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Taffy: Sara and I have some swap legal issues that we would like to discuss with Mark. We probably need about 1 hour. Can you find a time that works for all 3 of us, if possible this week, but if not, as soon as possible next week? Thanks.
Meeting With Mark
susan: I'm going to be out on Friday of this week. Is there any way that I can get this today or by early tomorrow? Alos, please send me an updated Columbia chart. Has any progress been made on the agreements that are still outstanding? Carol
Christiana Bank Guaranty Comments
Rod: I spoke with their counsel today and he promised to look at the comments that I sent him a few weeks ago and to try to get this finalized by May 1st. I'll keep you posted. Carol
Idacorp
Mark and Trina: My son's baseball game was re-scheduled for tonight so I will be unable to atten the party. My boss, Mark Taylor, thought that the event was last week and so he now has my ticket. I trust that you will say only good things about me in his presence! Carol
Tonight
Tanya: Here is the issue with respect to the Goldman Guaranty. The new Guarantor is now The Goldman Sachs Group, Inc. (previously it was The Goldman Sachs Group, LP). In the existing Guaranty, we permitted Goldman to assign its rights to a Successor Guarantor without our consent if the Successor Guarantor met the following qualifications: 1. (a) if the Successor Guarantor is a corporation, at least 50% of the voting stock had to be held by the same entities/persons that owned and controlled the previous Guarantor (b) if the Successor Guarantor is a partnership, it had to be controlled by the same entities/persons that controlled the previous Guarantor. 2. the Successor Guarantor's Credit Rating could not be lower than the lesser of (y) A2/A or (z) the predecessor Guarantor's Credit Rating prior to the transfer 3. the Successor Guarantor had to have a total net worth of at least $200,000,000 4. the Successor Guarantor had to be the direct or indirect parent of J Aron. Their lawyer is telling me that now that Goldman is public, it cannot agree to item #1. Are you okay if the criteria is just items 2,3 and 4? Carol
J Aron
Susan: Thanks for your e-mail. Please try to make the Columbia matters more of a priority and if you need to, Tana is available to help out on the day to day stuff. I really want to get this put behind us in the next 1-2 weeks. Thanks.
Columbia
Suzanne: Please set up a meeting next week with Rod Nelson to talk about issues relating to the Reliant Energy Services draft ISDA and CSA Schedules. We probably need about 1 hour. Thanks. Carol
Meeting with Rod Nelson
Lucy: Sara and I met with Mark today to talk in part about the concerns I had about the HDD info that third parties had requested us to provide. He wants us to talk to you and the group further about this because there are risks associated with us giving this info to third parties if a portion of such info is info that we fill in based on our internal knowledge. I'm out tomorrow and this afternoon is hectic so I would very much like to have this discussion at our Monday morning meeting. does everyone on your side know about the meeting at 10:30 and can they attend? If that time is a problem, please contact my assistant Suzanne Adams. Carol
Weather Info
Tana: Could you please have the clerks hand deliver this to Dave Forester? Alos, can you update Mark on what happened with Susan Bailey this afternoon with respect to the last interview and how much time if any she spent in that interview? Thanks.
Misc
Jeff: Here is what we are doing today with respect to the revised form of Annex A: 1. Marie sent to Bob Bowen yesterday the new forms of Annex A for ENA and ECC and it is my understanding that as of today, these forms will be used for all new Omnibus Counterparties. 2. Last week, Mary provided us with a list of new Omnibus Counterparties for the month of March and with the exception of the Canadian counterparties, we are in the process of faxing the Annex A letter which gives them until the end of April to respond. With respect to the Canadian counterparties we are waiting to hear back from Derek before we send them the letter. 3. We need to receive from Mary a list of any additional new Omnibus Counterparties, if any, that have done trades with us since the date of the list that she gave us last week so that we can include them in the mail-out. It is my understanding that Mary will leave Marie Heard a voice mail about this today so that we can make arrangements for the letters to be sent to those counterparties. Hopefully, that group will be small. 4. The plan is to roll out the new Annex A's to everyone beginning on May 1. I will update the Special Handlings List to include those counterparties that have requested special exceptions that we are okay with. I will be at the Enron legal conference the rest of the week but will be checking voice mail. Carol
Annex A Mailout
Suzanne: Could you please call this guy and let him know that I am out of the office today and that I will call him sometime tomorrow. Also, thanks for your message. My doctor needs to wait until he gets the other doctor's report before we can talk so probably nothing will happen until Wednesday morning when I see him. All I can do know is take it easy and try not to think about what might happen. There's not much I can do and the only way that I will know that there is a problem is if I start bleeding. The baby is fine. He's almost 3 pounds and Arthur got to see him today which was great! Needless to say, no more running nad unfortunately for Bill no more sex! The one funny thing that happened was when the doctor was trying to tell us that we could not have sex and she didn't want to use the word sex because Arthur was there so she used the word "relations". Bill couldn't understand what she was saying and I know you had to be there but I just cracked up. I also had a good laugh when the doctor found out that I was a runner. She looked me right in the eye and said "no more running" which is what I expected. Again, you had to be there! Anyway, barring no further problems, I'll be in tomorrow and we'll just take it one day at a time. Carol
General Electric
Fred: Enclosed is a revised draft of the letter agreement. Two points for you: 1. They want to roll over to next month the net payment that they will owe us for the month of March. Are you okay with this? 2. They wanted to make it clear that their obligation to deliver barrells to us was only an amount equal to the amount that they own or control, even if that amount is less than the amount shown on the schedule or oin the Purchase Agreement. In other words, they have no obligation to make up the difference. Asr you okay ith this. Alos, he told me to delete the "Amoco" language since that lease was no longer part of the deal. Let me know what you think. carol
