John:
I will send you my remaining comments shortly.  Here is a draft of the Enron 
Guaranty.  What have the credit people decided on with respect to a cap?



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



	"Shuttee, John" <ShutteeJ@EPEnergy.com>
	05/17/2000 03:05 PM
		 
		 To: "'Carol St Clair'" <Carol.St.Clair@enron.com>
		 cc: 
		 Subject: RE: Credit Response


Dear Carol -

Enclosed are drafts of (i) the ISDA schedule, (ii) Paragraph 13 to the
Credit Support Annex, and (iii) our standard guarantee.   Also included is a
draft what should be in the L/C and Schedule 1 of a Stby L/C.

Please note that I have accepted most of the previous changes so the current
issues would more easily be seen in the draft.

Comments concerning the schedule and para 13 are below:  Note - our legal
council is out this week but I thought I would send this draft to you now,
and we can make further adjustments, if any, based on our legal department
review next week.

1.  Part 1 (e):  After Charles Hofer spoke with your Credit Manager, Brant
Reves, they decided to make the cross default threshold at $100MM for each
credit support provider.
2.  1(h):  Made change per our phone conversation that Market Quotation will
apply for 3 years or less; Loss for over 3 years.
3.  5(g):  I am confused by this change.  I added back in the word
"obligations" in para B, 5th line and added back in the phrase concerning
affiliates.  I'm not sure my predecessor deleted them (it is not deleted on
my 3/20/00 draft) but I can't imagine who else would.  Two comments (i) do
you think this is best way to word this, and (2) my legal council (who is
out most of this week) will have to review your final wording before we can
execute.
4.  5(l):  Changed the telephone recording paragraph by (a) not limiting it
to just trading staff and (b) adding "to the extent permitted by applicable
law".
5.  5(n-q):  All new paragraphs that are not part of our standard agreement.
However, these were not discussed in Susan's last memo to you (except the
adding back in of paragraph q) so I am leaving them as is.
6.  Part 6:  After reviewing your changes vs. our standard paragraphs, I
have no objections to your changes
7.  13(b)(i)(C) Accepted your definition of Credit Support Amount even
though we don't normally use Independent Amounts.
8.  13(b)(iii)(A)  Letters of Credit - changes days to 20 from 10, per your
request.  After re-reading, I don't understand how it improves the position
of the secured party.  If the L/C has an expiration date and the secured
party attempts to execute (i.e.: cash in) this L/C, then if the L/C is
within 20 days of its expiration, the value can drop to zero.  Before, the
L/C maintained 100% of its value until 10 days prior to expiration.  Since
Enron looks at these contracts from the secured party perspective, how does
your position improve based on this change?
8.  13(b)(iii)(B and C) Threshold for both of us has been increased to $50MM
and Minimum Transfer Amount has been reduced to zero ($0).

For questions, please call at 713-420-3548 or email me.

Thanks!

John
.
 <<Enron Schedule -Draft 5-16.doc>>  <<Enron CSA - Draft 5-16.doc>>




> -----Original Message-----
> From: Carol St Clair [SMTP:Carol.St.Clair@enron.com]
> Sent: Friday, May 12, 2000 5:07 PM
> To: Shuttee, John
> Subject: Credit Response
>
>
>
> Carol St. Clair
> EB 3892
> 713-853-3989 (Phone)
> 713-646-3393 (Fax)
> ----- Forwarded by Carol St Clair/HOU/ECT on 05/12/2000 05:07 PM -----
> |--------+----------------------->
> |        |          Carol St     |
> |        |          Clair        |
> |        |                       |
> |        |          05/12/2000   |
> |        |          05:02 PM     |
> |        |                       |
> |--------+----------------------->
>
> >-------------------------------------------------------------------------
> ---|
>   |
> |
>   |       To:     shuttej@epenergy.com
> |
>   |       cc:     Brant Reves/HOU/ECT@ECT
> |
>   |       Subject:     Credit Response
> |
>
> >-------------------------------------------------------------------------
> ---|
>
>
>
> John:
> Our credit person has agreed to the 3% equity test for cross-default.
> With
> respect to setoff, given our relationships with El Paso, this is an
> important
> credit point for us and one that I guess the credit people will need to
> discuss
> since it is important for us to have the Affiliate language.  Our credit
> person
> is Brant Reves (713-853-9897).
> Carol St. Clair
> EB 3892
> 713-853-3989 (Phone)
> 713-646-3393 (Fax)
>


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 - Enron Schedule -Draft 5-16.doc
 - Enron CSA - Draft 5-16.doc