Steve:
Here is the response from my tax person

Carol St. Clair
EB 3892
713-853-3989 (Phone)
713-646-3393 (Fax)
----- Forwarded by Carol St Clair/HOU/ECT on 05/24/2000 04:01 PM -----

	Rhett Jackson
	05/23/2000 06:58 PM
		
		 To: Carol St Clair/HOU/ECT@ECT
		 cc: 
		 Subject: Re: ISDA Tax Issue

Carol:

I'd rather not change our standard agreement.  Specifically, the current 
definition of "Indemnifiable Tax" covers both present and future tax (as 
evidenced in the definition "Tax") and thus, necessarily, should protect the 
counterparty in the case of a "Change in Tax Law."  Moreover, Deutsche Bank's 
amendment to "Indemnifiable Tax" potentially subjects us to risk that I don't 
feel is in our best interest to assume because we don't have any control over 
the counterparty's activities.  Bottom line - I would reject the amendment.

Please let me know if you would like me to speak to their tax counsel.

Rhett Jackson
EB 4680
713/853-4718



   Carol St Clair                05/23/2000 10:17 AM

To: Rhett Jackson/HOU/ECT@ECT
cc:  
Subject: ISDA Tax Issue

Rhett:
You may recall a few weeks ago I asked you about some language that one of 
our counterparties wanted as an amendment to the term "Indemnifiable Tax".  
Another counterparty, Deutsche Bank, has requested the following which I 
think is very similar to what we were looking at before:

Notwithstanding the foregoing, "IndemnifiableTax" also means any Tax imposed 
by reasons of a Change in Tax Law by a government or taxing authority of a 
Relevant Jurisdiction of the payer, unless the payee is incorporated, 
organized, managed and controlled or considered to have its seat in such 
jurisdiction, or is acting for purposes of this Agreement through a branch or 
office located in such jurisdiction.

In the ISDA Users' guide, they explain that the effect of this language is to 
eliminate the payee's risk of bearing new taxes imposed by the payer's 
jurisdiction even if the payee's activities in such jurisdiction is the basis 
for such taxes. (except if the circumstances in the definition occur).    It 
thus results in the payer having to gross up for such taxes.

Do you think that we can or should accept this?


Carol St. Clair
EB 3892
713-853-3989 (Phone)
713-646-3393 (Fax)