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MASTER NETTING, SETOFF,
AND SECURITY AGREEMENT
DRAFT {10/30/01} [10/31/01]

This Master Netting, Setoff, and Security Agreement {(including the Collateral Annex,}[(]this "Agreement") is made and entered into effective as of _______________, 200_ by and among [list counterparty X and each affiliated party to this agreement, each with acronym], and Enron North America Corp. ("ENA"), Enron Power Marketing, Inc. ("EPMI") [list any other Enron entities, each with acronym].

RECITALS

ENA and [__] have entered into that certain [ISDA [or other]] Master Agreement dated effective as of ___________________, ____ (as the same may have been or may be amended, restated, supplemented, or otherwise modified from time to time, and including all Transactions, schedules, annexes, and confirmations thereunder, collectively, the "Financial Master Agreement").

ENA and [__] have entered into that certain [Master Firm Purchase/Sale Agreement [or other]] dated as of ___________________, ____ (as the same may have been or may be amended, restated, supplemented, or otherwise modified from time to time, and including all Transactions, schedules, annexes, and confirmations thereunder, the "Physical Gas Master Agreement"). 

EPMI and [__] have entered into that certain [Master Firm Purchase/Sale Agreement [or other]] dated as of ___________________, ____ (as the same may have been or may be amended, restated, supplemented, or otherwise modified from time to time, and including all Transactions, schedules, annexes, and confirmations thereunder, the "Physical Power Master Agreement"). 

[Name parties] have entered into various confirmations and general terms and conditions in the nature of ["forward contracts"] [and] ["swap agreements"] as defined in the United States Bankruptcy Code, 11 U.S.C. Secs. 101-1330 (as the same may have been or may be amended, restated, supplemented, or otherwise modified from time to time, and including all Transactions, schedules, annexes, and confirmations thereunder, the "Other Agreements").

[list other agreements among named parties]

The Financial Master Agreement, the Physical Gas Master Agreement, the Physical Power Master Agreement, and the Other Agreements [list other agreement identifiers] are referred to herein, collectively, as the "Existing Underlying Master Agreements."

The Enron Parties and the Counterparty Parties may after the date of this Agreement enter into master agreements or other confirmation agreements in the nature of "forward contracts" and "swap agreements" as defined in the United States Bankruptcy Code, 11 U.S.C. Secs. 101-1330 (such agreements, as the same may be amended, restated, supplemented, or otherwise modified from time to time, and including all Transactions, schedules, annexes, and confirmations thereunder, together with the Existing Underlying Master Agreements[,] are referred to herein, collectively, as the "Underlying Master Agreements" and each individually, as an "Underlying Master Agreement."  

Each Enron Party desires now to provide in this Agreement for its right to terminate, liquidate, net, [and] setoff{, and apply Collateral} upon a Default by{, and prior to Default determine the Collateral requirements of,} any Counterparty Party under any one or more of the Underlying Master Agreements as herein specified{,} [(]including, without limitation, by permitting each Enron Party to terminate, liquidate, net, [and] setoff{, and apply Collateral} across all of the Underlying Master Agreements[),] and to treat this Agreement, the Underlying Master Agreements, and all Transactions thereunder as a single agreement, whether or not the Obligations arising under the Underlying Master Agreements and Transactions thereunder are in connection with (a) cash settled Transactions or physically settled Transactions or (b) securities contracts, forward contracts, commodities contracts, repurchase agreements, swap agreements, or similar agreements.  Each Counterparty Party desires now to provide in this Agreement for its right to terminate, liquidate, net, [and] setoff{, and apply Collateral} upon a Default by{, and prior to Default determine the Collateral requirements of,} any Enron Party under any one or more of the Underlying Master Agreements as herein specified{,} [(]including, without limitation, by permitting each {Counterparty} [Enron] Party to terminate, liquidate, net, [and] setoff{, and apply Collateral} across all of the Underlying Master Agreements[),] and to treat this Agreement, the Underlying Master Agreements, and all Transactions thereunder as a single agreement, whether or not the Obligations arising under the Underlying Master Agreements and Transactions thereunder are in connection with (a) cash settled Transactions or physically settled Transactions or (b) securities contracts, forward contracts, commodities contracts, repurchase agreements, swap agreements, or similar agreements. 

NOW THEREFORE, for and in consideration of the mutual agreements herein made and other good and valuable consideration, including, without limitation, certain amendments to the Underlying Master Agreements, the receipt and sufficiency of which are hereby acknowledged, and in reliance upon the Parties' agreement and intent that this Agreement, the Underlying Master Agreements, and all Transactions thereunder are one single integrated agreement, each Party agrees as follows:

1.  Definitions.  (a) Capitalized terms used or incorporated by reference in this Agreement and not otherwise defined herein have the same meanings in this Agreement as given to them by the respective Underlying Master Agreement.  In the event of any conflict or inconsistency between a term defined herein and in any of the Underlying Master Agreements, such term as used in this Agreement shall govern and have the meaning ascribed to it in this Agreement.  In the event that a capitalized term used but not defined herein is given conflicting or inconsistent meanings in two or more Underlying Master Agreements, such term as used in this Agreement shall have the meaning that most effectively serves the purposes of this Agreement.  All references are to this Agreement unless otherwise expressly stated.

(b) The following terms used in this Agreement are defined as follows:

"Affiliate" means, with respect to any person, any other person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such person.  For purposes of the foregoing definition, "control" means the direct or indirect beneficial ownership of more than fifty percent of the outstanding capital stock or other equity interests having ordinary voting power, and "person" means any entity except an individual.

"BIA" means the Bankruptcy and Insolvency Act (Canada), R.S.C. 1985, c.B-3 as the same may be amended, restated, replaced, or re-enacted from time to time.

