December ____, 2000

Tejas Energy N S Holding, LLC
c/o Coral Power, L.L.C.
909 Fannin, Suite 700
Houston, Texas 77010

Re:  CA Energy Development I, LLC
        Letter Agreement for LM6000 Enhanced SPRINT Dual-fuel Combustion Turbine Generator Set

Gentlemen:

This letter (the “Agreement”), when executed by the parties, Enron North America Corp. (“ENA”) and Tejas Energy N S Holding, LLC (“TEH”) (collectively, the “Parties” and individually, a “Party”), shall set forth the agreement between the Parties.  

1.	Electric Turbine Generator Set.  Each of ENA and TEH is interested in acquiring, owning, operating, administering, maintaining, modifying, financing, disposing of and otherwise dealing with one (1) LM6000 Enhanced Sprint dual-fuel combustion turbine generator set (the “Subject Unit”).  For such purposes, ENA organized, and is the sole member of, CA Energy Development I, LLC, a Delaware limited liability company (the “LLC”).

2.	Transaction.  The parties agree to jointly engage in the transaction more particularly described as in this Agreement (collectively, the “Transaction”).  The Transaction shall close on or before December 14, 2000. Upon the closing of the Transaction, the following events shall occur, each being a condition precedent to the others and each being deemed to have occurred simultaneously with the others:

	(a)	In consideration for the execution and delivery by the LLC of a demand promissory note payable to the order of ENA in the principal amount of Sixteen Million One Hundred Thousand and No/100 Dollars ($16,100,000.00) (the “Purchase Price”), ENA shall cause the LLC to acquire rights and obligations associated with the purchase of the Subject Unit from GE Packaged Power, Inc. (“GE”), pursuant to an agreement between the LLC and GE (the “Facility Agreement”) in substantiallyall material respects in the same form as the agreement attached hereto as Exhibit A, as determined by TEH in its reasonable discretion.

	(b)	TEH shall acquire, and ENA shall cause the LLC to issue to TEH, membership interests in the LLC (“Membership Interests”) representing 80% of the equity in the LLC (the “TEH Membership Interests”) in exchange for a contribution to the capital of the LLC by TEH in the amount of Eight Hundred and No/100 Dollars ($800.00) cash.

	(c)	Simultaneously with the acquisition by TEH of the TEH Membership Interests, ENA and TEH shall execute and deliver the First Amended and Restated Limited Liability Company Agreement of the LLC (the “LLC Agreement”).

	(d)	Simultaneously with the acquisition by TEH of the TEH Membership Interests, TEH shall extend a loan to the LLC in the amount of the Purchase Price, in consideration for the execution and delivery by the LLC of a promissory note payable to the order of TEH in the principal amount of the Purchase Price.  

	(e)	Immediately upon the LLC’s receipt of loan proceeds from TEH, each of ENA and TEH shall cause the LLC to repay in its entirety the demand promissory note previously issued by the LLC to ENA.  
	(f)	TEH shall have received a written acknowledgement and confirmation from GE in the form attached hereto as Exhibit B.

	[(g)	TEH shall deliver to ENA a Guaranty Agreement executed by _____________Coral Energy, LLC substantially in the form attached here as Exhibit C, pursuant to which the guarantor guarantees payment and performance of the obligations of TEH pursuant to this Agreement.]  

3.	Additional Covenants and Agreements.  Upon and subsequent to the closing of the Transaction, the parties covenant and agree as follows:

	(a)	ENA agrees to be responsible for, to promptly pay, and to hold TEH and the LLC harmless from and against, payment of an amount equal to $1,829,000.00any and all amounts which are or become due and payable to GE or its successors and assigns pursuant to the terms of the Facility Agreement (i) on January 15, 2001account of the Purchase Amount as determined on the basis of all facts and circumstances existing prior to the closing of the Transaction and/or (ii) which are attributable to any event or circumstance, including any act or omission by ENA or any of its affiliates, occurring prior to the closing of the Transaction, in each case expressly excluding any and all sales, transfer, use and other taxes which might arise in connection with the sale, transfer, assignment or ownership of the Subject Unit.

