Payment and Guarantee Agreement - Enron Corp. and Enron Capital Resources L.P.


                        PAYMENT AND GUARANTEE AGREEMENT


        THIS PAYMENT AND GUARANTEE AGREEMENT ('Guarantee Agreement'), dated as
of August 3, 1994, is executed and delivered by Enron Corp., a Delaware
corporation (the 'Guarantor'), for the benefit of the Holders (as defined
below) from time to time of the Series A Preferred Securities (as defined
below) of Enron Capital Resources, L.P. (the 'Issuer'), a limited partnership
formed under the Delaware Revised Uniform Limited Partnership Act (the
'Delaware Act').

        WHEREAS, Issuer is issuing on the date hereof 3,000,000 shares of its
9% Cumulative Preferred Securities, Series A (the 'Series A Preferred
Securities'), and the Guarantor desires to issue this Guarantee Agreement for
the benefit of the Holders, as provided herein;

        WHEREAS, the Issuer pursuant to the Loan Agreement (as defined below)
will loan to the Guarantor the proceeds from the issuance and sale of the
Series A Preferred Securities and its contribution as general partner (the
'General Partner') in respect of its general partner interest (the 'GP
Interest'); and

        WHEREAS, the Guarantor desires hereby irrevocably and unconditionally
to agree to the extent set forth herein to pay to the Holders the Guarantee
Payments (as defined below) and to make certain other payments on the terms and
conditions set forth herein.

        NOW, THEREFORE, in consideration of the purchase by each Holder of the
Series A Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders.

                                   ARTICLE I

        As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. 
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the Amended and Restated Agreement of Limited
Partnership of the Issuer dated as of August 3, 1994 (the 'Partnership
Agreement').

        'Dividends' shall mean any distribution on the Series A Preferred
Securities, including additional distributions in respect of distributions in
arrears, required to be made pursuant to the terms of the Partnership
Agreement, other than distributions on liquidation.

        'Expense Agreement' shall mean the provisions of Section the 5.03 of
the Partnership Agreement pursuant to which the Guarantor has agreed to
guarantee the 


payment of any indebtedness or liabilities incurred by the Issuer (other
than obligations to Holders of Series A Preferred Securities in such Holders'
capacities as Holders of such Series A Preferred Securities).

        'Guarantee Payments' shall mean the following payments, without
duplication, to the extent not paid by the Issuer: (i) any accumulated and
unpaid Dividends which have been theretofore required to be paid pursuant to
the terms of the Partnership Agreement, (ii) the Redemption Price payable with
respect to any Series A Preferred Securities called for redemption by the
Issuer, (iii) upon a liquidation of the Issuer, the lesser of (a) the
Liquidation Distribution and (b) the amount of assets of the Issuer available
for distribution to Holders in liquidation of the Issuer and (iv) any
Additional Interest (as defined below) payable by the Issuer in respect of the
Series A Preferred Securities.

        'Holder' shall mean any holder (as defined in the Partnership
Agreement) from time to time of any Series A Preferred Securities of the
Issuer; provided, however, that in determining whether the Holders of the
requisite percentage of Series A Preferred Securities have given any request,
notice, consent or waiver hereunder, 'Holder' shall not include the Guarantor
or any entity owned more than 50% by the Guarantor, either directly or
indirectly.

        'Liquidation Distribution' shall mean the aggregate of the liquidation
preference of $25 per Series A Preferred Security and all accumulated and 
unpaid Dividends to the date of payment.

        'Loan Agreement' shall mean the agreement, dated as of the date hereof,
pursuant to which the Issuer will loan to the Guarantor the proceeds received
by the Issuer from the issuance and sale of the Series A Preferred Securities
and the contribution of the General Partner in respect of the GP Interest.

        'Paying Agent' shall mean Enron Corp., as registrar, transfer agent and
paying agent.

        'Redemption Price' shall mean $25 per Preferred Security plus
accumulated and unpaid Dividends to the date fixed for redemption.

                                   ARTICLE II

        SECTION 2.01.  (a) The Guarantor irrevocably and unconditionally agrees
to pay in full to the Holders the Guarantee Payments, as and when due (except
to the extent paid by the Issuer), regardless of any defense, right of set-off
or counterclaim which 

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the Issuer may have or assert.  The Guarantor's obligation to make a Guarantee 
Payment may be satisfied by direct payment of the required amounts by the 
Guarantor to the Holders or by causing the Issuer to pay such amounts to the 
Holders.

