in their entirety; and

WHEREAS, the parties desire to amend a certain provision of the Stock Finance Agreement;

NOW, THEREFORE, in consideration thereof and of the mutual covenants contained herein, the parties agree as follows:

1. Section 5.02 of the Stock Finance Agreement is deleted in its entirety and the following is substituted in its place:

"Section 5.02. Other Consideration. On August 12th, 1993, Company agrees to pay Employee a lump sum payment in the amount of One Million Ninety-Five Thousand One Hundred Twenty-Eight and No/100 Dollars ($1,095,128.00) as Other Consideration. Employee shall not be required to use the Other Consideration made in this Third Amendment to the Employment Agreement to repay any outstanding Advances under the Stock Finance Agreement and/or the Loan Commitment Agreement, respectively. Employee shall repay any outstanding Advances under the Stock Finance Agreement and/or the Loan Commitment Agreement in accordance with the terms and conditions set forth at Article II of the Stock Finance Agreement and the Loan Commitment Agreement, respectively."

2. This Agreement is an amendment to the Employment Agreement, and the parties agree that all other terms, conditions and stipulations contained in the Employment Agreement shall, as amended by any prior amendments thereto, remain in full force and effect and without any change or modification, except as provided herein.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

ENRON CORP.

By: CHARLES A. LeMAISTRE Title: Charles A. LeMaistre Chairman, Compensation Committee

KENNETH L. LAY

KENNETH L. LAY Employee

</TEXT>

</DOCUMENT>

<DOCUMENT> <TYPE>EX-10.14 <SEQUENCE>5 <DESCRIPTION>FOURTH AMENDMENT TO KEN LAY EMPLOYMENT AGREEMENT <TEXT>

Exhibit 10.14 FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT

This Agreement, made and entered into on this 15th day of October, 1993, and made effective as of January 1, 1993, by and between Enron Corp. ("Enron"), a Delaware corporation having its headquarters at 1400 Smith Street, Houston, Texas 77002, and Kenneth L. Lay, ("Employee"), an individual residing in Houston, Texas, is an amendment to that certain Employment Agreement between the parties effective September 1, 1989 (the "Employment Agreement").

WHEREAS, the Employment Agreement incorporates the terms and provisions of a Stock Finance Agreement attached to the Employment Agreement as Exhibit C and a Loan Commitment Agreement attached to the Employment Agreement as Exhibit D, as though recited therein in their entirety; and

WHEREAS, the parties desire to amend a certain provision of the Stock Finance Agreement and the Loan Commitment Agreement;

NOW THEREFORE, in consideration thereof and of the mutual covenants contained herein, the parties agree as follows:

1. Section 2.04 of the Stock Finance Agreement is deleted in its entirety and the following is substituted in its place:

"SECTION 2.04. Interest. The Borrower shall pay interest, compounded annually, on the unpaid principle and interest at an annual rate determined under the following formula: I = A x AFR, where "I" is the amount of interest, "A" is the amount of the Advance, and "AFR" is the applicable federal rate as defined under U.S. Internal Revenue Code Section 1274 (d) in effect during each month that the Advance is outstanding."

2. Section 2.05 of the Loan Commitment Agreement is deleted in its entirety and the following is substituted in its place:

"SECTION 2.05. Interest. The Borrower shall pay interest compounded annually, on the unpaid principal and interest at an annual rate determined under the following formulas for each Advance: I = A x AFR, where "I" is the amount of interest, "A" is the amount of the Advance, and "AFR" is the applicable federal rate as defined under U.S. Internal Revenue Code Section 1274 (d) in effect during each month that the Advance is outstanding. The Borrower shall make payments of accrued interest with respect to each Advance on the anniversary date of an Advance, or at the election of Borrower on the subsequent 31st day of December."

3. This Agreement is an amendment to the Employment Agreement, and the parties agree that all other terms, conditions and stipulations contained in the Employment Agreement, as amended by any prior amendments thereto, shall remain in full force and effect and without any change or modification, except as provided herein.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

ENRON CORP.

