Comments to Swap Docs

Alicia and Trina:
Here are my thoughts on the latest drafts of the swap docs:

Put Confirm

1. Looks like some type of price protection mechanism is contemplated in the
Master Derivatives Agreement and I'm assuming it would go into this confirm
2. In the definitions of ISDA and Equity Definitions, please add amendments
and supplements

Harrier/Talon Schedule

1. We need to discuss footnotes 2, 3, 6, 9, 12, 13
2. I think that the mechanics for putting up the LC that is described in the
Additional Termination Event that was added as clause (iv) needs to be
drafted somewhere to address, for example, drawing conditions, what happens
when Enron's credit rating improves, the comment made in footnote 6 etc.

3. In Part 4, Section (a) and in all of the notice sections the notice that
goes to the AGC of the Trading Group goes to Enron North America Corp. not
Enron Corp.
4. In Part 5, Section (l)(Recording) please add after the word "parties" the
phrase "in connection with the Transactions hereunder."
5. In Part 5, Section (o) (Confidentiality), is the class of permitted
discloses in clause (iv) too broad?

Talon/Enron Schedule

1. In Part 1, Section (h) should a carve out from the definition of
Identified Event be the new Termination Event that was added?
2. Why is Part 5, Section (n) in this Schedule?
3. Same comments as above

Master Derivatives Agreement

1. Is the defined term Net Premiums worded right for purposes of the
$400,000,000 limitation? For some reason, I'm thinking that a and b should
be reversed.

Talon Note

1. In Section 3.2, I'm not sure that the reference in the second paragraph to
Part 5(m)(i) of the Enron Schedule applies since the setoff rights only
benefit Enron and its affiliates. Also, what does it mean to refer to the
Enron Guaranty here?

Enron Guaranty

1. In Section 4, I think that it is fair for them to request that setoff only
apply to the Guaranteed Agreements and unless I'm missing something, I think
we can give on that point.

That's all that I have. Have you discussed with Ben the point that we talked
about last week concerning the difference between the calculation of "Net
Talon Loss" versus "Loss"?

I'm available tomorrow to talk about these points.
Carol