"Business Day" means a day on which commercial banks and foreign exchange markets settle payments and are open for general business in the location of the head office of each Party.

"Claims" has the meaning set forth in Section 16.

"Collateral" means collateral pledged or transferred [in accordance with each Underlying Master Agreement] by any one or more than one Enron Party or Counterparty Party, as applicable, {(including, without limitation, any such collateral transferred by the Collateral Administrator on behalf of any such Parties)} to secure payment or performance of any of its/their Obligations to any one or more than one Counterparty Party or Enron Party, as applicable, including without limitation, each Letter of Credit.
{
"Collateral Administrator" means the Party designated in the Collateral Annex to administer the Collateral for each Group in accordance with the Collateral Annex.

"Collateral Annex" means the Collateral Annex attached hereto as Annex A and made a part of this Agreement.}
"Counterparty Affiliate" means each Counterparty Party and each of its now and hereafter existing Affiliates.

	"Counterparty Group" means all Counterparty Parties.

["Counterparty Group Guaranty Agreement" means the guaranty agreement of __________ to be delivered to Enron Group pursuant to this Agreement.]

"Counterparty Party" means X, [list other acronyms].

"Default" has the meaning set forth in Section 2.

"Defaulting Group" means (i) Enron Group when a Default has occurred with respect to any Enron Party ("Defaulting Enron Party"), and (ii) Counterparty Group when a Default has occurred with respect to any Counterparty Party ("Defaulting Counterparty Party").

"Defaulting Party" means (i) each Enron Party when a Default has occurred with respect to a Defaulting Enron Party and (ii) each Counterparty Party when a Default has occurred with respect to a Defaulting Counterparty Party.

{"Drawing Event" has the meaning set forth in Section 6.}

"Enron Affiliate" means each Enron Party and each of its now and hereafter existing Affiliates.

"Enron Group" means all Enron Parties.

["Enron Group Guaranty Agreement" means the guaranty agreement of Enron Corp. to be delivered to Counterparty Group pursuant to this Agreement.]

"Enron Party" means any of ENA, EPMI, [list other acronyms].

{"Exposure" means, on any date, the amount that would be payable by one Party (First Party) to another Party (Second Party) under an Underlying Master Agreement if pursuant thereto Second Party was entitled to and did terminate all Transactions and accelerate First Party's payment Obligations under such agreement as of such date on the basis of a default by First Party, whether or not such default, termination, and acceleration actually occurs; provided, Exposure will be determined using mid-market estimates of amounts applicable to such determination.

"Exposure Threshold" means:

(a) with respect to Enron Group, an amount equal to [US]$[to be provided by Credit]; and

(b) with respect to Counterparty Group, an amount equal to [US]$[to be provided by Credit];

provided, the Exposure Threshold for a Group shall be zero upon the occurrence and during the continuance of a Material Adverse Change, Default, or any event which, with the giving of notice or the lapse of time or both, would constitute a Default (a "Potential Event of Default") by or in respect of any of the entities comprising that Group.}

"Final Settlement Amount" has the meaning set forth in Section 4.

"Group" means Enron Group or Counterparty Group, as applicable.

["Guarantor" means with respect to Enron Group, Enron Corp., and with respect to Counterparty Group, ____________________.]  [If one or more guarantors are included, provisions regarding guaranties are to be added.  See User Notes.]

"Letter of Credit" means a Letter of Credit{, as defined in the Collateral Annex,} posted in respect of any Obligations of any Party [in accordance with an Underlying Master Agreement.]{.

"Material Adverse Change" shall have the meaning set forth in the Collateral Annex.}

"Non-defaulting Group" means (i) Enron Group when a Default has occurred with respect to a Defaulting Counterparty Party and (ii) Counterparty Group when a Default has occurred with respect to a Defaulting Enron Party.

"Non-defaulting Party" means (i) each Enron Party when a Default has occurred with respect to a Defaulting Counterparty Party and (ii) each Counterparty Party when a Default has occurred with respect to a Defaulting Enron Party.

"Obligation" or "Obligations" means each and every obligation or liability for which any Counterparty Party is bound to any Enron Party or for which any Enron Party is bound to any Counterparty Party, under an Underlying Master Agreement, a Transaction, or this Agreement and whether financial or physical, including, without limitation, payment and delivery obligations, each and every other obligation or requirement, any debt, any payment obligations in respect of any previously terminated Transaction, any obligation arising under a guarantee issued pursuant to any Underlying Master Agreement, a Transaction, or this Agreement that any Counterparty Party has provided to any Enron Party or that any Enron Party has provided to any Counterparty Party, and each and every obligation or requirement under any Underlying Master Agreement{,} [or] a Transaction{, or this Agreement} to maintain or deliver Collateral with respect thereto (whether or not performance is due), or in connection with a guarantee, or acceleration, termination, or liquidation of a guarantee, whether arising under any Underlying Master Agreement, a Transaction, or this Agreement, heretofore or hereafter, and whether fixed, matured, liquidated, or unliquidated.

"Party" means ENA, EPMI, [list other party acronyms], X, [list other party acronyms] as the context indicates, and "Parties" means all of the foregoing.  

"Settlement Amount" means the net amount that is due and payable by one Party to the other Party in respect of an Underlying Master Agreement upon the exercise by Non-defaulting Party of the rights set forth in Section 2(b).

{"Termination Date" has the meaning set forth in Section 6.}

"Transaction" or "Transactions" means each and every trade, transaction, or other open contractual commitment, between any Enron Party and any Counterparty Party arising under any of the Underlying Master Agreements.

	"Underlying Master Agreements Close-Out" has the meaning set forth in Section 2.