CHARLES A. LeMAISTRE By: CHARLES A. LeMAISTRE Title: Chairman, Compensation Committee, Enron Corp. Board of Directors

KENNETH L. LAY

KENNETH L. LAY

</TEXT>

</DOCUMENT>

<DOCUMENT> <TYPE>EX-10.15 <SEQUENCE>6 <DESCRIPTION>FIFTH AMENDMENT TO KEN LAY EMPLOYMENT AGREEMENT <TEXT>

Exhibit 10.15 FIFTH AMENDMENT TO EMPLOYMENT AGREEMENT

This Agreement, made and entered into on this 28th day of February, 1994, ("Execution Date") and made effective as of February 8, 1994, by and between Enron Corp. ("Company"), a Delaware corporation having its headquarters at 1400 Smith Street, Houston, Texas 77002, and Kenneth L. Lay ("Employee"), an individual residing in Houston, Texas, is an amendment to that certain Employment Agreement between the parties effective September 1, 1989 (the "Employment Agreement").

WHEREAS, the Employment Agreement incorporates the terms and provisions of a Loan Commitment Agreement attached to the Employment Agreement as Exhibit D, as though recited therein in their entirety; and

WHEREAS, the parties desire to amend and clarify certain provisions of the Employment Agreement and the Loan Commitment Agreement;

NOW, THEREFORE, in consideration thereof and of the mutual covenants contained herein, the parties agree as follows:

1. Article 2: Term of Employment of the Employment Agreement is deleted in its entirety and the following is substituted in its place:

"Unless sooner terminated pursuant to other provisions hereof, Employee's period of employment under this Agreement shall be for a period of five (5) years beginning on the effective date of this Amendment ("Term"), and thereafter for such period, if any, as may be agreed upon in writing by Employee and Company. At the expiration of three years during the Term hereunder, Employee may terminate this Employment Agreement without penalty and as if this Employment Agreement were fulfilled. Employee shall have the option to continue employment with the Company for the full term under this Amendment."

2. Article 3: Compensation and Benefits of the Employment Agreement is deleted in its entirety and the following is substituted in its place:

"3.1 Base Salary. During the period beginning February 8, 1994 and ending February 7, 1997, Employee's annual base salary shall be equal to and not more than Nine Hundred Ninety Thousand and No/100 Dollars ($990,000.00), which shall be earned and paid in equal semimonthly installments in accordance with Company's standard payroll practice. Any raises after the three year period described above, shall be at the discretion of the Compensation Committee of the Board of Directors of the Company."

3. (a) The following shall be added to the end of paragraph 3.8 of the Employment Agreement:

"Notwithstanding any provision to the contrary in this Agreement or the Exhibits and attachments hereto (including, without limitation, the Stock Finance Agreement attached to this Agreement as Exhibit C and the attachments thereto (the 'Stock Finance Documents') and the Loan Commitment Agreement attached to this Agreement as Exhibit D and the attachments thereto (the 'Loan Commitment Documents')), within thirty (30) days of the Execution Date of this Amendment, the sum total of any and all Advances outstanding, in the amount of Seven and a half Million Dollars ($7,500,000.00), including principal and interest, under the Stock Finance Documents and the Loan Commitment Documents together, shall be repaid by Employee.

(b) The following shall be added to the end of Article II, Section 2.01, of the Loan Commitment Agreement: Notwithstanding any provision to the contrary in this Agreement or the Exhibits and attachments hereto, the Lender agrees, conditioned on 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 Effective Date of this Amendment until February 8, 1999, in an aggregate amount not to exceed, at any time, the amount of Four Million Dollars ($4,000,000.00). Employee shall repay any amounts outstanding in excess of Four Million Dollars within thirty (30) days of the Execution Date of this Amendment.

4. The following shall be added to the end of Article V, Section 5.01, of the Stock Finance Agreement:

(c) "Notwithstanding any provision to the contrary in this Agreement or the Exhibits and attachments thereto, Employee has received a grant of Option (which does not constitute an Incentive Stock Option), under and pursuant to the terms and provisions of Company's Enron Corp. 1991 Stock Plan, as made by such Plan's Committee at its meeting of February 7, 1994, to purchase One Million Two Hundred Thousand (1,200,000.00) shares of common stock of the Company. Such grant shall be made in the form of a Non-Qualified Stock Option Agreement as reflected in Exhibit A to this Fourth Amendment to the Employment Agreement between Company and Employee for a term of seven (7) years beginning February 8, 1994 and ending February 7, 2001. The grant price of such Option shall be Thirty-Four and No/100 Dollars ($34.00), the closing price of the common stock of the Company on February 8, 1994. Such Option shall vest 20% immediately upon the date of grant with the remainder to vest six (6) years and ten (10) months from date of issue (February 8, 1994), accordingly:

