Peter, here are preliminary comments from Pat Mackin on the PSA.  Michelle

---------------------- Forwarded by Michelle Cash/HOU/ECT on 12/07/2000 01:33 
PM ---------------------------


FMackin@aol.com on 12/07/2000 01:10:56 PM
To: Michelle.Cash@enron.com, dlenfes@enron.com
cc:  
Subject: Re: Project Canary - Asset Purchase Agreement


Michelle, I reviewed the Project Canary Asset Purchase and Sale Agreement and
offer the following observations:

In an asset transaction, where the buyer did not want to acquire or assume
the employee benefit plans of the seller, I have always recommended to
include such plans and liabilities in the statement of excluded assets.
Based on the recitals for this transaction, and other provisions of the
Agreement (Sections 7 and 10) it appears that the employee benefit plans are
not excluded.

Generally, when such employee benefit plans are included in an asset
transaction, the buyer wants to obtain representations as to the funding,
compliance and administration of the plans.  These kinds of representations
are not in the Agreement.

The bottom line is that the buyer needs to rely on Canadian counsel and
actuaries to gives buyer the level of comfort it desires to have with respect
to these issues of funding, compliance and administration so that they can be
inserted into the financial model for determining the offering price.

You may wish to obtain a formal opinion letter from the Canadian counsel and
actuary regarding the level of comfort the buyer requires.


Pat