Subject: Re: Update
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked]
Date: Tue, 5 Jun 2001 05:10:00 -0700 (PDT)

Carol:

I would prefer to go to them with all the  issues at one time.  If you have
any more issues you would like us to address, please forward and we can
approach sureties all at once.  If there are no more issues from you/ENRON
please advise and we will go to sureties now.

THX

Bill Oldham
Director, Insurance Risk Management
Reliant Energy Incorporated
Telephone No.713/207-3131
FAX No. 713/207-3251
email:    [email-masked]

                    Carol.St.Clair
                    @enron.com            To:     [email-masked]
                                          cc:     
[email-masked], [email-masked]
                    06/05/01 09:04        Subject:     Re: Update
                    AM

Bill:
Thanks for the information.  I need to take a closer look at Janet's
language, particularly the "null and void" language to make sure that it
covers all possible events of default under the Master Agreement.  As to
the Texas law issue, our ability to get comfortable from a legal standpoint
will in large part be dictated by this issue.  Is there anyway to get more
certainty on this with the sureties?  I understand that you don't want to
go to them multiple times but this is a key issue for us.  Let me know what
you think.

Carol St. Clair
EB 3889
713-853-3989 (Phone)
713-646-3393 (Fax)
[email-masked]

                    boldham@relia

                    nt.com               To:     [email-masked]

                                         cc:     [email-masked]

                    06/04/2001           Subject:     Re: Update

                    03:35 PM

Carol:

The attached two e-mails are in response to your inquiry of 6-1-01.  If you
have any questions, let me know.

Bill Oldham
Director, Insurance Risk Management
Reliant Energy Incorporated
Telephone No.713/207-3131
FAX No. 713/207-3251
email:    [email-masked]
----
----- Forwarded by Bill Oldham/ADM/HouInd on 06/04/01 10:19 AM -----

                    Michael_Herrod@a
                    rs.aon.com              To:     [email-masked]
                                            cc:     [email-masked],
[email-masked],
                    06/04/01 09:59          [email-masked],
[email-masked],
                    AM                      [email-masked]
                                            Subject:     Re: Update

In my opinion, the wording suggested by Janet Green should be acceptable.
We
will have to have this wording formally approved by the surety companies
prior
to issuance.  I would like to avoid approaching the sureties until all
questions
have been addressed and all changes have been made.  In regards the bonds
being
subject to Texas law, I do not see that as being a problem.  We will
address
that with the sureties along with other potential changes.

In response to previous email, neither Dan nor I know of an attorney that
would
be willing or able to write an opinion in regards the applicability of the
Appleton Law.  As discussed during the meeting, this law has nothing to do
with
the viability of an exisitng surety bond.  If a surety issued a bond that
was
later found to be in violation of Appleton, they would be fined by the
State of
New York.  It does not make the bond invalid.  MJH

----- Forwarded by Bill Oldham/ADM/HouInd on 06/04/01 07:32 AM -----

                    Janet K Greene
                                         To:     Bill
Oldham/ADM/HouInd@HouInd
                    06/03/01 05:23       cc:
                    PM                   Subject:     Re: Update(Document
link:
Bill Oldham)

What if we said:  "if the
Principal shall promptly and faithfully perform its obligations under the
Confirm, which is a part of and governed by the Master Agreement, then this
obligation shall be null and void"

With respect to her second point, what if we again said "an Event of
Default has occurred under the Confirm, which is a part of and governed by
the Master Agreement"?

I think she is trying to clarify in the language that the bond can be
called for an Event of Default under the Master Agreement, which could have
nothing to do with the Confirm - - - which is factually correct.

Janet K. Greene
Reliant Resources, Inc.
1111 Louisiana, Suite 4300
Houston, TX 77002
713-207-5732
fax: 713-207-0141
[email-masked]

                    Bill Oldham
                                         To:     [email-masked]
                    06/01/01 09:27       cc:     [email-masked],
[email-masked],
                    AM                   [email-masked], Bill T
Hamilton/TTG/HouInd@HouInd, William
                                         Waller/ADM/HouInd@HouInd, Rex
Clevenger/ADM/HouInd@HouInd
                                         Subject:     Re: Update(Document
link:
Janet K Greene)

Carol:

Thankyou for the attached.  I believe the governing law for each issuing
surety will be the law where the surety is domiciled, but let me do some
checking and confirm this.  Also, will get back to you on your comments Re
the language in our recommended bond form...probably Monday or Tuesday next
week.  Thanks for your continued efforts in this matter.

Bill Oldham
Director, Insurance Risk Management
Reliant Energy Incorporated
Telephone No.713/207-3131
FAX No. 713/207-3251
email:    [email-masked]

                    Carol.St.Clair
                    @enron.com            To:
[email-masked]
                                          cc:
[email-masked], [email-masked],
                    06/01/01 09:02        [email-masked]
                    AM                    Subject:     Update

Bill:
I spoke with our outside counsel yesterday and we have some more follow up
work that we need to do on our side.  One issue that may be of some
importance to us in our analysis is determining what the governing law of
the surety bond will be for each issuer, and more importantly, whether we
can have the bonds governed by Texas law.  Can you answer this for me?

Also, with respect to the form of the bond itself, as we mentioned at the
meeting, the language in the third paragraph which states that "if the
Principal shall promptly and faithfully provide the Firm energy as defined
in the Confirm, hen this obligation shall be null and void," does not work
for us.  Has anyone come up with alternative language?  Finally, with
respect to the Notice of Claim, we would like for the certification to say
something like, "an Event of Default has occurred under the Master
Agreement" rather than tie it to a specific default under the Confirmation.
Does that work for the sureties?

I look forward to hearing from you.

Carol St. Clair
EB 3889
713-853-3989 (Phone)
713-646-3393 (Fax)
[email-masked]