Caroline:

I am in the midst of preparing these annexes now.
You should take special note of the credit that Paul is insisting upon (seems 
to be similar to AIG).  This is all credit - but note his Additional 
Termination Event if the ISDA is not executed within 60 days.  You must 
discuss all of the items with your counterparty.

Also, if you do the deal(s), give me the name, phone/fax numbers, email 
addresses of all commercial and legal for your counterparties.


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
----- Forwarded by Sara Shackleton/HOU/ECT on 04/23/2001 09:45 AM -----

	Paul Radous/ENRON@enronXgate
	04/19/2001 05:43 PM
		 
		 To: Sara Shackleton/HOU/ECT@ECT
		 cc: Caroline Abramo/Corp/Enron@Enron
		 Subject: Valentis

Here are the credit worksheets for Valentis (25% of the trade and Independent 
amount should be allocated here) and CD Holdings (75% allocated here).  This 
will work for the ISDA, and I am hearing from Caroline that they are ok with 
posting this up front amount in cash.  So, for purposes of the Deemed ISDA, 
we may as well include all of the credit provisions, but make the $2MM a 
"Special Independent Amount" applicable to the counterparty, which may be 
increased by Enron up to $5MM. This Special Independent Amount should be 
added to the Independent Amount as that term is used in the ISDA in order to 
give us the ability to demand more collateral at will with respect to the 
long term hedge.  Given the fact that the c/p can post cash instead of LC's I 
see no reason for us to always have the Special Independent Amount in cash.  
That is, if we are $2MM out of the money on the position, I do not have a 
problem returning their cash, so long as it is in increments of the rounding 
amount. 

So I think we should just go ahead and put credit into these Deemed ISDAs, 
and require that the failure of the parties to execute an ISDA within 60 days 
will constitute a termination event.

Caroline, again, the c/p will have to verbally agree to Loss instead of 
market quotation, to the special margining provisions with respect to this 
particular long term trade, etc.  Let's discuss how this will work, since it 
is different from what I proposed on the phone.

Sara, after you have had a chance to look at these, give me a call so we can 
discuss.

Thanks.
Paul