a)  We have used language (Catequil Partners, LP for example) where the MAC 
applies first the S&P rating, if no S&P rating exists, then Moody's, then if 
Enron has no rating from either agency.  Please use the same language here.  
I expect this will be the standard for the hedge funds.

b)  Let's try for Events of Default.  If they protest, I'm okay with making 
them Termination events.

c)  Yes, my thinking on the deal changed when I realized we would be holding 
cash and not LCs.  So there will be two way margining.

Yes, we want the monthly statement language, and the engineering/reserve 
reports.

All of the above also applies for CD Holdings.
 -----Original Message-----
From:  Shackleton, Sara  
Sent: Monday, April 23, 2001 9:56 AM
To: Radous, Paul
Subject: Valentis

Paul:

  With respect to Valentis:

 (a)  Does the MAC apply to both S&P and Moody's?  (not clear from worksheet)
 (b)  Are the financial covenants Events of Default or Termination Events?  
(looks like these were Termination Events in AIG)
 (c)  Is this deal two-way margining?  You have set 0 Thresholds but 
indicated Return/Delivery for both parties.  Our discussion of last week may 
have changed (we discussed one-way margining for CP only).

I'll have the same questions for CD Holdings.


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