	(b)	TEH agrees to be responsible for, and to hold ENA and the LLC harmless from and against, payment of (i) any and all amounts which become due and payable to the vendor of the Subject Unit after the closing of the Transaction, including, without limitation, any change orders affecting the Subject Unit,GE or any amendments, revisions, modifications or supplementsits successors and assigns pursuant to, or assignments or transfers the terms of, the Facility Agreement, other orthan any of the foregoing actions with respect to the Subject Unit, but excluding payment of the amountamounts for which ENA is responsible pursuant to Section 3(a) hereof, and (ii) any and all sales, transfer, use and other taxes which might arise in connection with the sale, transfer, assignment or ownership of the Subject Unit.

	(c)	TEH shall have the right to purchase the remaining Membership Interests in the LLC owned by ENA for the sum of $200.00 (the “Call Right”) at any time following (i) the point at which the Subject Unit achieves Commercial Operation, or (ii) the breach of the Facility Agreement by any party thereto.  In addition, if TEH fails to exercise its Call Right, ENA shall have the right to require TEH to purchase the remaining Membership Interests in the LLC owned by ENA for the sum of $200.00 (the “Put Right”) at any time following the point at which the Subject Unit achieves Commercial Operation.  The Call Right or Put Right, as the case may be, may be exercised by the appropriate Party via delivery of written notice to the other Party specifying the desired closing date for the transfer of the Membership Interests, which date shall be no less than five (5) and no more than fifteen (15) business days following receipt of such notice.

	(d)	ENA shall provide TEH such development and technical assistance regarding the Subject Unit as TEH reasonably requests; provided, however, that (i) TEH shall have no recourse to ENA to the extent that ENA declines to provide such assistance in its sole and absolute discretion, (ii) should ENA choose to provide such assistance, it shall do so without any warranty whatsoever and TEH shall have no recourse to ENA with respect to such assistance, except for ENA’s gross negligence or willful misconduct, and (iii) TEH shall promptly pay ENA for any internal or third party costs it incurs or may incur with respect to any such assistance.  

	(e)	ENA covenants and agrees that (i) ENA shall not, by act or omission, cause or bring about any breach of the Facility Agreement; and (ii) following closing of the Transaction, ENA will (A) cooperate with the LLC in enforcing any of the terms of the Facility Agreement as the LLC may reasonably request, however, any reasonable travel or other out of pocket costs incurred by ENA in connection with such requested cooperation shall be paid by the LLC, and (B) deliver to TEH copies of all correspondence which it receives from any entity, including without limitation GE, in connection with the Subject Unit or the Facility Agreement.

	4.	Term.  This Agreement shall remain in force and effect until the later of (a) December 31, 2004 (the “Term”) or (b) the 60th day following the date on which the Subject Unit achieves Commercial Operation.  All representations, warranties, indemnities, covenants and agreements of the Parties shall survive the closing of the Transaction for the period of the Term; except that, if written notice of a claim arising prior to the end of the Term is given to the other Party by the Party making the claim on or before thirty (30) days after the end of the Term, then the relevant representation, warranty, indemnity, covenant or agreement shall survive as to such claim until the claim has been finally resolved.

5.	Confidentiality.  For a period beginning on the date of this Agreement and ending on the date on which the Subject Unit achieves Commercial Operation, no Party will disclose any confidential information furnished to it pursuant to this Agreement without the prior written consent of the other Party other than (i) to its employees, representatives, lenders, counsel, lender’s counsel and affiliates, if any, (collectively, its “representatives”) which representatives agree to be bound by the terms hereof and (ii) to GE in connection with the performance of or compliance with the Facility Agreement or the obtaining of any consent, acknowledgement or confirmation from GE relating to the Facility Agreement.  The term “confidential information” shall not include information (a) as may become generally available to the public, (b) known to a Party at the time of disclosure or acquired at any time from a source other than the other Party hereto that was not prohibited from making disclosure, or (c) required to be disclosed in order to comply with any applicable law, order, regulation or ruling.  Each Party shall promptly inform the other Party of the substance of any inquiries received by such Party from any governmental or regulatory authority in connection with attempts to gain access to confidential information concerning the Transaction.

6.	Representations and Warranties.  

	(a)	Each Party hereby represents and warrants to the other Party that this Agreement (i) has been validly executed and delivered by such Party, (ii) has been duly authorized by all action on the part of such Party necessary for the authorization hereof, and (iii) is the legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms.  ENA represents and warrants that it is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  TEH represents and warrants that it is a limited liability company duly organized, validly existing and in good standing under the laws of the State of [Delaware].