RMS
Jeff: Janice and I have been working on a deal with Fred LaGrasta that involves entering into a Crude Oil Purchase Agreement. Their lawyer has come back with the following requests which Janice has asked me to run by you: 1. They want to delete the arbitration provision or at the very least delete the waiver of the right to recover attorneys fees. They claim that this conflicts with an indemnity clause in the agreement for non-performance which allows for recovery of attorneys fees. 2. They want to delete subsection (e) of the submission to jurisdiction clause which contains a waiver of the right to claim immunity from suit, execution, attachment or other legal process. Can we give on these points? They owe us back payments on financial swaps that we have done with them and the purpose of entering into this Purchase Agreement is to be able to offset what they owe us under the swaps with what we owe them for the crude that we purchase. It's a long story as to how we ended up here but suffice it to say that this is our only hope of getting them to recognize the swaps and honor their obligations under the swaps so if there is any way taht we can accommodate their requests to get the deal done, that would be great. Carol
Crude Oil Purchase Agreement
Suzanne: Could you please call anyone from the credit group that has not yet responded in the next day or so and let me know when you have heard from the group who is coming? Alos, Rod Nelosnmissed our meeting today so I need for you to reschedule it for Wed. or Thurs. Thanks. Carol
Misc
Luanne: Just wanted to see where things stood from your end on your Guaranty. We have been asked to consent to an assignment of trades bewteen J Aron and Statoil and would very much like toi finalize the new Master before we give our consent. Please call me when convenient to discuss. Carol
Guaranty Status
adele: Just wanted to get back to you regarding the one remaining issue on the ISDA Schedule. With respect to Section 7 - Transfer, we would like to keep the original language. We view the "credit rating" language as a one time exception which if we need to we can deal with separately, but any subsequent transfers after that we want to use the more generic language. Can we set up a call to discuss this and my other comments which I sent to you? Let me know some times this week that work for you. Thanks. carol
Remaining Credit Issue
Leslie: I'm hoping you can help me answer a questions that John Roberts of GPU raised regarding their desire to sign up on EnronOnline. GPU Utilitiues is the parent corp that has 3 operating subs under it (Metropolitan Edison Company, Pennsylvania Electric Company and Jersey Central Power & Light). He mentioned that there is some type of Services Agreement bewteen EPMI and GPU Services Corp. He wants to know which legal entity should be on the omline application. Can you help? Carol
General Public utilities
David and Louise: I am working with Bob on a confidentiality agreement with Organic Inc. which contains a mutual "no solicitation" provisions that would prevent either party from hiring or soliciting for employment any employee or independent contractor of the other for a period that would expire 6 months after the termination of any business relationship of the parties. How do you feel about this? Carol
Organic Inc. CA Issue
Jeff: Sorry this took so long but here are my thoughts on the above: 1. In Section 3.1 (c), I'm assuming that the additional sections were added because we will get these reps in another agreement from the Trust. Is that correct? 2. In Section 3.4 e), the new language regarding rescission of acceleration I think belongs after the phrase that begins, "if the effect of such failure..." Also, where did the new language regarding prepayments at the end come from? Is this in the Revolver or in Enron's existing deals? 3. Section 3.11 should be made subject to Section 5.7 or vice versa. Carol
Swap Assignment Agreement - April 20 Draft
David: Grant has faxed to me Crestar's comments to the PA and ETA. As I explained to Grant, some of them are legal and some of them, I think, will require input from you and perhaps can be resolved in a call to them. I am going to have this delivered to you with my thoughts on some of the comments assuming that we couldn't talk them into accepting these docs as is. Please let me know when convenient how best to proceed. carol
Crestar energy
Jim: We have finally devised a procedure for handling termination rights. I will amend the ETA amendment letter and send it to you. We have a new procedure in place that requires me to get commercial approval for all amendments so I first will need to run this by the head of the Online group but will send it to you right after I receive that approval. Sorry for the delay. carol
Termination Right
David: Here is a draft of the ETA amendment letter that we have been discussing with Kennecott. It includes my proposed modifications to deal with giving them the termination right which I have highlighted. The current ETA states that all notices become effective immediately. I have inserted in my language a 3 day period after we receive a termination notice before it becomes effective. This creates a difference between Us and our Counterparty's since our termination notice would become effective immediately. What do you think? Do we need this 3 day period or are you okay with having their termination notice becoming effective on the date of our receipt? Carol
kennecott
Susan: Thanks for the update. Looks like we are getting close. Let's go ahead and prepare an agreement for Morgan. Alos, on Coral, are they ready to sign? Carol
CES
Steve: Just wanted to let you know that Bill is running for an open position on the Cy-Fair School Board. The election is Saturday May 6th at Emmott but early voting takes place tomorrow from 8-12 at the instructional Support Building on Jones Road. If you and Julie are planning on voting and are undecided, I hope to solicit your support. His opponent is Don Ryan. Carol
School Board Election
Ed: We are really close on finalizing the EEI. The following are open credit points with them: 1. They want their cross default to be $100 million too instead of $50. 2. They want to exclude from the affiliate definition Florida Power & Light and its subs. Their lawyer is sending me a list. 3. They want to raise both collateral thresholds from $20 to $50 million. 4. In the assignment language in section 10.5, they want to specify a creditworthiness test in clauses (ii) and (iii), such that if the assignee or its guarantor is rated BBB- or Baa3, the assignment is permitted. Clauses (ii) and (iii) relate to assignments to affiliates and assignments that occur as a result of mergers or asset transfers. Right now the test is a generic creditworthiness test. I look forward to hearing from you.
