ISDA

OK, this is hot off the press.
Tanya: our Performance Impairment language limited the collateral call to
1.1 times outstanding exposure. The collateral was defined only as Letters
of Credit and the issuing bank was at least A- S&P rated. As to the
Threshold, well, you can read the response.
Please let me know how you would like to proceed.
SS
---------------------- Forwarded by Sara Shackleton/HOU/ECT on 08/03/99 11:18
AM ---------------------------

Enron Capital & Trade Resources Corp.

From: "Jo-Ann Bigwood" <bigwoodj@hmc.harvard.edu<
08/03/99 11:17 AM

To: Sara Shackleton/HOU/ECT
cc:
Subject: ISDA

Sara,

Sorry for the delay in getting back to you. Internally we have been
discussing the main hurdle issues which you and I discussed in our last
telephone conversation.

The results are as follows:
Harvard will not agree to change its Additional Termination Event in favor
of your Performance Impairment clause. We find this to be too uncertain and
are more comfortable with the certainty of the ratings as set out in our
Additional Termination Event clause.
Harvard believes that it can get comfortable with the idea of Letters of
Credit, however, they must come from a middle single A or better
counterparty and we would like to know who you intend to provide such LOCs
from at the time of contract negotiation. Harvard will not provide letters
of credit as collateral but rather US Treasuries.
Harvard cannot accept or give cash as collateral.
Harvard is willing to raise the threshold for a BBB+ from $0 to $500,000,
but cannot agree to the increase of $10,000,000 which you have requested.
Harvard cannot agree to Minimum Transfer Amounts of $1 and requires the
threshold and minimum transfer amount table as set out in our CSA to remain
in tact.
Harvard will accept a guarantee from Enron Corp., however, it must be
Harvard's standard with no changes.

Please advise where this leaves us. I will await your response prior to
addressing issues raised in your facsimile dated 7/20/99.

Regards,
Jo-Ann Bigwood
Harvard Management Company, Inc.