	(b)	ENA specifically represents and warrants that (i) the Facility Agreement, when executed and delivered by the parties thereto and at the closing of the Transaction, will constitute the legal, valid and binding agreement of both of the parties thereto; (ii) the copy of the Facility Agreement attached hereto as Exhibit A is complete, true and correct in all respects, and as of the date of closing, the Facility Agreement will be in substantiallyall material respects in the same form as thatthe agreement attached hereto as Exhibit A, as determined by TEH in its reasonable discretion, and will not have been amended, revised, assigned, transferred, conveyed or otherwise modified and no change orders with respect thereto will have been agreed to or issued; and (iii) to the best of ENA’s knowledge, neither the LLC nor GE is in breach of any of the terms of the Facility Agreement, and ENA knows of no facts which, or which with the passage of time, may give rise to a breach of the Facility Agreement.

	(c)	TEH specifically represents and warrants that TEH is acquiring its Membership Interest in the LLC solely for investment and for TEH’s own account, with the intention of holding such interest for investment, without any intention of participating directly or indirectly in any distribution of any portion of such interest, and without the financial participation of any other person, other than to or with any affiliate of TEH.  Furthermore TEH specifically acknowledges that (i) TEH is aware that its Membership Interest in the LLC is subject to restrictions on transfer and other terms and conditions set forth in the LLC Agreement and may not be offered for sale, pledged, hypothecated, sold, assigned, or transferred at any time except in compliance with the terms and conditions thereof; (ii) TEH will be required to bear the risk of its investment for an indefinite period of time; (iii) the issuance of TEH’s Membership Interest in the LLC has not been registered under (A) the Securities Act of 1933, as amended (the “Securities Act”), (B) any state securities laws (the “State Acts”), or (C) the securities laws of any foreign jurisdiction (the “Foreign Acts”), and neither such interest nor any part thereof may be offered for sale, pledged, hypothecated, sold, assigned, or transferred at any time except in compliance with the terms and conditions of the LLC Agreement and (1) pursuant to an effective registration statement under any applicable State Acts or in a transaction that is exempt from registration under such State Acts or for which such registration otherwise is not required, (2) pursuant to an effective registration statement under the Securities Act or in a transaction that is exempt from registration under the Securities Act or for which such registration otherwise is not required, and (3) pursuant to an effective registration statement under any applicable Foreign Acts or in a transaction that is exempt from registration under any applicable Foreign Acts or for which such registration is not otherwise required.  TEH further understands and acknowledges that its representations and warranties contained in this Section 6(c) are being relied upon by the LLC as the basis for the exemption of the purchase by TEH of its interest in the LLC from the registration requirements of the Securities Act, the applicable State Acts, and the applicable Foreign Acts.  

	(d)	ENA specifically represents and warrants as follows:

(i)	Except for the TEH Membership Interests to be issued to TEH pursuant to this Agreement, ENA owns and holds of record and beneficially all Membership Interests in the LLC free and clear of any security interests, liens, options, warrants, purchase rights or other encumbrances, except (i) as contemplated by this Transaction and (ii) any restrictions on sales of the Membership Interests under applicable securities laws.  Upon the purchase of the TEH Membership Interests as contemplated by this Agreement and payment therefor as contemplated by this Agreement, the TEH Membership Interests will be fully paid and non-assessable and TEH will obtain good and valid title to the TEH Membership Interests free and clear of all security interests, liens, options, warrants, purchase rights or other encumbrances, except (i) the LLC Agreement and (ii) any restrictions on sales of the Membership Interests under applicable securities laws.  Upon issuance of the TEH Membership Interests against payment therefor as contemplated by this Agreement, the TEH Membership Interests will have been validly issued, without violation of the preemptive rights of any Person.  Following the issuance of the TEH Membership Interests, the Membership Interests in the LLC will consist solely of (1) the TEH Membership Interests, which shall constitute 80% of the limited liability company membership interests in, and the equity of, the LLC and (2) the issued and outstanding Membership Interests which are owned and held solely by ENA, which shall constitute 20% of the limited liability company membership interests in, and the equity of, the LLC.  Neither ENA nor the LLC is a party to any option, warrant, purchase right or other contract or commitment that would require ENA or the LLC to sell, transfer or otherwise dispose of any Membership Interests in the LLC, except this Agreement.  Neither ENA nor the LLC is a party to any voting trust, proxy or other agreement or understanding with respect to the voting of the Membership Interests of the LLC, except the LLC Agreement.  The LLC does not have outstanding, and is not directly or indirectly obligated to sell, issue, or otherwise dispose of any Membership Interests in the LLC pursuant to, any convertible security, call, option, warrant, purchase right, or other contract or commitment, except as described in the LLC Agreement.  The LLC is not a party to or bound by any convertible security, call, option, warrant, purchase right, or other contract or commitment that could, directly or indirectly, require the LLC to sell, issue, or otherwise dispose of any limited liability company membership interests in the LLC.  The LLC has not made any distributions or repurchased or redeemed any Membership Interests since the date of its formation.  