Carolina Power & Light EEI
Janet: Enclosed is some sample surety bond language that we have used along with a surety bond form. I have reviewed your form and think that we can use it with some minor modifications. The enclosed provisions will need to be modified to fit our situation and taht is part of what I want to discuss at our meeting next week so we can all understand how the bond gets issued, what it covers and how it gets triggered. I look forward to seeing you next Thursday.
Surety Bond Language
Jack, Did you send over your comments? I have not received anything by fax or messenger and our business folks are anxious to move this forward. Please let me know where things stand. Thanks.
Comments
Phyllis: I spoke with Ed sacks, our credit person, about the form of LC that your credit person circulated. We both agreed that the LC form for the EEI Master and the ISDA needs to be the form that we attached to the drafts that have been sent to you given that the drawing conditions match the LC language that is in each Master. Please talk to your credit person about this and let me know if this is okay.
Form of Letter of Credit
Randy: We are still discussing internally the time period that should be specified in the definition of Credit Support Provider. We are not comfortable with specifying October 2002 as the date. What is the reason for this? We are trying to make this language as transaction specific as possible. Is there anything else that we can add to it to make it more precise? Please call me in the morning. I'm in by 8:30. Thanks.
Credit Support provider Language
Rod and Paul: I have checked the ISDA between Kaiser and ENA and it has our standard setoff language which permits setoff of amounts owed by or to the Non-Defaulting Party and its Affiliates against amounts owed by or to the Defaulting Party under the ISDA and other agreements. Please call me once you have located the Metals agreement as Greg indicated to me in a voice mail that he needs an answer this morning. Rod, If we get comfortable on the legal side with this arrangement, are there other credit issues that need to be considered?
Kaiser
Randy: As I mentioned in my voice mail to you, we have accepted the CSP language with the October 2002 date and with my other modifications which Susan sent to you yesterday. With respect to the Guaranty, the last draft that I saw had a termination date of June 30, 2001. Just want to make sure taht whatever is signed has a different termination date (i.e. June 30, 2002). Again, before we release our Guaranty I would like to see the final version of your Guaranty. Thanks.
Status
The NY Mercantile Exchange is putting on a half-day seminar in Houston called "Introduction to Futures and Options". Suzanne is getting more info on it. It's scheduled for June 2. Carol
Options wprkshop
Keith: As we discussed, here is Enron's legal/credit issues list on the ISDA: 1. We cannot agree to cross-acceleration. 2. There is a note that the cross default threshold needs to be discussed. Enron's $100 million threshold is based on the threshold that its banks accept in its credit agreements. 3. We prefer elective termination on bankruptcy. 4. We prefer the Loss method. 5. We would like to discuss with you your credit rating test for defining the "materially weaker" standard in Credit Event Upon Merger as well as the timing for posting collateral as it appears in this provisions as well as the Credit Support Annex. We believe that 7 Business Days is too long for posting an LC. 6. We would like to make the GP of Encore a "Specified Entity". We need to discuss with you your request to modify the definition of "Specified Transaction" to include physical transactions. 7. In the MAC Additional Termination Event, we would like to propose a cure through the posting of collateral. 8. We would like to discuss your proposed chnages to Section 13(b). 9. We need to discuss the arbitration language. 10. We would like to understand why you want to change the definitions of Default Rate and Interest rate. 11. Why do you want to exclude Sections 7.3 trough 7.6 of the Commodity Definitions Supplement? 12. In the "Recording" section we would like to add the phrase "To the extent permitted by applicable law" at the beginning of the last sentence. 13. We cannot agree to No Fault Termination. 14. We cannot accept Surety Bonds as a form of collateral to secure financial obligations. Looks like LC's would be the only form of acceptable collateral. 15. We need to discuss the credit threshold language as well as the rounding amounts. 16. We need to discuss what constitutes an acceptable LC Issuer. I look forward to hearing from you.
Encore Issues List
Chris: Would it be too late to suggest changes to the definition of "forward contracts" in the Bankruptcy Code in order to improve our position with respect to the physical supply contracts that EES enters into? I am not sure what chnages we would want, but was wondering if there was any opportunity to suggest a change. Let me know what you think. Thanks.
Forward Contract Definition
Below is a summary of the surety bond issues that I believe we need to resolve in order to feel comfortable accepting it as a form of collateral to secure a counterparty's obligations with respect to physical power purchase and sale transactions: 1. Determine whether an issuer can refuse to honor a draw made under a surety bond if after issuance, it determines that the bond was issued in violation of the appleton statute. What type of legal comfort should we receive from the issuer at the outset to get comfortable that the bond was validly issued and is enforceable against such issuer? 2. Determine the proper minimum credit rating(s) that should apply to the issuer. 3. In the form of bond that we were given, the "Now Therefore" language in the third paragraph is not acceptable. Determine what can be said in its place to establish the necessary linkage back to the transaction covered by the Confirmation. 4. Make sure that the bond can be drawn down no matter what type of Event of Default occurs, even if such event is not related to the transaction that the bond references. The Notice of Claim language needs to be written more generically to accommodate this. 5. Does credit need a "pre-bankruptcy" trigger that would require Reliant to convert all outstanding bonds into LC's or cash collateral? If so, what would this trigger be? Let me know if you have any additional issues. I will be discussing some of these with our outside counsel shortly.