2.  Default and Remedies.  (a) Each of the occurrence of (i) a default, event of default, or other event on the basis of which a Party has the contractual right to accelerate, terminate (including automatic early termination, if applicable), or liquidate all Transactions under any of the Underlying Master Agreements, or (ii) any representation or warranty made or repeated by a Party hereunder proves to have been incorrect or misleading in any material respect when made or repeated, or (iii) a Party is in violation of, or fails to comply with, any covenant made hereunder, {including, without limitation, the covenants set forth in the Collateral Annex and Section 6 hereof,} constitutes a "Default" under this Agreement.
 
	(b) Upon the occurrence and during the continuance of a Default in respect of any Defaulting Party, Non-defaulting Group may give notice to Defaulting Group specifying the relevant Default, declaring Defaulting Group in default of all Underlying Master Agreements and all Transactions thereunder, and designating a date not earlier than the date such notice is effective, but not later than 20 days after such notice is effective, upon which date each Non-defaulting Party shall (i) accelerate, terminate, and liquidate, or otherwise close-out all Transactions under its Underlying Master Agreements as of such designated date; (ii) exercise rights of setoff, netting, and/or recoupment in accordance with the terms of its Underlying Master Agreements; (iii) [exercise rights to apply Collateral pursuant to all rights granted, and as specified in, its Underlying Master Agreements; (iv)] retain any Collateral; {(iv)}[(v)] with respect to each Defaulting Party, withhold payment and performance of each Non-defaulting Party's Obligations to each Defaulting Party to pay, secure, setoff against, net, and/or recoup such Defaulting Party's Obligations to such Non-defaulting Party; {(v)}[(vi)] convert any Obligation from one currency into another currency as set forth in Section 5; and {(vi)}[(vii)] take any other action permitted by law or in equity or by its Underlying Master Agreements or any Transactions thereunder necessary or appropriate to protect, preserve, or enforce its rights or to reduce any risk of loss or delay.  This Section 2(b) shall be referred to herein as the "Underlying Master Agreements Close-Out."

(c) Any and all notification requirements under the Underlying Master Agreements for accelerating, terminating, liquidating, or otherwise closing-out Transactions thereunder shall be superceded by Section 2(b) and shall be satisfied in all respects by the notice provided for in Section 2(b) and, with particularity, any automatic termination provided for in any Underlying Master Agreement shall be inapplicable thereto.  If a Default occurs and if Non-defaulting Group does not elect to cause the Underlying Master Agreements Close-Out, each Party shall retain its rights and obligations under each Underlying Master Agreement with respect thereto {and the Collateral Administrator for Enron Group or Counterparty Group, as the case may be, shall have the right to apply Collateral to satisfy the Obligations under any Underlying Master Agreement for which an Early Termination Date is designated in accordance therewith}.

	3.  Obligations and Setoff.  Upon Non-defaulting Group's exercise of the Underlying Master Agreements Close-Out and the determination of the Settlement Amount under each Underlying Master Agreement, Non-defaulting Group may, without further notice, setoff (including by set-off, offset, combination of accounts, retention, or withholding across or within each or all of the Underlying Master Agreements) any and all sums, amounts, or Obligations Owed by any Non-defaulting Party to any Defaulting Party against any sums, amounts, or Obligations Owed by any Defaulting Party to any Non-defaulting Party.  The foregoing is in addition to, and not in limitation of, any other right or remedy available to Non-defaulting Group (including, without limitation, any right of setoff, offset, combination of accounts, deduction, counterclaim, retention, or withholding), whether arising under this Agreement or other agreement, including, without limitation, any of the Underlying Master Agreements and with particularity, rights therein with respect to any Enron Affiliate or any Counterparty Affiliate, applicable law, equity, or otherwise.  For purposes of this Section, "Owed" means, as of any date of determination, any amounts owed or otherwise accrued and payable (regardless of whether such amounts have been or could be invoiced) as of such date.  If an Obligation is unascertained, Non-defaulting Group may in good faith estimate that Obligation and setoff in respect of the estimate, subject to accounting to Defaulting Group when the Obligation is ascertained.
	
	4.  Settlement.  Upon Non-defaulting Group's exercise of the Underlying Master Agreements Close-Out, the Settlement Amounts under the Underlying Master Agreements shall be netted {and reduced by the exercise of rights to apply Collateral pursuant to all rights granted in this Agreement (as so netted and reduced}[(as so netted], the "Final Settlement Amount").  Upon determination of the Final Settlement Amount, Non-defaulting Group shall provide Defaulting Group with a statement showing the calculation of the Final Settlement Amount.  The Final Settlement Amount shall be payable by the Group from whom such payment is due on the third Business Day after the statement is provided.  In the event of a dispute as to the Final Settlement Amount payable by a Group, such Group shall, within the time proscribed herein, pay the undisputed amount of the Final Settlement Amount.  The Parties shall in good faith seek to resolve such disputed amount of the Final Settlement Amount without delay.  If the Parties are unable to resolve the disputed amount of the Final Settlement Amount within 10 days, the matter shall be submitted to arbitration in accordance with Section 16.  The Final Settlement Amount shall bear interest at the highest rate provided for in any of the Underlying Master Agreements; provided, such rate shall not exceed the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken reserved, charged, or received thereon under any applicable law.  { Nothing in this Section 4 shall be construed to restrict or preclude any Group from realizing on Collateral at any time after the Final Settlement Amount has been calculated, notwithstanding (and without awaiting the outcome of) any dispute as to the Final Settlement Amount payable.}

5.  Currency.  In order to effect the provisions of this Agreement, any amounts subject hereto may be converted into another currency specified in any of the Underlying Master Agreements at the rate of exchange at which the Party so converting, acting in a reasonable manner and in good faith, would be able to purchase the relevant amount of the currency being converted; provided, amounts shall not be converted into a currency that is specified in fewer than 50% of the Transactions at the time of such conversion.