(ii)	The LLC is a limited liability company duly organized and validly existing under the laws of the State of Delaware.

(iii)	ENA has delivered to TEH true and complete originals of (A) the limited liability company agreement and other governing instruments of the LLC, each as amended, and (B) the minute book and other records of the LLC.  

(iv)	Since its formation, the LLC has engaged in no business, other than the Transaction and the Facility Agreement, and has complied with all laws, rules, regulations and orders of governmental authority applicable to the LLC or its assets and business.  Since its formation, the LLC has not entered into any contracts or agreements or incurred any liabilities, other than the obligations of the LLC under the Facility Agreement and the promissory notes contemplated by Sections 2(a) and 2(d) hereof.

(v)	The LLC does not directly or indirectly own any capital stock or other equity interest in any corporation, partnership or other entity.

(vi)	The LLC has no employees and has never had any employees.

(vii)	At closing, the LLC will own and hold good and valid title to all rights and interests of the “Purchaser” under the Facility Agreement free and clear of any security interests, liens, options, purchase rights or other encumbrances, and will not have transferred, or entered any agreement to transfer, any of its rights, title and interests under the Facility Agreement to any Person. 

(viii)	Neither the execution, delivery nor performance of this Agreement or the Transaction by ENA or the LLC will violate any provision of the Certificate of Incorporation or Bylaws of ENA, or violate, or be in conflict with, or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or cause the acceleration of the maturity of any debt or obligation pursuant to, or result in the creation or imposition of any security interest, lien or other encumbrance upon any property or assets of ENA or the LLC under, any agreement or commitment (including the Facility Agreement) to which ENA or the LLC is a party or by which ENA or the LLC is bound, or violate any statute or law or any judgment, decree, order, regulation or rule of any court or governmental authority by which ENA or the LLC is bound.

(ix)	No consent, approval or authorization of, or declaration, filing or registration with, any Person or any governmental or regulatory authority is required in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby (including the Transaction) by ENA or the LLC, including, without limitation, consents from parties to loans, contracts, leases or other agreements, except such as have been obtained.

(x)	There is no Action pending, or to the knowledge of ENA threatened, relating to the Facility Agreement, the Subject Unit, the LLC or the LLC’s business or assets.

(xi)	Neither TEH nor the LLC shall directly or indirectly have any responsibility, liability or expense, as a result of undertakings or agreements of ENA or any affiliate of ENA, for brokerage fees, finder’s fees, agent’s commissions, or other similar forms of compensation in connection with this Agreement or the Transaction.

(xii)	The LLC has no bank accounts or other similar accounts and has never had any bank accounts or other similar accounts.

(xiii)	ENA has not received from GE any notice of delay or any request to extend any date of delivery or other performance by GE under the Facility Agreement.  ENA has furnished TEH copies of all notices received by ENA from GE pursuant to the Facility Agreement.

(xiv)	Since its formation, the LLC has not made any tax elections on behalf of the LLC, including any tax election that causes the LLC to be treated as anything other than a disregarded entity in accordance with Income Tax Regulations section 301.7701-3(b).

(xiv)	[Tax representations to come]
(xv)	Attached to this Agreement as Exhibit D is a true and correct balance sheet of the LLC which has been prepared in accordance with generally accepted accounting principles, consistently applied, and presents fairly, in accordance with generally accepted accounting principles, the assets, liabilities and financial condition of the LLC as of the closing date of the Transaction immediately prior to the closing of the Transaction.

	(e)	TEH specifically represents and warrants as follows:

(i)	Neither the execution, delivery nor performance of this Agreement or the Transaction by TEH will violate any provision of the limited liability agreement or other governing documents of TEH, or violate, or be in conflict with, or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or cause the acceleration of the maturity of any debt or obligation pursuant to, or result in the creation or imposition of any security interest, lien or other encumbrance upon any property or assets of TEH under, any agreement or commitment to which TEH is a party or by which TEH is bound, or violate any statute or law or any judgment, decree, order, regulation or rule of any court or governmental authority by which TEH is bound.