Surety Bond Issues
John: Here is a summary of the 2 Snyder Agreements. As we discussed last week, there is one trade (a basis swap that will expire in August 2004) that they want to remain under the 1194 Master. Let me know what you want to do. !. 1994 Agreement cross default threshold - $10,000,000 for Snyder and $25,000,000 for us automatic termination if bankruptcy occurs setoff includes affiliates collateral is LC's only collateral threshold - credit rating matrix Below BB- - 0 BB- $2,500,000 BB $5,000,000 BB+ $6,000,000 BBB- to BBB+ $10,000,000 A- and above $15,000,000 $15,000,000 Enron Guaranty 2. 1996 ISDA Agreement cross default threshold - $50,000,00 for us and $25,000,000 for them no automatic termination upon bankruptcy setoff includes affiliates collateral includes LC's and cash collateral threshold - $10,000,000 for both parties MAC trigger is below BBB- for us and BB- or below for them no Enron Guaranty Carol
Snyder
Libby: I finally had a chance to talk to ENA's General Counsel about the arbitration/courts issue. We would prefer arbitration and ask that you consider whether this is acceptable to P&G. Thanks.
ISDA
Pam: I saw Janet Greene last week and she said that she was working with you. She looked great! Can we get together for lunch sometime soon? Let me know some dates that work for you in the next 1-2 weeks. I'm in the office Tuesday through Thursday. Everything is going well. Charles is on the verge of walking! I'm now in the power trading group and loving the work. Hope to hear from you soon.
How Are Things?
Mary: I am going to return this file to Stephanie since credit is still deciding how to proceed given their extensive comments. Could you please reassign this to someone in the group once it gets going again? Thanks.
Casco
Linda: I wanted to order as a gift for Marcus and Louise a 2 year subscription to Parents Magazine. Is there some discreet way that you can find out for me whether they are already getting it? Thanks.
Misc
Suzanne: We have a visitor from SArgentina that will be here this week so please add 1 more to the credit lunch count. Alos, Jason Peters will be attending. Saw Ric at the Q Saturday morning. Where were you? Carol
Credit Lunch
Ed: Rudwell and I would like to talk to you about the form of Trade Guaranty Agreement that has been sent to us. Specifically, we need some clarification on how Section 5 works since some new language has been added to the June 1, 1999 form that we received. Please call me at your convenience to discuss this.
Trade Guaranty Agreement
Suzanne: Can you find out when Madonna will be in Philly? We will be there from 6/30 through 7/4 and I was hoping that she would be there at that time. Can you check for her dates in NY or DC as well? Thanks.
Concert
Suzanne: Please include Jim Crump in the Inland meeting that I need to have with Ken Curry. He would like to meet as early on Tuesday as possible as he will be travelling later on Tuesday. His assistant's name is Dora Trevino. Does Ken Curry have an assistant that can access his calendar? If not, why don';t you get a time that works for Jim and me and leave Ken a voice mail message so he can get back to you on Monday. We need about 1 hour. thanks.
Inland Meeting
Mary and Sara: I spoke with Lech about the Article 9 questions. He is going to send me some articles that they have written which I will send to you. He alos confirmed that the cash perfection issue has not changed under new Article 9 although his view on it was that this type of collateral under the UCC is more like a deposit account than "money" which, under common law principles, gets perfected through the exercise of dominion and control over the cash. Under the new Article 9, deposit accounts are covered and the new Article 9 codifies the common law control test. e alos expressed a view that It may take longer than July 1st for NY to adopt the new Article 9.
Article (
After our meeting yesterday, I asked Mark Taylor whether under the revised version of the CEA there was any restriction on one's ability to cash settle physical transactions. He confirmed that so long as the parties to the transaction are "Eligible Contract Participants", then there is no restriction and our physical contracts can expressly permit cash settlement. Enclosed is a summary of the ECP definition.
Csah Out Option
Mark, Sara and Mary: Jim would like to talk to someone about problems he is having with his customers concerning the ISDA and CSA forms. Apparently, most of his customers feel that it is too complicated and Jim would like to see if any alternatives exist. Could someone please contact him? Thanks.
Pulp/Paper
Susan: Here are the final versions of the Guaranty and Transfer Agreement which you can finalize with Russell (dates etc.) once we are ready to sign. As soon as I get answers to the 2 questions I had on his comments I will give you his mark-up so that we can wrap this up. Carol
UtiliCorp
Rhonda: Enclosed is a clean and marked version of the MEGA Assignment. Is the plan to confirm these trades under the existing Master with Morgan until a new EEI Master is executed? What is the cutoff date for this assignment?