6.  Collateral.  {Prior to the Termination Date during the term of this Agreement, the provisions hereof, including the Collateral Annex, replace the separate exposure thresholds and Collateral requirements set forth in each Underlying Master Agreement with the Exposure Thresholds and aggregate Collateral requirements set forth in this Agreement, including the Collateral Annex, covering all Underlying Master Agreements. Notwithstanding anything to the contrary contained in any Underlying Master Agreement or in any documentation comprising or pertaining to Collateral or other credit support and subject to Section 2(c), the determination and application of Collateral requirements and rights shall be in accordance with the following provisions so long as this Agreement is in force and effect.

(a) Any Collateral provided (before, on or after the date of this Agreement) in respect of any Obligations, by or on behalf of any Counterparty Party to any Enron Party, shall secure the aggregate of the Obligations of Counterparty Group to Enron Group and the administration of such Collateral shall be governed by the Collateral Annex as of the effective date of this Agreement. Any Collateral provided (before, on or after the date of this Agreement) in respect of any Obligations, by or on behalf of any Enron Party to any Counterparty Party, shall secure the aggregate of the Obligations of Enron Group to Counterparty Group and the administration of such Collateral shall be governed by the Collateral Annex as of the effective date of this Agreement. 

(b) In the event of the occurrence of an Early Termination Date under any Underlying Master Agreement occasioned by an event other than a Default, the Collateral Administrator for Enron Group and Counterparty Group, as the case may be, shall have the right to apply Collateral to satisfy the Obligations under the subject Underlying Master Agreement in accordance therewith.

(c) Each Enron Party agrees to act as the agent and bailee of each other Enron Party in respect of the Collateral and shall hold any Collateral both as secured party and as agent and bailee of each other Enron Party as a secured party. Each Counterparty Party hereby irrevocably appoints each Enron Party severally to be its attorney in the name of and on behalf and as the act and deed of such Counterparty Party or otherwise under a power coupled with an interest to execute, sign, seal, and deliver any documents which each Enron Party may require for perfecting its security interest in the Collateral or upon the occurrence of a Default vesting the Collateral in each Enron Party or its nominees or any purchaser, and otherwise generally to sign, seal, deliver, and otherwise perfect any such legal or other charge or assignment and all documents, and to do all such acts and things as may be required for the full exercise of the powers hereby conferred, including filing any financing statements and charges, and upon the occurrence of a Default, any sale, lease, realization, or other disposition of the Collateral or the enforcement of any of the Enron Parties' rights hereunder or otherwise.

(d) Each Counterparty Party agrees to act as the agent and bailee of each other Counterparty Party in respect of the Collateral and shall hold any Collateral both as secured party and as agent and bailee of each other Counterparty Party as a secured party. Each Enron Party hereby irrevocably appoints each Counterparty Party severally to be its attorney in the name of and on behalf and as the act and deed of such Enron Party or otherwise under a power coupled with an interest to execute, sign, seal, and deliver any documents which each Counterparty Party may require for perfecting its security interest in the Collateral or upon the occurrence of a Default vesting the Collateral in each Counterparty Party or its nominees or any purchaser, and otherwise generally to sign, seal, deliver, and otherwise perfect any such legal or other charge or assignment and all documents, and to do all such acts and things as may be required for the full exercise of the powers hereby conferred, including filing any financing statements and charges, and upon the occurrence of a Default, any sale, lease, realization, or other disposition of the Collateral or the enforcement of any of the Counterparty Parties' rights hereunder or otherwise.

(e) Notwithstanding any provisions of any of the Underlying Master Agreements, each Letter of Credit permitted as Collateral issued for the account of any Counterparty Party shall name ENA for itself and as agent for [list each other Enron Party] as beneficiary thereof, and each Letter of Credit permitted as credit support thereunder issued for the account of any Enron Party shall name X for itself and as agent for [list each other Counterparty Party] as beneficiary thereof, and in each case shall provide for the right of ENA or X, respectively, to draw thereon upon the occurrence of a "Drawing Event" therein set forth, all as further defined and provided for in the Collateral Annex. The Parties covenant to each other to use reasonable efforts to promptly cause the amendment or reestablishment of each Letter of Credit issued for its account under the Underlying Master Agreements in accordance with this Agreement and the Collateral Annex.

(f) The provisions of the Collateral Annex shall apply.

(g) At such time as this Agreement has been terminated or is otherwise no longer in force and effect for any reason (the "Termination Date"), the exposure thresholds and Collateral requirements set forth in the Underlying Master Agreements shall be effective between the Parties to each such Underlying Master Agreement as therein stated. As of and from the Termination Date the Collateral held by Enron Group and Counterparty Group shall continue to be maintained and secure the Obligations of Counterparty Group and Enron Group, respectively. Within a reasonably practicable time thereafter, but no later than 30 Business Days, the Collateral Administrator for each Group shall provide a written notice to the other Group setting forth the distribution of the Collateral held by it applicable to each Underlying Master Agreement effective as of the Termination Date, which distribution may be determined in the sole discretion of each Collateral Administrator; provided, should a Default occur under any remaining Underlying Master Agreement prior to any such written notice, Non-defaulting Party shall have the right to apply Collateral to satisfy the Obligations under any such Underlying Master Agreement in accordance therewith. Each Party waives any and all objections and claims in respect of the rights granted to each Group's Collateral Administrator to determine the distribution of Collateral effected as of the Termination Date. Each Party confirms and ratifies the grant of security interest set forth in Paragraph 2 of the Collateral Annex covering the Collateral, as may be distributed among the Underlying Master Agreements in accordance herewith as of the Termination Date.}[(a)  The exposure thresholds and Collateral requirements set forth in the Underlying Master Agreements shall continue to be effective between the Parties to each such Underlying Master Agreement as therein stated.  