(A) Upon Grant % Vested Exercisable 240,000 20% Six (6) months after date of grant (2-8-94)

Six Years 10 Months % Vested Exercisable 960,000 80% 12-8-00 unless previously vested and exercised

(B) Notwithstanding the above, provided the performance criteria of 15% annual earnings per share (EPS) growth is achieved in calendar years 1994, 1995, and 1996, as set forth below, vesting shall occur at the rate of 33% each year of the remaining shares to be vested as follows:

1994 1995 1996

320,000 320,000 320,000

Earnings per share target*:

1994 $1.783 1995 $2.050 1996 $2.357

* 1993 adjusted earnings per share - $1.55

For purposes of vesting, 15% compounded growth in earnings per share will be cumulative so that any short fall in 1994, 1995, and/or 1996 can be made up in subsequent years (including years after 1996) so long as the average growth in earnings per share for all previous years beginning in 1994 is at least 15% per year.

No additional vesting of the Option will occur if, and after Employee leaves the Company, however all vested Options at the date of Employee's termination of employment with Company can be exercised up until the end of February 7, 2001.

(d) Notwithstanding any other provision in said Stock Plan or in the grant of said Option reflected in said Exhibit A, the vesting provision described in paragraphs (A) and (B) above shall be the sole and exclusive method of vesting."

5. This Agreement is the Fourth Amendment to the Employment Agreement, and the parties agree that all other terms, conditions and stipulations contained in the Employment Agreement shall remain in full force and effect and without any change or modification, except as provided herein.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

ENRON CORP.

By: CHARLES A LeMAISTRE Charles A. LeMaistre Title: Chairman, Compensation Committee of Board of Directors

ENRON CORP.

By: JOHN H. DUNCAN Name: John H. Duncan Title: Chairman, Executive Committee of Board of Directors

KENNETH L. LAY

KENNETH L. LAY Employee

SIXTH AMENDMENT TO EMPLOYMENT AGREEMENT

This Agreement, made and entered into and effective as of the 22nd day of April, 1994, by and among Enron Corp. (Company"), and Kenneth L. Lay ("Employee"), is an amendment to that certain Employment Agreement between the parties effective September 1, 1989 (the "Employment Agreement").

WHEREAS, the parties desire to amend the Employment Agreement to provide for Employee and Company to establish a program for split dollar life insurance;

WHEREAS, Employee has certain rights and benefits under the terms and provisions of the Enron Executive Supplemental Survivor Benefit Plan, the Houston Natural Gas Corporation and Subsidiaries Executive Post-Retirement Salary Continuation Agreement and the Houston Natural Gas Corporation and Subsidiaries Executive Supplemental Benefit Agreement which will terminate, and be superseded by the provisions of the Split Dollar Life Insurance Agreement;

NOW, THEREFORE, in consideration thereof, and of the mutual covenants contained herein, the parties agree as follows:

1. Contemporaneously with the execution of this Agreement, Company and Employee shall execute and deliver a form of Split Dollar Life Insurance Agreement ("Split Dollar Agreement") attached hereto as Exhibit A.

2. Article 3, Section 3.3 Other Employee Benefits shall be amended by adding the following language:

As consideration for the Company to enter into the Split Dollar Agreement on behalf of the Employee, Employee irrevocably waives, renounces and forfeits any and all rights to benefits under the Enron Executive Supplemental Survivor Benefits Plan; the Houston Natural Gas Corporation and Subsidiaries Executive Post-Retirement Salary Continuation Agreement between Employee and Houston Natural Gas Corporation dated July 1, 1985; and the Houston Natural Gas Corporation and Subsidiaries Executive Supplemental Benefit Agreement, excluding all rights as described under the terms and provisions of Section 2 of the Houston Natural Gas Corporation and Subsidiaries Executive Supplemental Benefit Agreement, between Employee and Houston Natural Gas Corporation dated November 12, 1984; all of Employee's rights with respect thereto are rescinded.

3. This Agreement is an amendment to the Employment Agreement, and the parties agree that all other terms, conditions and stipulations contained in the Employment Agreement shall remain in full force and effect and without any change or modification, except as provided herein.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

ENRON CORP.

By: JOHN H. DUNCAN
Name: John H. Duncan
Title: Chairman, Executive Committee of Board of Directors

By: CHARLES A. LeMAISTRE
Name: Charles A. LeMaistre
Title: Chairman, Compensation Committee of Board of Directors

KENNETH L. LAY
Kenneth L. Lay