(ii)	No consent, approval or authorization of, or declaration, filing or registration with, any Person or any governmental or regulatory authority is required in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby (including the Transaction) by TEH, including, without limitation, consents from parties to loans, contracts, leases or other agreements, except such as have been obtained.

(iii)	There is no Action pending, or to the knowledge of TEH threatened, against TEH relating to the Facility Agreement, the Subject Unit, the LLC or the LLC’s business or assets.

(iv)	ENA shall not directly or indirectly have any responsibility, liability or expense, as a result of undertakings or agreements of TEH or any affiliate of TEH, for brokerage fees, finder’s fees, agent’s commissions, or other similar forms of compensation in connection with this Agreement or the Transaction.  TEH shall bear and timely pay, and shall hold ENA harmless from and against, all amounts due to [Young] in connection with the execution, delivery and performance of this Agreement insofar as such amounts are payable as a result of any agreement between [Young] and TEH or any affiliate of TEH.

7.	Expenses.  Each Party shall bear its own costs associated with negotiating and performing under this Agreement.

8.	Entire Agreement.  This Agreement constitutes the entire agreement of the Parties relating to the subject matter hereof and supersedes all prior discussions, agreements or understandings, whether oral or written, relating to such subject matter, including that certain letter of intent dated November 29, 2000, between ENA and Coral Power, L.L.C. which is hereby terminated.  There are no other written or oral agreements or understandings among the Parties.  Any amendment of this Agreement must be written and signed by both Parties.

9.	Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES.

10.	Relationship of the Parties; No Third Party Beneficiaries. The Parties shall not be deemed in a relationship of partners or joint venturers by virtue of this Agreement, nor shall any Party be an agent, representative, trustee or fiduciary of any other.  No Party shall have any authority to bind any other to any agreement.  Nothing in this Agreement shall be deemed to stipulate any benefit for third parties not signatories hereto.	

11.	Limitation of liability.  

	(a)	Notwithstanding anything herein to the contrary, it is the explicit intent of each Party that neither Party is making any representations or warranties whatsoever, express or implied, beyond those expressly set forth in this Agreement, and it is understood that, except for the representations and warranties contained herein or in the LLC Agreement and without limiting any rights, claims and remedies against GE or any other third party, the LLC is acquiring the Subject Unit from ENA “AS IS, WHERE IS.”  Without limiting the generality of the foregoing, except for the representations and warranties contained in this Agreement or in the LLC Agreement, ENA hereby disclaims and negates any representation or warranty, expressed or implied, at common law, by statute, or otherwise, relating to the condition of the Subject Unit (including any implied or expressed warranty of merchantability or fitness for a particular purpose, or of conformity to models or samples of materials).

	(b)	Notwithstanding anything herein to the contrary, no Party or their respective directors, officers, shareholders, managers, or employees will be liable to any other Party, or its directors, officers, shareholders, managers or employees, whether under breach of contract, breach of warranty, tort liability (including without limitation both negligence and strict liability), strict liability or otherwise, for any incidental, special, indirect or consequential damages whatsoever (including without limitation lost profits or revenue) of any nature connected with or resulting from performance of this Agreement, but rather shall be liable only for direct actual damages arising from the breaching Party’s breach or sole, joint or concurrent negligence.

12.	Assignment.  This Agreement shall be binding upon the successors and assigns of the Parties, but no Party may assign this Agreement without the prior written approval of the other Party, which approval shall not be unreasonably withheld or delayed.  Notwithstanding the foregoing, however, either Party may assign its rights and obligations hereunder without the approval of the other to any subsidiary or affiliate of the assignor.  Furthermore, for the purpose of financing the purchase, construction and/or operation of the Subject Unit or the electric power generation facility in which the Subject Unit is used, TEH may assign, mortgage and/or pledge to and/or create security interests, liens, and/or other encumbrances in favor of lenders in its rights and interests in, under and pursuant to this Agreement.  No assignment by any Party of this Agreement or any of its rights or obligations hereunder shall operate to release the assigning Party from its obligations under this Agreement, unless an express written release is then obtained from all other Parties.

