Deutsche Bank ,
 ---------------------- Forwarded by Carol St Clair/HOU/ECT on 05/05/2000 
04:11 PM ---------------------------


Carol St Clair
04/26/2000 04:41 PM
To: Rod Nelson/HOU/ECT@ECT
cc:  
Subject: Deutsche Bank

Rod:
Here are their credit issues:

1. In the cross-default language that want to add language that basically 
says that even if a cross-default occurs, unless the Non-Defaulting 
determines in good faith that performance by the Defaulting Party of its 
obligations under the Master is "endangered", then no cross default is 
triggered.

2. In Credit Event Upon Merger we had commented that instaed of the 
"materially weaker" standard we wanted to specify that it meant being rated 
below BBB- by S&P.  Do you feel strongly about this?  Alos, we usually have 
language that says that if an event like merger occurs and the transferee 
provides collateral to the other party in an amount that is satisfactory to 
such party, then a Credit Event Upon Merger is not triggered.  They did not 
want to add this carve-out.  Are you okay with this?

3. They want a separate Event of Default that gets triggered if a MAC (below 
BBB-) occurs.  We requested that it be out in the collateral threshold 
language.

4. They are saying that for "operational" purposes, they cannot agree to 
"netting".

5. They want as a category of Eligible Collateral governmental securities 
with a maturity of less than 1 year, valued at 98%.

6. In the CSA, if a dispute occurs with respect to either the calculation of 
Exposure or the calculation of the value of any colateral in connection with 
a party's request either for the transfer or return of collateral, normally 
the following procedures apply:

a. the disputing party notifies the other party of the nature of the dispute 
by the close of business on the day following the day that the collateral 
request was made.

b. the undisputed amount is transferred to the party making the request

c. the parties attempt to resolve the dispute by the "Resolution Time" and if 
a resolution is not reached, a recalculation of the Exposure is made and 
market quotations have to be obtained.

We normally say that the Resolution Time is 3 Business Days after the dispute 
notice is given.  DB wants to shorten this period to 1 Business Day after the 
dispute notice is given which gives the parties less time to resolve the 
dispute on their own.  What do you think?

7. If a party holds cash as collateral, we normally say that interest earned 
is transferred on the first day of the month.  They want to change first to 
last.

Let me know what you think.  I was hoping that some of these you could 
resolve with your counterpart at DB.

Carol
rod.nelson@enron.com, molly.harris@enron.com