MEGA assignment
Joe, Jeff an Bob: Here is a summary of those counterparties that have had specific objections to our new form of Annex A: 1. Sithe Energy - wants New York law to apply 2. Voest-Alpine Intertrading USA, Inc. - won't agree to the setoff language. Credit should be consulted prior to any further trades to see if they are okay with this given our relationships with this entity. 3. Madison Gas & Electric - will not agree to the "or otherwise" language in the setoff language. Again, this is a credit issue. 4. Cargill - wouldn't review the new language because we are close to getting a master in place with them. Sara expects this to happen in the next few days. 5. Idacorp Energy Solutions, L.P. - same as Cargill. I am working on this one and their attorney owes me a response. This one may take a few weeks. 6. Formosa Plastics - this is the counterparty that sent the threatening letter. It didn't appear from our records that we have traded financial derivatives with them recently. 7. General Electric Company - won't accept the chnages and have failed to tell me specifically what they object to. I will continue to follow up with their attorney. 8. Basin Exploration, Inc. - same as General Electric. 9. TransMontaigne Product services Inc. - sent letter out on March 30 saying they would respond in 30 days and I have never heard back from them. I will follow up with their attorney. 10. Reliant - they didn't accept the new language that we added as clause (z) to Section 3(e) and wanted to deal with this differently in the confirmation as a trigger that would give us the right to call for collateral. Credit should be alerted. 11. Devon Energy - they had in the past requested more time to review Annex A and when I followed up with them last week, they still didn't have a response. 12. Smurfit - Stone Container - same as Devon energy. 13. Public Service Gas & Electric Company - we are close to finalizing an ISDA with them. If we do any trades with them before one is signed they have requested chnages in few areas to match what we have agreed to in the iSDA negotiations. I can prepare a mark-up.
Additions to Special Handling List
Suzanne: Could you please go into the following Shari Stack files and print out all of the docs that are in these files? WSPP Agt. Municipality Info Thanks.
Docs
Cass: I can play at 9 on Sat. as Arthur doesn't play until Noon. Also, I'm considering getting my hair highlighted. What does Tina charge for color/highlighting ballpark?
Tennis
David and Louise: One of the things that Organic has asked us to keep confidential is "the existence of any business discussions, negotiations or agreements between the parties as well as any information regarding the skills and compensation of employees, contractors or other agents of the disclosing party." This is a departure from our form. Are we prepared to agree to this? Also, to the extent that parties are insisting on using their form of CA, what do you want the approval process to be? Carol
Organic Confidentiality Agreement
John: Thanks for your voice mail message. I will wait to hear back from either you or John M. before I respond to Reliant on our issues list. I do agree with you on all of the points that they need to address. On the Event of Default issue, do you think that Janet Greene's proposed language to the "null and void" sentence as well as the drawing certificate works? I was concerned that the language "Event of Default under the Confirm" may lead to some confusion as to what Events of default are covered. What do you think?
Misc
Sara: I have asked the HR folks to coordinate with Taffy in setting up 2 interviews for you and I with 2 potential candidates - Samantha Boyd and Dixie Gibson Meynier. Samantha's resume look pretty good. I will send you copies. Carol
Legal assistant Candidates
Jack: Jim Crump met with Mike Sullivan and Julie Beck yesterday and it appears as if based on the e-mails that we have exchanged that the next step is to have a conference call to finalize the ISDA and the remaining open issues. What I plan to do by tomorrow is circulate a redraft of the Schedules. Julie and Mike agreed that David Turpin should partic ipate in the call so that all open issues can be resolved. Could you please contact my assistant, Suzanne Adams, at 713-853-7340 and give her some days and times next week that you and David are available. I would think that we would only need an hour. I plan to have Ken Curry, my credit person, with me for the call. Thanks.
Status
Sara: I have never had one executed. Here are the forms of Annexes that I have used, 1 with the PSA Form (Chase 1/29/98) and the other with the ISMA form. Also I'm sending you some questions that I have asked Kinneman et al in the past. Carol
Repos
Sarah: I just wanted to thank you for the time and effort that you have spent on my behalf in trying to resolve this ratings situation. I know that Bill S. is still trying to plead my case today with Cindy Benson, but I am afraid that the damage was done when Memorial's team captain voiced her objection. Why do you think that she did what she did and won't this happen again when we play them? I look forward to hearing from you.
Misc
Ed: I spoke with our credit people today. We would like to arrange a call to discuss our concerns about Section 5 of the Guaranty with me, our credit people, your counsel and your credit person or someone that can make a decision if we propose a change to the Guaranty. Can you let me know who these people are (and their phone numbers) so that we can arrange a call? We understand fully your need for the Section 5 language, but we would like to explore with your people whether your concerns can be addressed in a different manner. Thanks.
Status
Brant: There is one issue that is left to resolve. In the CSA, we define independent amount as any amount specified for a party in any Confirmation or if no amount is specified, 0. They wnat to either delete this entirely or add language requiring some type of notice to the credit dept. of the party that has to put up the independent amount before it becomes effective. What do you want to do? Carol
UtiliCorp
Susan: Could you please ask Joe Hunter to fax some recent confirms that we have done with Torch. I want to see if they contain Market Disruption language. Thanks.
Torch
Russell: Our credit person is okay with deleting the Independent Amount definition. Susan will make all the changes and coordinate with you in getting this signed up hopefully sometime this week. Thanks for your help on this. Carol
Status
Derek: We are ready to roll out to our counterparties the new Annex A. I have not received any calls from Canadian counterparties. Do you have any remianing issues or concerns about this? Carol
Annex A
Jack: Enclosed is a new draft of the Schedules marked against the previous draft. I believe that this draft responds to most of the issues raised in your e-mails. Just a few additional thoughts: 1. Since we will be redoing all of the existing confirms to refer to this Master, I did not change the language that states that conflicts between the Confirms and the Agreement are resolved in favor of the Confirm. I think that the language as written works. 2. On the setoff language, when we are the Non-Defaulting Party, we can only pull in other agreements between our affiliates and inland so I don't see how this language would impact any agreements between ENA and guaranty Bank unless Inland is the Non-Defaulting party. 3. With respect to Disruption Fallbacks, our view is that if the Confirm specifies a Fallback reference Price that after Postponement, you would use that price if available. I think that the language works as drafted. 4. On cash collateral, the Qualified institution concept only applies when the non-posting party is a Defaulting party or has a Credit rating below the threshold. Otherwise the non-posting party can hold the collateral and do whatever it wants to with it. Your are correct that in practice this cash gets commingled with corporate funds and swept into the party's bank account but there is no requirement taht it work that way. We look forward to having a call with your group next week. Please e-mail me with some days and times so that I can alert our people. thanks.
