Re: Rep Agreement

Yes, it does. Thanks so much.

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

Cris Sherman
02/22/2001 07:48 AM

To: Sara Shackleton/HOU/ECT@ECT
cc:
Subject: Rep Agreement

Sara, in the interest of time this morning, I thought I would send a quick
e-mail. I have read the appendix to the repo agreement and think it is OK.
No accounting issues, I think they just want to address the substitution
mechanics. Technically, repo transactions are FAS 125 transactions (sales of
financial assets), so I presume that is why the "FAS 125" is noted at the top
of the page (I don't believe it is necessary - what value does it add?). I
think the issue is one for Treasury - are we OK with the counterparties
ability to terminate the contract if we do not agree to the replacement
(substituted) securities? Hope this helps.