	(b)  As security for the prompt and complete payment and performance of all Obligations of Enron Group, each member of Enron Group hereby pledges, assigns, conveys, and transfers to each member of Counterparty Group, and hereby grants to Counterparty Group and each member thereof a present and continuing first priority security interest in and to, and a general first lien upon and right of setoff against all right, title, and interest any member of Enron Group has in any Obligations of any member of Counterparty Group to any member of Enron Group, together with all contract rights in respect of such Obligations, other than any Final Settlement Amount payable by Counterparty Group to Enron Group.  As security for the prompt and complete payment and performance of all Obligations of Counterparty Group, each member of Counterparty Group hereby pledges, assigns, conveys, and transfers to each member of Enron Group, and hereby grants to Enron Group and each member thereof a present and continuing first priority security interest in and to, and a general first lien upon and right of setoff against all right, title, and interest any member of Counterparty Group has in any Obligations of any member of Enron Group to any member of Counterparty Group, together with all contract rights in respect of such Obligations, other than any Final Settlement Amount payable by Enron Group to Counterparty Group.  Each member of each Group agrees to take such action as the other Group reasonably requests in order to perfect the other Group's and its members' continuing security interest in, lien on, and right of setoff against the foregoing interests and grants authority to the other Group to file financing statements or take such other actions necessary to perfect the foregoing interests.]

7.  Representations and Warranties.  Each Party represents and warrants to the other that (a) it is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder and has taken all necessary actions to authorize such execution, delivery, and performance, (b) the person signing this Agreement on its behalf is duly authorized to do so on its behalf, (c) this Agreement constitutes its legal, valid, and binding obligation, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, conservatorship, receivership, moratorium, or other similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law), and (d) the location of its incorporation or organization and the location of its chief executive office are the locations set forth under its signature line to this Agreement.

8.  Interpretation and Headings.  The Parties intend that this Agreement constitutes and should be deemed to be a "master netting agreement" and that the Parties are and should be deemed to be "master netting agreement participants" within the meaning of and as such terms are used in any law, rule, regulation, statute, or order applicable to the Parties' rights herein, whether now or hereafter enacted or made applicable.  The use of headings and subheadings in this Agreement, and the division of this Agreement into sections and sub-sections, are for convenience of reference only and shall not affect the interpretation or construction of this Agreement.  The Parties further intend that this Agreement, the Underlying Master Agreements, all Transactions, and any guarantees provided in respect thereof, each and together constitute an "eligible financial contract" under and in all proceedings related to the BIA, the Companies' Creditors Arrangement Act, R.S.C. 1985, c.C-36 or the Winding-Up Act, R.S.C. 1985, c.W-11, as the same may be amended, restated, replaced, or re-enacted from time to time.

9.  Governing Law.  The rights of the Parties under this Agreement shall be in addition to, and not in limitation or exclusion of, any other rights that they may have (whether by agreement, operation of law, or otherwise).  This Agreement shall be governed by, and construed in accordance with the laws of the State of New York (without reference to its choice of law doctrine).

10.  Waiver and Process.  Any provisions in the Underlying Master Agreements regarding waiver of immunity, waiver of trial by jury, and process shall apply to this Agreement in the same manner and to the same extent as if such references were contained in this Agreement.

11.  Assignment and Amendment.  (a)  Any assignment or other transfer of an Underlying Master Agreement and Transactions subject thereto by any Enron Party to an Enron Affiliate or by any Counterparty Party to a Counterparty Affiliate permitted under an Underlying Master Agreement, including, without limitation, whether by any permitted consolidation or amalgamation with, merger with or into, or transfer of substantially all of its assets to such entity, shall be made without relieving the assigning Party from liability thereunder and expressly subject and subordinate to this Agreement.

(b)  This Agreement, the Underlying Master Agreements and Transactions thereunder, and any rights therein, including, without limitation, rights to amounts payable to a Party thereunder, may be assigned or otherwise transferred without consent of the non-assigning Parties as security only if the assignment or other transfer is made without relieving the assigning Party from liability thereunder and expressly subject and subordinate to this Agreement. 

(c)  This Agreement, the Underlying Master Agreements and Transactions thereunder, and any rights to amounts payable to a Party thereunder, shall not be assigned by any Enron Party or any Counterparty Party without the prior written consent of Counterparty Party or Enron Party, respectively, which consent may be given or withheld at the sole discretion of the non-assigning Party, except (i) as expressly set forth herein and (ii) pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under any Underlying Master Agreement). 

(d)  Any purported assignment or other transfer that is not in compliance herewith shall be void.

(e)  This Agreement may not be amended except by an amendment to this Agreement signed by each Party.  Confirmations of Transactions under any Underlying Master Agreement shall not serve as an amendment.

12.  Notices.  Any and all notices, statements, demands, or other communications under this Agreement shall be given by mail, facsimile transmission, electronic message system, or messenger, to the individuals and at the facsimile numbers, electronic message addresses, or other locations set forth below.  { Any notice, statement, demand, or other communication under this Agreement to be given by a Group or in respect of the Collateral may be given by the applicable Collateral Administrator.}
Address for notices or communications to Enron Group:

Address: 

Street Address:
(for courier delivery)
	Enron North America Corp.
P.O. Box 4428
Houston, Texas  77210-4428
1400 Smith Street
Houston, Texas 77002
Attn:  Director, Documentation Department	Facsimile No.:  (713) 646-4816
Telephone No.:  (713) 853-3300	
A copy of any notice sent to Enron Group pursuant to Section 2 or Section 6 must also be sent to (i) Enron Corp., Attention:  Corporate Secretary at the above address and facsimile no. (713) 853-2534, and (ii) Enron North America Corp., Attention:  Assistant General Counsel, Trading Group at the above address and facsimile no. (713) 646-4818.

