---------------------- Forwarded by Tana Jones/HOU/ECT on 09/20/99 01:50 PM 
---------------------------


Shari Stack
09/20/99 01:36 PM
To: John Suttle/HOU/ECT@ECT
cc: Tana Jones/HOU/ECT@ECT, Marie Heard/HOU/ECT@ECT, Susan 
Bailey/HOU/ECT@ECT, Susan Flynn/HOU/ECT@ECT, Mark - ECT Legal 
Taylor/HOU/ECT@ECT 
Subject: MAC as an Additional Event of Default

John: Thanks for taking the time to read the email. I have not had many 
responses!

There are two reasons why I drafted the clause in this way. 

1) It tracks the "cure" modification clause for Credit Event Upon Merger (and 
I think the cures for both clauses need to be consistent).

2) The wording is useful because it describes what the written demand is 
asking for - i.e. "performance assurance". 

Maybe there is a more elegant way of expressing #2 - maybe we just use "for" 
rather than "therefor". I was not the original drafter of the CEUM provision 
so I don't know why it was written this way but in any event, the concept of 
#2 needs to remain in clause in some fashion. 

I will be out of the office from 9/22 to 10/3. Mark Taylor will be handling 
matters in my absence so I will forward this onto him to decide.

Thanks,
 
Shari
 
---------------------- Forwarded by Shari Stack/HOU/ECT on 09/20/99 01:23 PM 
---------------------------
   
	Enron North America Corp.
	
	From:  John Suttle                           09/20/99 11:07 AM
	

To: Shari Stack/HOU/ECT@ECT, Marie Heard/HOU/ECT@ECT, Tana Jones/HOU/ECT@ECT, 
Susan Flynn/HOU/ECT@ECT, Susan Bailey/HOU/ECT@ECT
cc:  
Subject: MAC as an Addtional Event of Default

I just got around to reading the e-mail Shari sent us last week regarding the 
new MAC language, and had a quick point on the MAC paragraph.  The last 
sentence doesn't seem to read quite right.  I copied the paragraph below, 
highlighted the area and thought you might want to take a look at it before 
it goes into any contracts.  Does "therefor" belong in there?

(ix) The occurrence of a Material Adverse Change (as hereinafter defined) 
with respect to Party A or Party B.  "Material Adverse Change" means, (a) 
with respect to Party A, its Credit Support Provider,s Credit Rating is rated 
below "BBB" by S&P; or (b) with respect to Party B, [insert as appropriate], 
provided, however, that the foregoing occurrence shall not constitute an 
Event of Default so long as in connection with or after such action or event, 
the party experiencing the Material Adverse Change (&X8) provides (or causes 
to be provided) to the other party (&Y8) within two Local Business Days of 
Y's written demand therefor performance assurance in an amount satisfactory 
to Y in its sole discretion.

Regards,

John Suttle
Non-Lawyer