        (b)  All Guarantee Payments shall be made without deduction for or on
account of any present or future taxes (other than withholding taxes), duties,
assessments or governmental charges of whatever nature imposed or levied upon
the Issuer by or on behalf of the United States, any state thereof or any other
jurisdiction through which or from which such payment is made, or any authority
therein or thereof having power to tax, unless the deduction of such taxes,
duties, assessments or governmental charges is required by law.  In that event,
the Guarantor shall pay such additional amounts ('Additional Interest') as
may be necessary in order that the net amounts received by the Holders after
such deduction will equal the amount which would have been receivable in
respect of the Series A Preferred Securities in the absence of such deduction.

        SECTION 2.02.  The Guarantor hereby waives notice of acceptance of this
Guarantee Agreement and of any liability to which it applies or may apply,
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.

        SECTION 2.03.  The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:

                (a)  the release or waiver, by operation of law or otherwise,
        of the performance or observance by the Issuer of any express or
        implied agreement, covenant, term or condition relating to the Series A
        Preferred Securities to be performed or observed by the Issuer;

                (b)  the extension of time for the payment by the Issuer of all
        or any portion of the Dividends, Redemption Price, Liquidation
        Distribution or any other sums payable under the terms of the Series A
        Preferred Securities or the extension of time for the performance of
        any other obligation under, arising out of, or in connection with, the
        Series A Preferred Securities;

                (c)  any failure, omission, delay or lack of diligence on the
        part of the Holders to enforce, assert or exercise any right,
        privilege, power or remedy conferred on the Holders pursuant to the
        terms of the Series A Preferred Securities, or any action on the part
        of the Issuer granting indulgence or extension of any kind;

                (d)  the voluntary or involuntary liquidation, dissolution,
        sale of any collateral, receivership, insolvency, bankruptcy,
        assignment for the benefit of creditors, reorganization, arrangement,
        composition or readjustment of debt, of or other similar proceedings
        affecting, the Issuer or any of the assets of the Issuer;


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                (e)  any invalidity of, or defect or deficiency in, any of the
        Series A Preferred Securities; or
                                    
                (f)  the settlement or compromise of any obligation guaranteed
        hereby or hereby incurred.

There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the
foregoing.

        SECTION 2.04.  This is a guarantee of payment and not of collection.  A
Holder may enforce this Guarantee Agreement directly against the Guarantor, and
the Guarantor will waive any right or remedy to require that any action be
brought against the Issuer or any other person or entity before proceeding
against the Guarantor.  Subject to Section 2.05, all waivers herein contained
shall be without prejudice to the Holders' right at the Holders' option to
proceed against the Issuer, whether by separate action or by joinder.  The
Guarantor agrees that this Guarantee Agreement shall not be discharged except
by payment of the Guarantee Payments in full (to the extent not paid by the
Issuer) and by complete performance of all obligations of the Guarantor
contained in this Guarantee Agreement.

        SECTION 2.05.  The Guarantor shall be subrogated to all (if any) rights
of the Holders against the Issuer in respect of any amounts paid to the Holders
by the Guarantor under this Guarantee Agreement and shall have the right to
waive payment of any amount of Guaranty Payments in respect of which payment
has been made to the Holders by the Guarantor pursuant to Section 2.01;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of a payment under this Guarantee Agreement, if, at the time of any
such payment, any amounts are due and unpaid under this Guarantee Agreement. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to pay over such amount to the Holders.

        SECTION 2.06.  The Guarantor acknowledges that its obligations
hereunder are independent of the obligations of the Issuer with respect to the
Series A Preferred Securities and that the Guarantor shall be liable as
principal and sole debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (f), inclusive, of Section 2.03 hereof.


                                  ARTICLE III

        SECTION 3.01.  So long as any Series A Preferred Securities remain
outstanding, the Guarantor shall not declare or pay any dividend on, or redeem,
purchase, 

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acquire or make a liquidation payment with respect to, any of its capital 
stock (other than (i) payments under this Guarantee Agreement and (ii)
guarantee payments under guarantee agreements ranking pari passu with this
Guarantee Agreement) if at such time the Guarantor shall be in default with
respect to its payment or other obligations hereunder or under the Expense
Agreement or there shall have occurred any event that, with the giving of
notice or the lapse of time or both, would constitute an Event of Default under
the Loan Agreement.