New Draft
Paul: Just a few questions for you on the revised EEI master that we received from Engage today: 1. I just want to confirm that the collateral thresholds should be 9 million. 2. They want to have Section 8.1(b) and 8.2(b) apply which requires a party to post collateral if the other party believes that its creditworthiness is unsatisfactory. 2. In our Schedule, we delete the 3 day cure period for an event of default that occurs as a result of a Guarantor's non-payment. They want the cure period. do you care? 3. In Section 5.7, each party can suspend performance if a Potential Event of Default or an Event of Default occurs. They want to delete Potential Event of Default. 4. They want to extend the right to dispute invoices and to request adjustments to statements or payments from 12 months to 18 months. 5. They want to change the consent to assignments standard from being able to withhold consent in one's sole discretion to being able to withhold consent only when it is reasonable to do so. I look forward to hearing from you.
Engage
Keith: I am okay with the arbitration and non-exclusive jurisdiction language as currently written as I understand that these concepts were previously agreed to between you and Mary. Here is my understanding of the remaining open issues: 1. Whther termination is automatic or elective on bankruptcy. You are considering our request to make it elective. 2. Loss vs. Market Quotation. We are considering whther we can accept your proposed language. 3. Time period for posting collateral. You are considering how long you need. 4. Cash collateral. I am checking with our office in Canada about this. 5. MAC clause - you are considering whther this should be an Additional Termination Event with the ability to cure by posting collateral or an event that reduces the collateral threshold to zero. 6. Default rate definition - Ed is considering what we can accept in lieu of the ISDA definition. 7. No Fault Termination - we are considering whether we can accept this. 8. Credit thresholds and Rounding amounts - you and Ed to discuss. 9. Acceptable LC Issuers - Ed to consider whther limiting it to US and Schedule 1Canadian banks with a certain credit rating is sufficient with language that the parties can agree to add foreign banks. Let me know if I misstated and of the above issues. Thanks.
ISDA Matters
Mr. Brown: At Laird's request, I am forwarding to you a draft if the ISDA and CSA Schedules. We need more information from you concerning our counterparty such as exact legal name, type of entity, state/country of incorporation etc. as apparently we could not tell from the financials what type of entity it is. This may require some changes to the enclosed drafts, but nothing major. We look forward to hearing from you after you have had a chance to review the enclosed drafts.
ISDA and CSA Schedules
Mike: I work with Sara Shackleton and she has asked me to try and complete the negotiation of the ISDA Master that we are trying to put in place with your company. Could you please call me at 713-853-3989 so we can discuss where things stand? Thanks. Carol
ISDA Negotiations
Christian: I sent out the Schedules to Jeff Brown by e-mail and faxed him and Laird the preprinted ISDA and CSA. Ed Sacks seems to think that they are a German company. I have asked then for more information. Laird is hot to get this "signed up" on Monday. I am out on Monday but if necessary, Sara or Mary Cook can help you. Marie Heard is the legal assistant. I will be checking my voice mail messages but will be out of pocket from Noon-5 on Monday.
Knauf
Kal: As we discussed, enclosed is a draft of the letter. Please review and make sure that I have accurately described what will take place and if you find acceptable, please forward on. If any changes need to be made please call me at 33989. carol
Letter
Tanya: Some of the people in your group may not be aware of the latest forms that we use for the Enron Guaranty, the Counterparty Guaranty and the letter of credit form that we use for the ISDA, Omnibus, Industrial Master and Deemed ISDA forms. enclosed are those forms. We will discuss them with the group tomorrow, but could you circulate them to the group? Alos, in light of all of the counterparty visits taht are occurring, should we send to the group a form of confidentiality agreement taht they can send to the counterparty? The practice lately has been for us to see the counterparty form and our preference would be to use our form. Let me know what you think. Carol
Forms
Jaime: I spoke with our counsel in Mexico today and they are beginning the process of analyzing the online issues for us. I hope to be able to have a call with me, you and them sometime next week where we can answer whatever questions they have and maybe get a preliminary indication from them as to what our online issues may be. Who from the online side should I involve? Alos, are there any days next week in which you would not be available? Could you alos e-mail me with your direct phone number and fax number? Our counsel's name is Jose Raz-Guzman.
Update
Tana: Jose is helping us out with some research of online issues in Mexico. Could you please e-mail to him the Password Application, the ETA and the financial and physical GTC's? Thanks. Carol
Hello
Gary: Mark Taylor and I are getting a bunch of these EOL notices but can't seem to get into them to see what they are when we click on them. Can you help us out? Amita suggested that I contact you. Carol ext. 33989
EOL Notices
Ann: Are you still working on sending us a new draft of the ETA amendment? Our folks have been asking about it. I will be leaving to go on maternity leave in about 3-4 weeks and if there is anyway that we can reach closure on this before then, taht would be great.