Address for notices or communications to Counterparty Group:

Address: 
Street Address:
(for courier delivery) 
	_________________________________
_________________________________
_________________________________
Attn.:  ____________________________	Facsimile No.:  	
Telephone No.:  		
 
Any notice or other communication in respect of this Agreement given in any manner herein permitted to the address or number or in accordance with the electronic messaging system details above provided will be deemed effective as follows:  (i) if in writing and delivered in person or by courier, on the date it is delivered; (ii) if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the recipient in legible form; (iii) if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery is attempted; (iv) if sent by electronic messaging system, on the date that electronic message is received; in each case unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Business Day, or that communication is delivered (or attempted) or received, as applicable, after the close of business of recipient on a Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Business Day.  Any Party may by notice to the others change the address, facsimile number, or electronic messaging system details at which notices or other communications are to be given to it.
13.  Conflicts and Inconsistencies; Confidentiality.  In the event of any conflict or inconsistency between any provision of this Agreement and any provision of any Underlying Master Agreement or any Transaction thereunder concerning the matters set forth in this Agreement, the provision of this Agreement shall govern and supercede the provision of the Underlying Master Agreement or any Transaction thereunder.  The contents of this Agreement, the Underlying Master Agreements and all Transactions thereunder, all other documents relating thereto and any information pertaining thereto made available by one Group or its Guarantor to the other Group or its Guarantor is confidential and shall not be disclosed to any third party (nor shall any public announcement relating to this Agreement be made by any Party), except for such information (a) as may become generally available to the public, (b) as may be required or appropriate in response to any summons, subpoena, or otherwise in connection with any litigation or to comply with any applicable law, order, regulation, ruling, or accounting disclosure rule or standard, (c) as may be obtained from a non-confidential source that disclosed such information in a manner that did not violate its obligations to the non-disclosing Group or its Guarantor in making such disclosure, or (d) as may be furnished to the disclosing Group’s Affiliates, and to each of such person’s auditors, attorneys, advisors, lenders, or prospective purchasers which are required to keep the information that is disclosed in confidence.

 14.  Continuation of Master Agreements; Amendment; Severability.  (a)  Each Party agrees that the Underlying Master Agreements are hereby amended to the extent necessary to give effect to this Agreement, including, without limitation, by the deletion of any automatic termination provisions set forth in any of the Underlying Master Agreements.  Except as amended by this Agreement, the Underlying Master Agreements shall remain in full force and effect.  Subject to Section 14(b), in the event any one or more of the provisions contained in this Agreement should be held invalid, illegal, or unenforceable in any respect under the law of any jurisdiction, the validity, legality, and enforceability of the remaining provisions under the law of such jurisdiction, and the validity, legality, and enforceability of such provisions and any other provisions under the law of any other jurisdiction, shall not in any way be affected or impaired thereby.

(b)  Each Party agrees that if any Underlying Master Agreement does not provide for the determination and payment of the Settlement Amount on the basis of a payment owed by the non-defaulting party to the defaulting party (in addition to a payment owed by the defaulting party to the non-defaulting party), then any such Underlying Master Agreement is hereby amended to provide that the Settlement Amount shall be determined and paid on the basis of a payment owed by the non-defaulting party to the defaulting party (in addition to a payment owed by the defaulting party to the non-defaulting party). 

(c)  If either of Section 2 or Section 3 is deemed or held to be invalid, illegal, or unenforceable, this Agreement shall be deemed to be null and void in its entirety and without any further force or effect.

	15.  No Waiver.  A failure or delay in exercising any right, power, or privilege in respect of the Underlying Master Agreements or this Agreement will not be presumed to operate as a waiver of that right, power, or privilege, and a single or partial exercise of any right, power, or privilege will not be presumed to preclude any subsequent or further exercise of that right, power, or privilege, or the exercise of any other right, power, or privilege.

	16.  Arbitration.  Notwithstanding any provisions in any of the Underlying Master Agreements, any claim, counterclaim, demand, cause of action, dispute, and controversy arising out of or relating to this Agreement or the relationship established by this Agreement, any provision hereof, the alleged breach thereof, or in any way relating to the subject matter of this Agreement, including, without limitation, insofar as same relates to any Underlying Master Agreement, involving the Parties and/or their respective representatives (collectively, the "Claims") shall be resolved by binding arbitration.  Arbitration shall be governed by the Federal Arbitration Act and conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association.  The validity, construction, and interpretation of this agreement to arbitrate, and all procedural aspects of the arbitration conducted pursuant hereto shall be decided by the arbitrators.  In deciding the substance of the Claims, the arbitrators shall refer to the governing law.  It is agreed that the arbitrators shall have no authority to award treble, exemplary, or punitive damages of any type under any circumstances whether or not such damages may be available under state or federal law, or under the Federal Arbitration Act, or under the Commercial Arbitration Rules of the American Arbitration Association, the Parties hereby waiving their right, if any, to recover any such damages.  The arbitration proceeding shall be conducted in Houston, Texas.  Within thirty days of the notice of initiation of the arbitration procedure, Enron Group and Counterparty Group shall each select one arbitrator.  The two arbitrators shall select a third arbitrator.  The third arbitrator shall be a person who has over eight years professional experience in over-the-counter derivative products and who has not previously been employed by any Party and does not have a direct or indirect interest in any Party or the subject matter of the arbitration.  While the third arbitrator shall be neutral, the two Group-appointed arbitrators are not required to be neutral, and it shall not be grounds for removal of either of the two Group-appointed arbitrators or for vacating the arbitrators’ award that either of such arbitrators has past or present minimal relationships with any Party.  To the fullest extent permitted by law, any arbitration proceeding and the arbitrators' award shall be maintained in confidence by the Parties.