        SECTION 3.02.  The Guarantor covenants, so long as any Series A
Preferred Securities remain outstanding: (i) to maintain direct or indirect
100% ownership of the GP Interest and to timely perform all of its duties as
General Partner of the Issuer; (ii) to cause at least 21% of the total value of
the Issuer and at least 21% of all interests in the capital, income, gain,
loss, deduction and credit of the Issuer to be represented by the GP Interest;
(iii) not to voluntarily dissolve, wind-up or liquidate the Issuer; (iv) to
remain the General Partner of the Issuer and to timely perform all of its
duties as General Partner (including the duty to pay Dividends on the Series A
Preferred Securities), provided that any permitted successor of the Guarantor
under the Loan Agreement may succeed to the Guarantor's duties as General
Partner; and (v) to use its reasonable efforts to cause the Issuer to remain a
limited partnership under the Delaware Act and otherwise continue to be treated
as a partnership for United States federal income tax purposes.

        SECTION 3.03.  This Guarantee Agreement will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to all liabilities of the Guarantor, other than the Payment and
Guarantee Agreement dated as of November 15, 1993 (the 'Pari Passu Guarantee')
of the Guarantor relating to the 8% Cumulative Monthly Income Preferred Shares
of Enron Capital LLC, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Guarantor, with the Pari Passu
Guarantee and with any other guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any affiliate of
the Guarantor and (iii) senior to the Guarantor's common stock.  For purposes
of clause (ii) herein, pari passu means that any payments to which
beneficiaries of this Guarantee Agreement are entitled must be shared with
holders of any preferred or preference stock or beneficiaries of any guaranty
for which this Guarantee Agreement is stated to be pari passu ('Pari Passu
Securities') to the same extent as would be required under applicable law if
instead this Guarantee Agreement constituted a class of preferred or preference
stock of the Guarantor ranking pari passu with such Pari Passu Securities 
(and if such Pari Passu Securities are a guarantee of Enron affiliate stock, 
as if such Pari Passu Securities were part of the most senior preferred or 
preference stock of Enron) as to such payments.  Each holder of Series A 
Preferred Securities, by acceptance thereof, is deemed to agree to the 
subordination provisions and other terms of this Guarantee Agreement.

                                     -5-



                                   ARTICLE IV

        This Guarantee Agreement shall terminate and be of no further force and
effect upon full payment of the Redemption Price of all Series A Preferred
Securities or upon full payment of the amounts payable to the Holders upon
liquidation of the Issuer; provided, however, that this Guarantee Agreement
shall continue to be effective or shall be reinstated, as the case may be, if
at any time any Holder of Series A Preferred Securities must restore payment of
any sums paid under the Series A Preferred Securities or under this Guarantee
Agreement for any reason whatsoever.

                                    
                                   ARTICLE V

        SECTION 5.01.  All guarantees and agreements contained in this
Guarantee Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders.
The Guarantor shall not assign its obligations hereunder without the prior
approval of the Holders of not less than 66-2/3% in liquidation preference (as
defined in the Partnership Agreement) of all Series A Preferred Securities then
outstanding.

        SECTION 5.02.  Except with respect to any changes which do not
adversely affect the rights of holders of Series A Preferred Securities (in
which case no vote will be required), this Guarantee Agreement may only be
amended by instrument in writing signed by the Guarantor with the prior
approval of the Holders of not less than 66-2/3% in liquidation preference of
the Series A Preferred Securities then outstanding.

        SECTION 5.03.  Any notice, request or other communication required or
permitted to be given hereunder to the Guarantor shall be given in writing by
delivering the same against receipt therefor by facsimile transmission
(confirmed by mail) or telex, addressed to the Guarantor, as follows (and if so
given, shall be deemed given when mailed or upon receipt of an answer-back, if
sent by telex), to it:

        Enron Corp.
        1400 Smith Street
        Houston, Texas 77002

        Facsimile No.: (713) 853-3920
        Attention:  Treasurer

        Any notice, request or other communication required or permitted to be
given hereunder to the Holders shall be given by the Guarantor in the same
manner as notices sent by the Issuer to the Holders pursuant to the Partnership
Agreement.

        SECTION 5.04.  The masculine and neuter genders used herein shall
include the masculine, feminine and neuter genders.


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        SECTION 5.05.  This Guarantee Agreement is solely for the benefit of
the Holders and is not separately transferable from the Series A Preferred
Securities.

        SECTION 5.06.  THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

        THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.

        
                                         ENRON CORP.



                                         By:__________________________ 
                                            Name: 
                                            Title:





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