13.	Indemnity.

	(a)	Indemnification By TEH.  FROM AND AFTER THE CLOSING OF THE TRANSACTION, TEH SHALL INDEMNIFY AND HOLD HARMLESS ENA, ITS DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS, AND THE HEIRS, EXECUTORS, SUCCESSORS AND ASSIGNS OF ANY OF THE FOREGOING (COLLECTIVELY HEREIN REFERRED TO AS THE "ENA INDEMNIFIED PARTIES") FROM AND AGAINST ANY AND ALL COVERED LIABILITIES RESULTING FROM ANY MISREPRESENTATION, BREACH OF WARRANTY OR NONFULFILLMENT OF ANY COVENANT OR AGREEMENT ON THE PART OF TEH HEREUNDER, INCLUDING, WITHOUT LIMITATION, ANY COVERED LIABILITY BASED ON NEGLIGENCE, GROSS NEGLIGENCE, OR STRICT LIABILITY OF THE ENA INDEMNIFIED PARTY OR ANY OTHER THEORY OF LIABILITY, WHETHER IN LAW (WHETHER COMMON OR STATUTORY) OR EQUITY.

	(b)	Indemnification By ENA.  FROM AND AFTER THE CLOSING OF THE TRANSACTION, ENA SHALL INDEMNIFY AND HOLD HARMLESS TEH, ITS DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS, AND EACH OF THE HEIRS, EXECUTORS, SUCCESSORS, AND ASSIGNS OF ANY OF THE FOREGOING (COLLECTIVELY HEREIN REFERRED TO AS THE "TEH INDEMNIFIED PARTIES") FROM AND AGAINST ANY AND ALL COVERED LIABILITIES RESULTING FROM ANY MISREPRESENTATION, BREACH OF WARRANTY, OR NONFULFILLMENT OF ANY COVENANT OR AGREEMENT ON THE PART OF ENA HEREUNDER, INCLUDING, WITHOUT LIMITATION, ANY COVERED LIABILITY BASED ON NEGLIGENCE, GROSS NEGLIGENCE, OR STRICT LIABILITY OF THE TEH INDEMNIFIED PARTY OR ANY OTHER THEORY OF LIABILITY, WHETHER IN LAW (WHETHER COMMON OR STATUTORY) OR EQUITY.

	(c)	Third Party Claims.  If a claim by a third party is made against a ENA Indemnified Party or a TEH Indemnified Party (herein referred to as an "Indemnified Party"), and if such party intends to seek indemnity with respect thereto under this Section 13, such Indemnified Party shall promptly notify TEH or ENA, as the case may be (herein referred to as the "Indemnitor"), of such claims.  The Indemnitor shall have thirty (30) days after receipt of such notice to undertake, conduct, and control, through counsel of its own choosing and at its own expense, the settlement or defense thereof, and the Indemnified Party shall cooperate with it in connection therewith; provided that the Indemnitor shall permit the Indemnified Party to participate in such settlement or defense through counsel chosen by such Indemnified Party at the expenses of such Indemnified Party.  So long as the Indemnitor, at Indemnitor's cost and expense, (1) has undertaken the defense of, and assumed full responsibility for all Covered Liabilities with respect to, such claim, (2) is reasonably contesting such claim in good faith by appropriate proceedings, and (3) has taken such action (including the posting of a bond, deposit, or other security) as may be necessary to prevent any action to foreclose a lien against or attachment of the property of the Indemnified Party for payment of such claim, the Indemnified Party shall not pay or settle any such claim.  Notwithstanding compliance by the Indemnitor with the preceding sentence, the Indemnified Party shall have the right to pay or settle any such claim, provided that, if the Indemnitor is in compliance with the preceding sentence at the time of such payment or settlement by the Indemnified Party then in such event the Indemnified Party shall waive any right to indemnity therefor by the Indemnitor for such claim.  If, within thirty (30) days after the receipt of the Indemnified Party's notice of a claim of indemnity hereunder, the Indemnitor does not notify the Indemnified Party that it elects, at Indemnitor's cost and expense, to undertake the defense thereof and assume full responsibility for all Covered Liabilities with respect thereto, or gives such notice and thereafter fails to contest such claim in good faith or to prevent action to foreclose a lien against or attachment of the Indemnified Party's property as contemplated above, the Indemnified Party shall have the right to contest, settle, or compromise the claim but shall not thereby waive any right to indemnity therefor pursuant to this Agreement.