Update
Jaime: Just wanted to update you on the call that I had this morning with Jose and Pablo. As a general matter, I think that we are going to be okay with offering physical and financial derivative products to Mexican counterparties online. They are in the process of reviewing the online documents and will get back to me sometime next week with any thoughts or recommendations. One area that we will need to be careful in is in how we market Enron Online for there are restrictions in connection with the offering of "securities". While it is fairly clear that commodity based derivatives are not securities there may be other products where it is not so clear cut. I think that it would be very helpful if you would send to Jose and Pablo the Online materials (i.e, brochures etc.) that we would plan to send to prospective counterparties so that we can make sure that our marketing efforts don't violate any restrictions taht we would be subject to. Here is their address:
Update
Pablo and Jose: Thanks for the update. Based on the marketing information that you received from us yesterday, are there any restrictions on our folks in Mexico going forward with their marketing efforts? If so, please advise. Prior to receiving you written advice, would it be possible to schedule a call maybe on Wednesday of next week with myself and Jaime so that we can at least outline any potential online issues, both in connection with our marketing efforts and in connection with the online documents that you are reviewing? I am available anytime after 2:30 (Houston time) on Wednesday and I am wide open on Thursday.
Update
Don: Can you give me an idea of where things stand on the Transfer Agreement? I think that we were just waiting for you to get signed up correctly on Enron Online. I will be going on maternity leave shortly and just wanted to figure out how much I could get done before I leave.
Update
Susan: I spoke with Brant today and confirmed that the entity that he wanted to add to the Enron Guaranty in the second whereas clause does need to be added. Please check with Russell Martinson to confirm the entities name. Thanks. Carol
Utilicorp
Fred: I'm going to instruct RMS to send the $40,000 to NationsBank of Texas, N.A., Account No. 3750494727, ABA Routing No. 111000012. This is what is in our Master with them. Carol
RMS
Trina: Could you please make sure that Susan Bailey, a legal assistant in our group, gets copies of all of the Raptor docs so that we can keep a file in our group. Ideally, we should get originals of all of the swap docs but I don't know if that's possible. I just want to make sure that I don't have to go through Scott to get anthing if you know what I mean. Susan's extension is 34737. Could you also e-mail the latest closing list so that she can keep track of what was signed? Thanks. Carol P.S. Spoke with Kristina last night and she said that she had a great time in Arizona. Hopefully I can make the next trip. Also, when you are in the neighborhood, stop by my office. I have a great picture of our son that I would like to share with you from the last ultrasound!
Project Raptor
Stacy: John had asked me to review a form of Guaranty from Alberta Energy Company Ltd. As it turns out, the Guarantor will be the counterparty on all financial trades so this Guaranty will only support physical deals done by Alberta's affiliates. I had commented on it and they had responded. Could you please take a look at their response and coordinate with John on this? Thanks.
Alberta Energy Guaranty
Suzanne: If Bill gets his act together I will hand you an invitation to our party tomorrow, but here are the details: Saturday, April 22, 5-7. If you have some time, please stop by this afternoon and hopefully I can narrow down what I want to order. Alos, have you had any kluck in getting some Enron stuff for my JA class? Carol
Misc Stuff
Brant Per our discussions, here is what the Oneok folks want to do. 1. We currently have 2 Masters - one with KN Marketing LP (now known as Oneok Energy Marketing & Trading Company, LP) and one with Oneok Gas Marketing Company. Pursuant to the Guaranty that you just received, both Masters are currently guaranteed by Oneok Inc. In addition, both Masters are currently guaranteed by Enron Corp. under a $15,000,000 Guaranty for Onoek Gas and a $10, 000,000 Guaranty for KN. 2. The Oneok folks want Oneok Gas Marketing to assign all trades and its Master to KN Marketing LP and to terminate the KN Marketing LP Master. When all is said and done, there will be one Master with KN Marketing LP and all trading activity will be with this entity. As I mentioned to you, the Master that will remain in place has no Credit Support Annex. How much should the Enron Guaranty be for? Call me if you have any questions. Susan, Could you please prepare an assignment and Termination Agreement for this. Brant will let us know if any amendments need to be made to the Oneok Master. Carol
KN Marketing and Onoek
Elizabeth and Leslie: I received a call from UtiliCorp's counsel yesterday and he was asking questions about how we would structure an option with respect to power. He was describing an financial option that could be settled physically and was wondering who the counterparty on our side would be. Would or can we do such an option and if so, would ENA or EPMI be the counterparty? Carol
UtiliCorp
Paul Henry on the weather desk informed me that they have agreed with one of our counterparties to terminate a deal. I've asked for a copy of the confirm. Could one of you please e-mail to me this morning a form of dela termination letter that we can send to the counterparty? Thanks. Carol
Cancellation of Weather Deal
Peggy: I work in the ENA legal group - financial trading section. One of our legal assistants recently left our group and I was wondering if you might be interested in interviewing for this position. I received a copy of your resume from Joyce Dorsey. If you are interesred, could you please call me at 33989? Thanks. carol
Legal assistant Position
Susan: Plaese set up a call next week with their legal and credut people to discuss their comments. Please include Rod Nelson and Jason Peters on our side. Taffy has access to my schedule. Thanks.
