Subject: Re: Enron - Select MPPSA
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked]
Date: Fri, 4 May 2001 02:38:00 -0700 (PDT)

Here's a followup note about Select's concerns on termination issues under 
Article 5 of the EEI.  I did not have time to get to this, but it should help 
wrap up the few outstanding issues on this Master.
Regards,
Janice

EB3861
Assistant General Counsel, Enron North America Corp.
713-853-1794 (Fax:  713-646-4842)
----- Forwarded by Janice R Moore/HOU/ECT on 05/04/2001 09:37 AM -----

	[email-masked]
	05/03/2001 10:48 AM
		 
		 To: [email-masked]
		 cc: [email-masked], [email-masked]
		 Subject: Re: Enron - Select MPPSA

Janice - Thanks for turning this around so quickly.  John Morissette has
all the information necessary to fill out the rest of the cover sheet.  I
reviewed the language you proposed for Sections 5.2 and 5.4 to recall what
our issues were and where the inconsistencies lie with the ISDA.

Apparently, in Section 5.2, a series of Transactions might be considered
Excluded Transactions if they can't be terminated under applicable law on
the Early Termination Date, but are used in the calculation of Gains and
Losses once they are terminated.  We don't have any objection to this
language, but in similar language that we proposed for the ISDA  (for a new
proposed Section 6(c)), Enron expressed a concern that this could lead to
"cherry-picking".  I think the way to solve this is to accept your language
for the Master, and limit our language in the ISDA to situations where
transactions can't be terminated immediately under applicable law, but not
due to market issues.  You should run this by Bob Bruce and Carol St. Clair
to see if it helps.

In your new addition to Section 5.4, our concern was with similar language
that had been proposed for Part 5(g)(B) of the ISDA, particularly the words
"all other obligations".  It seemed to me (both in the ISDA and the Master)
that such language could be used to allow the Non-Defaulting party to
withhold payment that may be due to the Defaulting Party, if the Defaulting
Party still owed money or performance to the Non-Defaulting Party.  If this
owing of money or performance is what triggered the Event of Default in the
first place, than the Non-Defaulting Party has created an opportunity where
it never has to make payment to the Defaulting Party.  I don't think this
was the intent.  Bob solved the problem in the ISDA by striking the word
"other" before "obligations" and including the words "(other than those
pursuant to Section 6(e)) after the word "obligations", which works for me.
I suggest that, in the Master, you similarly strike out the word "other"
and insert after "obligations" the words "(other than those pursuant to
Section 5.3)".  Let me know if this is acceptable.