Sara:
In the unlikely event taht you are called tomorrow and they can't reach me 
here is where things stand.  After several internal discussions with Paul, 
Akasha and Denis O'Connell and based on the information that we have received 
from DB thus far, it appears as if our Reference Entity's subsidiaries have 
declared a standstill/moratorium with respect to all of their debt.  Our 
Reference Entity is the Guarantor of such debt.  We have taken the position 
that since the Credit Event must occur with respect to our Reference Entity, 
we need proof that our Reference Entity has repudiated its obligations under 
its Guaranty.  We feel fairly certain that it has, but DB has not shown us 
any proof of this.  Paul is calling the paying agent on the defaulted bonds 
to try and find out and we have sent another e-mail to DB requesting proof.

All of the other requirements have been met with respect to the obligations 
that DB plans to deliver to us next week to settle the contract.  I just need 
to quickly review the Guaranty that supports such obligations to make sure 
that it is unconditional.  I expect to see it sometime today.

Carol St. Clair
EB 3889
713-853-3989 (Phone)
713-646-3393 (Fax)
carol.st.clair@enron.com