Dresdner Bank
Stacy: I left on your chair the commnets to the amendment agreements. Could you please confirm with Lisa that it makes sense to have the additional bankruptcy termination enevts as "automatic" triggers in your document when in the fianncial master it is drafted as an election. Please e-mail the revised agreement to KCS' counsel - Zachary May and copy Harry Stout. Zachary's e-mail is zachary.may@weil.com and Harry Stout's is hls@KCSEnergy.com. Thanks and call me if you have any questions. Carol
KCS
Rhett: We are in the process of negotiating an ISDA with this counterparty which is a German Bank and is not a Multibranch Party. We just received their comments to our ISDA Schedule and they raised the following tax issues: 1. They have deleted the Section 3(f) rep in our Schedule and inserted "none". 2. In our tax forms section, they have deleted our language and added language that only requires them to give to us a Form 4224 in connection with payments received by them under the ISDA that are attributable to the conduct of a business in the US. 3. They have modified the definition of "Indemnifiable Tax" to include taxes imposed as a result of a Change in Tax Law by an authority in the jurisdiction of the payee, unless the payor is located in such jurisdiction . I will send you their mark-up but I need your advice on how to handle these comments. Thanks. Carol
Dresdner Bank
Sara: I met with David Dupre to discuss issues relating to unsigned confirms and apparently Williams is one of our biggest offenders. Do you know why they are not signing? Also, are we planning on talking about this next Friday? Carol
Williams
Russell: Our confirms desk has informed me that Aquila Risk Management has not been executing confirmations that are sent to them and apparently the reason for this was that they ere waiting for the Utilicorp Master to be put in place. Now that we have completed the Master, is there some way that we can get these confirms executed? I will send you a list of deals shortly, but I'm assuming that given the language that we have in the Master that there should be no problem in signing the existing confirms that reference the existing Aquila Master. I look forward to hearing from you. Carol
Unsigned Confirmations
Jeff: Were the following points considered or discussed prior to them turning the last draft? The cross default langugae still does not work. Why was the threshold lowered to $50,000,000? Alicia: What are your thoughts on this? Carol
Swap Assignment Agreement - April 20 Draft
Sara: Thanks for your voice mail message. David Dupre and I have not done all that much to date. He is in the process of compiling information for all counterparties (online and offline) who are not signing confirms. I have asked him to group these counterparties according to total outstanding exposure so that we can priortize our efforts. I think that the main issues to cover on Friday involve: 1. The effect of not getting signed confirms when we have our standard langugae in the confirm or in the ISDA and whether it makes adifference as to whether NY or Texas law applies. 2. Possible alternative approaches that we can suggest to counterparties. For example, in some cases, a counterparty is sending us a letter attaching a list of the deals that they have done with us and stating that they agree with the terms of such deals. I'll have David D. send up a sample. 3. Whether our concerns are greater or lesser when we do trades online. I'm available anytime to talk about the above. Carol
Confirms Issues
To whom it may concern: This morning I filled at an online registration form for Camp Enron for my son Arthur for the June 26-30 and July 10-14 sessions. I wish to confirm your receipt of my application. I also wanted to know who I should send the release form to. My phone number is 713-853-3989 and my e-mail address is Carol.St.Clair@enron.com. Thank you.
Camp Registration
Joe: I need your help regarding the above counterparties As you probably know, at the holding company level, BT and Deutsche merged so that now bankers Trust is a subsidiary of Deutsche Bank AG. ENA has a Master with BT and we are negotiating one with Deutsche. Their attorney informed me today that it was his understanding that all new trades should be confirmed with Deutsche Bank. Here is what I need to know: 1. The date of the last trade that we confirmed with BT. 2. The date of the first trade that we have confirmed with Deutsche. 3. A copy of the Deutsche confirm that we are being sent. Thanks for your help.
Deutsche Bank and Bankers Trust
Jeff: Alicia and I will get back to you with a mark-up with our thoughts on this since some of the langugae appears to be different from what is in the Revolver. Alicia thought that maybe this langugae came from Condor. My objective here is to make sure that there is some good precedent for this language and that this deal does not create a new standard. Carol
Cross Default Langugae
Sheri: Our swaps group meeting is at 10 on Wednesday so I cannot make the second half of the Training Session. Could you please coordinate with Suzanne on another time? Again, I just need to take the second part of the class. thanks.
Lotus Notes Training
Rod and Brant: I finally received their revised draft of the Schedules. They are still insisting on an Additional Termination Event that gets triggered if there is a MAC. As defined, MAC means a rating that is below BBB- OR Baa3 or failure to have a rating from either S&P OR Moody's. I need your guidance on this. MAC as defined in the CSA which triggers the threshold going to zero works the same way. I seem to recall that from a credit standpoint, we were okay with a MAC that would be triggered if either rating fell. Is that correct? Carol
Idacorp
Russell: Since late 1998, we have been trying to put in place a Master between ENA and the above counterparty. We currently have a Master dated July 1997 between ECC and Pancanadian Petroleum Limited and Pancanadian wants to pretty much duplicate this Master. Here are the credit terms of the late 1998 drfat that we sent them which I need for you to tell me are still okay: No Credit Support Providers Cross Default - $50,000,000 for ENA and $25,000,000 for them Additional Event of Default - occurrence of a MAC and the failure to provide Perfprmance Assurance in accordnace with annex A. MAC is defined as Enron's rating going below BBB- and their Net Worth falling below $133,000,000 opr their Funded Debt to Net Worth being more than 1 to 1 They want to defined the "control" concept in Affiliate as ownership of more than 50% of equity. This term is used in the Setoff language and limits the possible entities that could be Affiliates on our side and their side Forms of collateral are cash and LC's Collateral Thresholds are $10,000,000 for us and $3,500,000 for them Let me know what you think. Carol
Pancanadian Energy Services