14.	Notices.  All notices and other communications hereunder shall be in writing and shall be deemed sufficiently given for all purposes hereof if (i) delivered in person, by courier or by registered or certified United States Mail to the Person to be notified, with receipt obtained, or (ii) sent by telecopy, telefax or other facsimile or electronic transmission, with "answer back" or other "evidence of receipt" obtained, in each case to the appropriate address or number as set forth below (or at such other address or number for a party as shall be specified by like notice).  Each notice shall be deemed effective on receipt by the addressee as aforesaid; provided that, notice received by telex, telecopy, telefax or other facsimile or electronic transmission after 5:00 p.m. at the location of the addressee of such notice shall be deemed received on the first business day following the date of such electronic receipt.  Until changed pursuant to the foregoing, notices to the Parties shall be addressed as follows:  

Tejas Energy N S Holding, LLC
c/o Coral Power, L.L.C.
909 Fannin, Suite 700
Houston, Texas  77010
Attention:  Mr. Tom Seigler
Facsimile:  (713) 265-5672

Enron North America Corp.
1400 Smith Street
Houston, Texas  77002
Attention:  Mr. Ben F. Jacoby
Facsimile:  (713) 646-3037

	15.	Defined Terms.  

		(a)	Unless the context otherwise requires, the respective terms defined in this Section 15 or defined in another Section of this Agreement shall, when used in this Agreement, have the respective meanings specified in this Section 15 or such other Section of this Agreement, with each such definition to be equally applicable both to the singular and the plural forms of the term so defined.

		(b)	“Action” shall mean an action, suit, proceeding, governmental investigation, governmental notice of violation, governmental inquiry or any arbitration proceeding.

		(c)	“Commercial Operation” shall have the meaning given to such term in the Facility Agreement.

		(d)	“Covered Liabilities” shall mean any and all debts, losses, liabilities, duties, claims, damages, obligations, payments (including, without limitation, those arising out of any demand, assessment, settlement, judgment, or compromise relating to any actual or threatened Action), taxes, costs, and expenses (including, without limitation, any attorneys' fees and any and all expenses whatsoever incurred in investigating, preparing, or defending any Action), matured or unmatured, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, known or unknown, including, without limitation, any of the foregoing arising under, out of, or in connection with any Action, any order or consent decree of any governmental authority, any award of any arbitrator, or any law, rule, regulation, order, contract, commitment, or undertaking.

		(e)	“Person” shall mean governmental authority or any individual, firm, partnership, corporation, limited liability company, joint venture, trust, unincorporated organization, or other entity or organization.

		(f)	“Purchase Amount” shall have the meaning given to such term in the Facility Agreement.

	16.	Interpretation.  In construing this Agreement:

		(a)	Examples.  Examples shall not be construed to limit, expressly or by implication, the matter they illustrate;

		(b)	Including.  The word "includes" and its derivatives means "includes, but is not limited to" and corresponding derivative expressions;

		(c)	Location of Definitions.  A defined term has its defined meaning throughout this Agreement, regardless of whether it appears before or after the place where it is defined;

		(d)	Controlling Provisions.  Each Exhibit and Schedule to this Agreement is a part of this Agreement, but if there is any conflict or inconsistency between the main body of this Agreement and any Exhibit or Schedule, the provisions of the main body of this Agreement shall prevail; and 

		(e)	Neutral Interpretation.  This Agreement is the result of arm's-length negotiations from equal bargaining positions by both Parties.  It is expressly agreed that this Agreement shall not be construed against any Party, and no consideration shall be given or presumption made on the basis of who drafted this Agreement or any particular provision hereof or who supplied the form of Agreement.

If the foregoing provisions correctly set forth our binding agreement, please execute both originals of this Agreement in the space provided below.  This Agreement may be executed in counterparts, and all such counterparts together shall constitute but one agreement.

ENRON NORTH AMERICA CORP. 

By:  ___________________________________
Printed Name:					
Title:						

Agreed and accepted this 
_____ day of December, 2000.

TEJAS ENERGY N S HOLDING, LLC

By:   ___________________________________
Printed Name:___________________________
Title:__________________________________

Exhibit A - Form of Facility Agreement
Exhibit B - Form of GE Acknowledgement Letter
Exhibit C - Form of Guaranty Agreement
Exhibit D – LLC Balance Sheet

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Statistics:	
Insertions	31	(7.18%)	
Deletions	15	(1.26%)	
Moves	0	(0.00%)	
Matched	31	(84.71%)	
Format changed	0	(6.85%)