Tanya:  There are a few issues left:

(1) [re:  legal name of our counterparty]
 According to FUNB, there is no legal entity named "First Union National 
Bank, Charlotte".  If S&P is including the city where FUNB is headquartered 
as part of their legal name, then S&P is wrong.  FUNB has asked that we 
forward the S&P document that you are looking at.

(2)  [re:  FUNB request to provide us with First Union Corp. financials and 
your response that it's OK if First Union Corp. signs on as a guarantor]
FUNB says that First Union National Bank doesn't prepare annual statements.  
FUNB can provide quarterly call reports (with YTD info) which is also 
available on the FDIC page (www.fdic.gov).  FUNB annual financials also 
available on EDGAR.  I don't know what a call report is and FUNB did not 
offer up First Union Corp. as a guarantor.

(3)  [re:  10 year bonds which you agreed to accept as Eligible Credit 
Support]
I don't know what the "usual haircut" is on these issues.  You said 90% or 
95%.  Legal no longer offers up bonds in our documents which is why we 
haven't discussed haircuts lately.

(4)  [re:  the Specified Conditions of Tax Event, Tax Event Upon Merger and 
Credit Event Upon Merger]
FUNB would rather terminate than collateralize Transactions (and eliminate 
obligations to transfer in avoidance of termination).  If a Specified 
Condition exists, then there is no obligation to deliver collateral to that 
party (experiencing the Specified Condition) and a Secured Party could 
exercise all remedies available to it against the Pledgor.  (I think that we 
have a different philosophy in that we would prefer to preserve 
Transactions).  I'm more willing to give in on the tax events (but global 
mergers could force that issue and the agreement basically requires the 
Affected Party to try to transfer the Transaction to avoid termination).

Please let me know if you have any questions.  Thanks.  Sara
 

Sara Shackleton
Enron North America Corp.
1400 Smith Street, EB 3801a
Houston, Texas  77002
713-853-5620 (phone)
713-646-3490 (fax)
sara.shackleton@enron.com