Merrill Lynch International

In the interest of time, I have revised our draft ISDA Schedule to conform in
most material respects to the 1994 (effective 1992) agreement executed
between ERMS and Merrill Lynch Capital Services, Inc. ("Old ISDA"). This was
done to accommadate the Merrill lawyer, Gary Rosenblum (who didn't want to
read our Schedule!). The Old ISDA is not identical to the format used by
Merrill Lynch International today so I'm not sure how hard they will press
for other changes. There are two potential credit issues that I see: (1)
agreement as to the Enron Corp. guaranty cap (and possible Merrill Lynch
guaranty cap) and (2) our introduction of a MAC provision in the form of an
Additional Event of Default (necessary because the Old ISDA had a Credit
Support Annex and this one does not). I left a voice mail for Gary Rosenblum
and asked that he let me know when he was available on Monday to talk AND to
have his credit person contact Rod Nelson. Sara

P.S. I haven't heard from Morgan Guaranty Trust Company or Morgan Stanley
Capital Services, Inc.