Martin

How is it going?  I don't want to make this a big deal, (quite frankly you and me have better things to spend our time on, and the dollar amount relating to these cuts is trivial) but with respect to cuts in the future I think it is important that we teach the people underneath us the correct way to handle these issues, so that in the future we do not have to be involved.  Below is a quick dialog that Greg Johnston and I have had with respect to the cuts and what we can and can not do.

This seems to be blown way out of proportion by Kevin Heal and if there is anything I can do to make this GO AWAY please let me know.

Thanks,

Jon 

 -----Original Message-----
From: 	Johnston, Greg  
Sent:	Friday, July 20, 2001 8:37 AM
To:	Mckay, Jonathan
Subject:	RE: ENA-ECC Force Majeure

No.  If they declare FM against us, the operative wording in the agreement is "to the extent that they are affected by such event".  In other words, they can only cut a deal to the extent the force majeure prevents them from performing.

 -----Original Message-----
From: 	Mckay, Jonathan  
Sent:	Friday, July 20, 2001 9:29 AM
To:	Johnston, Greg
Subject:	RE: ENA-ECC Force Majeure

Greg,

Do they have any right to cut a deal by more than the amount that the pipeline declared as its force majure volume?

Jon McKay
Unemployed
phone: 403-974-6733
jonathan.mckay@enron.com

 -----Original Message-----
From: 	Johnston, Greg  
Sent:	Friday, July 20, 2001 8:11 AM
To:	Heal, Kevin
Cc:	Mckay, Jonathan
Subject:	ENA-ECC Force Majeure

Kevin, further to your voice-mail, as indicated to you yesterday, our physical gas master agreement with ENA is in their form of Enfolio master agreement and not our form of master.  What that means is that, although the mechanics of declaring force majeure, etc. are the same, the definition of force majeure under our Enfolio master with ENA is not restricted to delivery point force majeure as it is in ECC's standard form, but is rather a broader based force majeure.  However, it must be kept in mind that, depending on the transaction, the definition of "force majeure" may be amended in the terms of the particular confirmation letter.  The application section (which is basically the same as in our form) is as follows:

This Article 5 is the sole and exclusive excuse of performance permitted under this Agreement, and all other excuses at law or in equity are waived to the extent permitted by law.  Except with regard to payment obligations, in the event either Party is rendered unable, wholly or in part, by Force Majeure to carry out its obligations hereunder, it is agreed that upon such Party's giving notice and full particulars of such Force Majeure to the other Party as soon as reasonably possible (such notice to be confirmed in writing), the obligations of the Party giving such notice, to the extent that they are affected by such event, shall be suspended from the inception and during the continuance of the Force Majeure for a period of up to 60 Days in the aggregate during any 12 Month period, but for no longer period.  The Party receiving notice of Force Majeure may immediately take such action as it deems necessary at its expense for the entire 60 Day period or any part thereof.  The Parties expressly agree that upon the expiration of the 60 Day period Force Majeure shall no longer apply to the obligations hereunder and both Buyer and Seller shall be obligated to perform...

I will send a copy of the agreement over to you which also contains the definition of Force Majeure, but again it must be remembered that such definition may be amended in the particular confirm.

Greg Johnston
Senior Counsel
Enron Canada Corp.
phone: 403-974-6745
greg.johnston@enron.com