I thought I might try to sum up.  It seems to me that we both need to 
finalize the structure as well as co-ordinate across various groups such that 
we all know what each is doing with the view to funding on time by the end of 
next week.

1. As soon as possible next week (i.e. Monday) we need to finalize the swap 
structure including the credit and covenant package.

2. If there is not already a Term Sheet in place, it may be useful to have 
one prepared.  Frankly, it seems from my various discussions with Global 
Finance, Credit, Origination, Enron Corp., Royal Bank of Canada and its 
external counsel and our external counsel, that there are certain agreements, 
documents, deliverables and covenants that are being expected by, or 
exchanged between, the parties, but which are not being communicated among 
each other and we are therefore working at cross purposes.  Frankly, unless 
and until we know what the structure is to look like, what the credit and 
financial covenants are to look like, and what the documentation expectations 
are, it is difficult if not  impossible to prepare documentation.  For 
example:

 (a) I had a confusing conversation with the Bank as to the form of Guarantee 
they were expecting from Enron Corp.  I was trying to require the Bank to 
accept an Enron Corp. standard form Guarantee, whereas the Bank was looking 
for a long form Guarantee that includes the covenants, representations and 
warranties of Enron Corp. in its revolving credit facilities.  Based upon 
this disagreement, I left a message for Clement to the effect that we may 
have a problem to resolve.  However, Clement was kind enough to advise me by 
voice mail that in fact Enron Corp. does not have a problem with giving a 
long form Guarantee of this nature and that the form of Guarantee had in fact 
been provided (by whom I'm not sure) to the Bank.

 (b) The Bank was enquiring as to what would be the governing law of the 
Enron Corp. Guarantee, to which I advised it would be Texas law.  However, I 
now understand there may be some agreement (by whom I'm not sure) to have the 
Enron Corp. Guarantee governed by New York law.

 (c) In any event, I understand that the Bank will be looking for a form of 
enforceability opinion from Enron Corp.'s outside legal counsel with respect 
to the authorization, execution, delivery and enforceability of the Enron 
Corp. Guarantee, as well as certain conflicts of laws opinions with respect 
to the governing law of the Guarantee (Texas/New York) being enforceable.

 (d) In my discussions with the Bank this afternoon, it also became aware to 
me that the Bank is expecting external counsel legal opinions with respect to 
Enron Canada.  Blake, Cassels & Graydon is prepared to provide those legal 
opinions.

 (e) As noted above, I have discussed with the Bank that the governing law of 
the underlying swap documents would be Alberta, to which they seemed fine.  I 
suggested that Ontario law would also be acceptable.

 (f) I assume that Enron Canada ought to obtain legal opinions from the 
Bank's external counsel with respect to the documents and obligations of 
Swapco (and perhaps even the Bank), but I will need to have this confirmed.

 (g) It came to my attention during my conversations with the Bank this 
afternoon that Swapco (or financing SPV) is unaffiliated to the Bank.  This 
presents problems as, I understand for accounting purposes, the two swaps 
involving Enron Canada cannot be linked, for example by cross-defaults.  At 
the same time unaffiliated exposures under de-linked transactions may not be 
capable of being set-off.  We undertook to attempt to remedy this situation 
through broadening the set-off concepts under the ISDA Master Agreements.

 (h) I do not think the Bank frankly (nor anyone else) has a firm grasp on 
the credit/collateralization/margin requirements, which I think is dependent 
upon a final understanding of the swap structure.

 (i) From my discussions with the Bank, it seemed to me that they were not 
clear as to how their fees and costs would be repaid through the swap 
structure.  Although it might be as simple as adding these amounts to the 
principal amount of the swaps, I suggested that the Bank prepare a separate 
"fee letter" to recover its fees.  More problematically, the Bank was not 
clear as to how "increased costs" would be accounted for in the swap 
structure.  Generally speaking, a Bank credit agreement contains provisions 
that if there are increased costs of funding to the Bank as a result of a 
change in Bank regulations or lending or reserve requirements, those 
increased costs are flowed through.  They were not sure how this could be 
accommodated in a swap structure.  I suggested that there may be some way to 
fix this through a price adjustment mechanism in the fixed price or volumes 
or through a separate indemnification in the "fee letter".

 (j) The Bank is anxious to see paper, and I am not sure who is preparing the 
paper and consolidating it in a distribution package to the Bank.  For 
example, I think a package that includes all of the swap Master Agreements 
and related documentation (which I believe Mark T's group will prepare in 
Houston), the Enron Corp. Guarantee (which I've indicated above seems to have 
already been provided in draft to the Bank) and all other documentation needs 
to be sent to the Bank as soon as possible, as well as to Blake, Cassels & 
Graydon and Vinson and Elkins if they are to be giving legal opinions to the 
Bank in connection with the transaction.  Of course this depends on 
finalization of the structure as well as the credit and other covenants 
package.  In concept, I have told the Bank, and I believe the Bank agrees, 
that the form of the ISDA Master and related documentation would be the same 
as the form of ISDA Master which currently exists between ENA and Royal Bank 
of Canada, and the Bank asked that they at least be provided with that paper 
as soon as possible.  Perhaps Tana could look after delivering that as soon 
as possible, if not this afternoon, Monday morning.

Frankly, I think this project, if it is to get funded on time, needs a 
measure of co-ordination and communication of internal and external 
expectations.  It may be worthwhile to convene a conference call with all 
relevant groups (i.e. Legal/Global Finance/Credit/Origination) on Monday 
morning.

Regards,
Peter