	17.  Term.  This Agreement shall continue in effect from the date hereof until terminated by agreement of the Parties; provided, notwithstanding the foregoing, a Group shall have the right, but not the obligation, to terminate this Agreement by notice to the other Group upon such time as there are fewer than two Underlying Master Agreements in effect.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by facsimile or original signature and in multiple counterparts, each of which is deemed an original and effective as one document, all as of the date first written above.

"ENRON GROUP"

ENRON NORTH AMERICA CORP.

BY:  _______________________________________
PRINTED NAME:  ____________________________
TITLE:  _____________________________________

Location of state of incorporation or organization:  _______________
Location of chief executive office:  __________________________
____________________________________________________

[ADD SIGNATURE LINES]

"COUNTERPARTY GROUP"

[NAME]

BY:  _______________________________________
PRINTED NAME:  ____________________________
TITLE:  _____________________________________

Location of State of incorporation or organization:  _______________
Location of chief executive office:  __________________________
____________________________________________________

[ADD SIGNATURE LINES]

ANNEX A
ENRON GROUP GUARANTY AGREEMENT
COUNTERPARTY GROUP GUARANTY AGREEMENT

USER NOTES:  

1.  PRIOR TO USE EACH UNDERLYING MASTER AGREEMENT TO BE INCLUDED HEREIN MUST BE REVIEWED AND ASSESSED FOR ITS APPROPRIATENESS.  FOR EXAMPLE:  IF PHYSICAL, IS ANY TRANSACTION RELATED TO ANY TYPE OF BACK TO BACK FACILITY? OR IF FINANCIAL OR PHYSICAL, ARE ANY OF THE TRANSACTIONS RELATED TO A STRUCTURED FINANCE TRANSACTION OR OTHER ONE-OFF TYPE OF STRUCTURE SUCH AS A PRODUCTION PAYMENT?  CONFIRM THAT THE TYPE OF AGREEMENT BEING INCLUDED IS A SAFE-HARBORED AGREEMENT.  

2.  ABSENT SPECIAL CIRCUMSTANCES, EACH UNDERLYING MASTER AGREEMENT (1) MUST INCLUDE CONDITIONAL TWO WAY PAYMENTS, A/K/A CONDITIONAL SECOND METHOD UNDER ISDA, FOR TERMINATION PAYMENTS, (2) CHERRY-PICKING UPON TERMINATION (BANKRUPTCY OR OTHERWISE) MUST NOT BE ALLOWED AND (3) MUST NOT INCLUDE AUTOMATIC TERMINATION UNLESS FOREIGN JURISDICTION INSOLVENCY LAW WOULD MAKE SUCH NECESSARY.  THE UNDERLYING MASTER AGREEMENTS SHOULD BE AMENDED AS NECESSARY PRIOR TO INCLUSION HEREUNDER.  

3.  EACH PHYSICAL UNDERLYING MASTER AGREEMENT SHOULD BE REVIEWED TO DETERMINE THAT THE LEVEL OF DEFAULT, WHICH OCCASIONS ACCELERATION AND TERMINATION OF THE UNDERLYING MASTER AGREEMENT, IS APPROPRIATE AS A DEFAULT UNDER THIS AGREEMENT.  DEFAULTS UNDER EACH PHYSICAL UNDERLYING MASTER AGREEMENT SHOULD BE REVIEWED TO DETERMINE WHICH DEFAULTS ARE SUFFICIENTLY MATERIAL TO WARRANT ACCELERATION AND TERMINATION OF THIS AGREEMENT.  EACH PHYSICAL UNDERLYING MASTER AGREEMENT SHOULD BE AMENDED TO PROVIDE FOR ACCELERATION AND TERMINATION ONLY UPON DEFAULTS APPROPRIATE TO BE A DEFAULT UNDER THIS AGREEMENT.  

4{. LETTERS OF CREDIT CURRENTLY POSTED SHOULD BE MODIFIED IN ACCORDANCE HEREWITH. 

5}.  CONSIDER CROSS-BORDER TAX AND OTHER ISSUES, INCLUDING CANADA TAX MATTERS.

{6} [5].  CONSIDER GUARANTY ISSUES WITH CREDIT.  IF REPLACEMENT/NEW GUARANTIES ARE TO BE ISSUED IN THE AGGREGATE TO SECURE OBLIGATIONS UNDER THIS AGREEMENT AND THE UNDERLYING MASTER AGREEMENTS, INCLUDE ADDITIONAL PROVISIONS COVERING THE OBLIGATIONS TO ISSUE THE GUARANTIES AND THE FORMS OF GUARANTIES AS EXHIBITS.  IF ORIGINAL GUARANTIES ARE TO REMAIN IN PLACE, AMEND THE GUARANTIES TO INCORPORATE OBLIGATIONS UNDER THIS AGREEMENT AND INCLUDE RATIFICATION LANGUAGE.  ADD THE FOLLOWING TO THE GUARANTY PROVISIONS:  As of the date hereof, any Obligations of Enron Group and Counterparty Group with respect to the delivery by a "credit support provider" or "guarantor" of a "credit support document" or "guaranty" (in each case, however designated) have been satisfied by the respective delivery of the Enron Group Guaranty Agreement to the Counterparty Group and the Counterparty Group Guaranty Agreement to the Enron Group.

