Robert:
I am still waiting to hear back from our credit person on some of the credit 
comments that you made, but here is my response to the legal and certain of 
the credit comments:

1. I am okay with the first paragraph of Insert 1.  I would like to talk to 
you about the second paragraph.

2. We have a strong preference and policy towards using Loss rather than 
Market Quotation.

3. Inserts 2, 3, 4 and 5 are okay.  In addition. our tax people are now 
advising us to require the delivery of W-9's to part 3.

4. NY is okay with governing law.

5. On arbitration, other than changing the location, I would prefer to go 
with our language and really didn't see much difference in what you sent 
other than the fact that it was more abbreviated. Did I miss something?

6. In Part 5, Section (e), 10 Business Days is too long.  How about 5?

7. In Part 5, Section (f), your requested change is too narrow for us.  We 
can agree that any calls coming in to or going out from trading, marketing 
and financial/credit personnel will be recorded.  Does that work for you?

8. Insert 7 is okay.


9. Your reduction of the rounding amount is okay.,  

10. Your comments on page 4 of Annex A are okay.

11. Your comment on Annex A, page 5 is problematic for us unless we limit 
posted collateral to LC's only.    

12. On page 6 of Annex A, can we include both the Issuer and the pledgor?

13. Insert 8 is okay, as are the remaining comments on page 7 of Annex A 
except that we need Moody's because it is used in the LC language.

14. On the LC provisions, in 1(a) can we put "either the Issuer or X" and in 
1(b) include your language as an alternative?

15. I need to discuss with you your deletion of clause (ii) of 1(d).  We 
would like the right to draw if an Event of Default has occurred and if no 
payment is owed at such time, to hold it as cash collateral.

16. Raising the guaranty cap is okay as are the chnages that you made in 
Section 2 of the Guaranty.

17. Inserts 10, 11 and 12 are okay.    

18. In Section 6(c), I would like to keep that phrase as it refers to the 
Payment Demand procedure.

19. Your chnages to Section 7 of the Guaranty are okay.

20. We can change governing law to NY but as a matter of enron policy, cannot 
agree to Insert 13.

21. Insert 14 is okay although I may reword it slightly to make it clearer 
that this applies in connection with a bankruptcy, insolvency or similar 
proceeding.

 I am waiting to hear back from my credit person with respect to the Minimum 
Transfer Amount comment, the LC transfer language comment and the language of 
Insert 9.  I look forward to hearing from you.  I will not be in the office 
monday or tuesday.  Alos, we have recently revised our ISDA Schedule to 
include the following language at the end of Part 6.  Sorry for the late 
notice.
 

Carol St. Clair
EB 3892
713-853-3989 (Phone)
713-646-3393 (Fax)
carol.st.clair@enron.com