Scott,

Here are some of the comments that we have to the redline version of the Enfolio Master you sent us.  I will designate them by the section number they are assigned in the Master.  Also, there are a few items that we are waiting on our credit department to resolve.  Initially, I would like to clarify some of the basics of the agreement.  Do you anticipate being the buyer or the seller more often under this agreement?  Where is the delivery point?  

All changes from Texas to New York law are acceptable.  

2.2  Why do you want to strike the language "and acknowledge that each Party will rely thereon in doing business related to the Transaction"?

2.3 This change is acceptable

2.4  We agree that the change from "may" to "shall", but don't agree to striking the reasonable time for reciept.  Would it be more acceptable to change this to "Two Business Days"?

3.1  This change is acceptable

3.2 and 3.4  We would like to hold off on these items until for now.

4.1  The changes in this section are acceptable, save the last change which strikes the langauge dealing with affiliates.  We are waiting on credit to ensure that this last change is acceptable.

4.2  This language is not acceptable as we find the language already provided in the Master to be satisfactory.  The clause already makes reference to "material" representations

Article 5  You propose to take out the language limiting Force Majeure to 60 days.  Is it your intention that Force Majeure can continue indefinetly?  If not, what time period do you suggest?

6.2  Why do you want to take this section out?  Who will be responsible should new taxes be levied?

7.1  The first change in this paragraph, "as the Gas passes the receiving manifold..." is acceptable.  However, the second change, which allows the parties to take negligence into consideration in determining indemnity, is not acceptable.

8.2  The first change is acceptable.   However the language disallowing the parties to transfer, sell, encumber, or assign the Agreement for security purposes is unacceptable.  As for the obligation of a transferring party, we agree that the parties should remain liable on contracts transferred to an affiliate of the company and for transactions which have not been completed.  However, in all other scenarios, the parties should not be liable.

8.3  These changes are unacceptable.  If you could explain your reasoning for the change, perhaps we could reach some middle ground.  

8.4 Would it be more to your liking to change the 60 day requirement to 30 days?

8.9  Could you explain your reasons for the deletion of the language in this section.  The first two sentences and the last sentence added by you are acceptable, however the remaining portions are unacceptable.


If you have any questions regarding these comments, please refer them to Debra Perlingeire.  Here telephone numer is 713-853-7658 and her email is dperlin@enron.com.  

Best regards,

Alisha Mahabir