{7} [6].  THE FORM OF THIS AGREEMENT IS DRAFTED FOR “RECTANGULAR” CROSS-AFFILIATE SETOFF, ASSUMING AFFILIATED ENRON SIGNATORIES AND AFFILIATED COUNTERPARTY SIGNATORIES.  UNDERLYING MASTER AGREEMENTS SHOULD BE REVIEWED TO DETERMINE IF THE AGREEMENTS AND ALL TRANSACTIONS THEREUNDER CAN BE ASSIGNED INTO ONE ENRON ENTITY, ON THE ONE HAND, OR INTO ONE COUNTERPARTY ENTITY, ON THE OTHER HAND.  IF EITHER PARTY, OR BOTH, CAN SO ASSIGN, CONSIDER ASSIGNING THE UNDERLYING MASTER AGREEMENTS TO AVOID CONSIDERATIONS OF CROSS-ENTITY ISSUES.

{8} [7].  CANADA MATTERS:  {NO COLLATERAL ADMINISTRATOR SHOULD BE A CANADIAN COMPANY.} PERFECTION OF CASH COLLATERAL SHOULD BE UNDERTAKEN IN CANADA BY MAKING REQUISITE FILINGS IN ACCORDANCE WITH CANADIAN LAW.

{9} [8].  IF CAPITALIZED TERMS USED IN MASTER NETTING AGREEMENT ARE NOT DEFINED IN MASTER NETTING AGREEMENT AND ARE DEFINED IN TWO OR MORE UNDERLYING MASTER AGREEMENTS, CONSIDER ELECTING ONE DEFINITION TO APPLY IN MASTER NETTING AGREEMENT.

---------------------- REVISION LIST ----------------------

The bracketed numbers refer to the Page and Paragraph for the start of the paragraph in both the old and the new documents.

[1:3 1:3] Changed	"10/30/01" to "10/31/01"
[1:4 1:4] Changed	"(including the Collateral Annex, " to "("
[1:12 1:12] Changed	"Agreements are" to "Agreements, are"
[1:13 1:13] Changed	"Enron Party  ...  requirements" to "Enron Party  ...  Underlying"
[1:13 1:13] Changed	"desires now  ...  Counterparty" to "now to provide  ...  Underlying"
[1:13 1:13] Changed	"Default by,  ...  Counterparty" to "Default by any Counterparty"
[1:13 1:13] Changed	"the Underlying  ...  Collateral across" to "the Underlying  ...  all of the"
[1:13 1:13] Changed	"Enron Party  ...  Agreements" to "Party to terminate,  ...  Agreements),"
[1:13 1:13] Changed	"Counterparty  ...  requirements" to "Counterparty  ...  Underlying"
[1:13 1:13] Changed	"desires now  ...  any Enron" to "now to provide  ...  Underlying"
[1:13 1:13] Changed	"Default by,  ...  any Enron" to "Default by any Enron"
[1:13 1:13] Changed	"Underlying  ...  Collateral across" to "Underlying  ...  all of the"
[1:13 1:13] Changed	"Counterparty  ...  Agreements" to "Party to terminate,  ...  Agreements),"
[1:21 1:21] Changed	"or transferred by any" to "or transferred  ...  Agreement by any"
[1:21 1:21] Changed	"applicable,  ...  Parties) to" to "applicable, to"
[1:23 1:22] Del Para	""Collateral Administrator"  ...  this Agreement."
[1:31 1:29] Del Para	""Drawing Event"  ...  forth in Section 6."
[1:36 1:33] Del Paras	""Exposure" means,  ...  comprising that Group."
[1:44 1:36] Changed	"Credit, as  ...  Annex, posted" to "Credit posted"
[1:44 1:36] Changed	"." to "in accordance  ...  Agreement."
[1:45 1:36] Del Para	""Material Adverse  ...  Collateral Annex."
[1:48 1:39] Changed	"requirement  ...  Agreement to" to "requirement  ...  or deliver"
[1:48 1:39] Changed	"Transaction,  ...  Agreement to" to "Transaction to"
[1:51 1:42] Del Para	""Termination Date"  ...  forth in Section 6."
[1:54 1:44] Changed	"hereunder,  ...  constitutes" to "hereunder, constitutes"
[1:55 1:45] Changed	"(iii) retain" to "(iii) exercise  ...  (iv) retain"
[1:55 1:45] Changed	"(iv) " to "(v) "
[1:55 1:45] Changed	"(v) " to "(vi) "
[1:55 1:45] Changed	"(vi) " to "(vii) "
[1:56 1:46] Changed	"thereto and  ...  therewith." to "thereto."
[1:58 1:48] Changed	"and reduced  ...  and reduced" to "(as so netted"
[1:58 1:48] Changed	"law. Nothing  ...  Amount payable." to "law. "
[1:60 1:50] Changed	"Prior to the  ...  and effect." to "(a) The exposure  ...  therein stated. "
[1:61 1:51] Del Paras	"(a) Any Collateral  ...  Termination Date."
[1:68 1:51] Add Para	"(b) As security  ...  foregoing interests."
[1:77 1:61] Changed	"below. Any  ...  Administrator." to "below. "
[2:28 2:27] Changed	"4. LETTERS  ...  HEREWITH. " to "4"
[2:29 2:28] Changed	"5." to "."
[2:30 2:29] Changed	"6" to "5"
[2:31 2:30] Changed	"7" to "6"
[2:32 2:31] Changed	"8" to "7"
[2:32 2:31] Changed	"MATTERS: NO  ...  PERFECTION" to "MATTERS: PERFECTION"
[2:33 2:32] Changed	"9" to "8"