Subject: Re: Fw: IBJ ISDA MASTER AGREEMENT
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Date: Thu, 21 Sep 2000 07:35:00 -0700 (PDT)

Sara:

We need some help on this matter while Mark Taylor is out. Can you provide 
some guidance or suggest who on the Financial Trading Legal side could step 
in and assist with the negotiations of the ISDA? IBJ has now responded to the 
comments made by Mark to IBJ's previous comments to our Enron Japan ISDA 
Schedule Draft. The Enron Japanese commercial people are very anxious to try 
to bring the ISDA negotiations to a positive conclusion so trading can 
commence with IBJ. Your prompt reply is greatly appreciated.

Alan
----- Forwarded by Alan Aronowitz/HOU/ECT on 09/21/2000 02:27 PM -----

	John Viverito@ENRON
	09/21/2000 01:53 AM
		 
		 To: Alan Aronowitz/HOU/ECT@ECT
		 cc: [email-masked], Jane McBride/AP/Enron@Enron
		 Subject: Re: Fw: IBJ ISDA MASTER AGREEMENT

Alan-

I received an automated message when I sent an e-mail to Mark Taylor that 
stated he will be out of the office until October 4th. 

We have certain issues relating to the ISDA Master negotiations with IBJ that 
will require input from Houston.  Please review the correspondence below and 
inform us as to who in Houston will be able to ensure that Enron Japan can 
move forward on the ISDA documentation in Mark's absence.

Thanks,

John
----- Forwarded by John Viverito/Corp/Enron on 09/21/2000 01:19 AM -----

	John Viverito
	09/19/2000 04:40 AM
		 
		 To: Mark Taylor/HOU/ECT@ECT
		 cc: [email-masked], Kevin Cordesman/HOU/ECT@ECT, Steven 
Kleege/HOU/ECT@ECT, Tom Bruce-Jones/LON/ECT@ECT, Morten E 
Pettersen/AP/Enron@Enron, Jane McBride/AP/Enron@Enron, John Suttle/HOU/ECT@ECT
		 Subject: Re: Fw: IBJ ISDA MASTER AGREEMENT

Mark-

Today, we received IBJ's responsive comments to the points that have been 
raised, which are set forth below for your review.

IBJ has stated "In terms of CSA, as we are not ready for running collateral 
operations, we still do not prefer to use the CSA."  During our recent 
meeting they did not deny that IBJ had entered into CSAs with financial 
institutions.  I note that IBJ also raised the point that Enron had a loan 
from IBJ of roughly US$ 100,000,000.
Jonathan Whitehead has raised this issue with John Suttle to receive his 
input.  

IBJ's specific responses are quoted below as follows:-

"Part 1

(a)  Agreed not include Affiliates of PartyA.

(g)  We prefer to terminate the Transactions when as a result of merger as 
for a party, a surviving party of such becomes materially weaker than before.

Part 3

We usually accept to deliver a copy the list of authorized signatures only.

Part 4

(f)Even though deleting the word "not" in this provision, we can net the 
payments with respect to the same Transaction.   Due to our system 
incapability, we are not able to net the payments with respect to two or more 
Transactions in the same currency.

(h) Agreed.

Part 5

(a)  If your suggested language is included, a Non-defaulting Party has to 
continue to make payment to a Defaulting Party with no payment obligation, 
which does not seem realistic.  We prefer to terminate Transactions when an 
Event of Default occurs.  We do not like to include the provision which 
releases a technical error.

(c)  Agreed.

(e)  We propose 5 business days instead.

(g)  We do not think the definition of the Affiliate includes a party's 
branch offices. If our branch have a deal with Enron Japan, we will amend 
this Master Agreement to include such branch as Multibranch Office.  We heard 
that in most jurisdictions of the world,  it is not effective to set-off the 
obligations between a party and the other party's Affiliate.

(i)  Agreed to include this provision.

(j)  We do not prefer that a party could transfer its rights and obligations 
without the other party's consent to even its Affiliates. We might not get 
approval of the transfer from our Credit Department or such transfer might 
cause an additional payment of tax or other cost.

(k)  We will revert to you later.

(m)  Agreed.

(n)  Agreed to include this provision.

Part 6

We still prefer to include the provisions relating to the Commodity 
Transactions in the respective Confirmations."

I look forward to receiving your input.  I note that Jane McBride has started 
here at Enron Japan, therefore I have copied her on this correspondence.  
Looking forward to seeing you in Houston soon.

Best regards,

John 
----- Forwarded by John Viverito/Corp/Enron on 09/19/2000 04:15 AM -----

	John Viverito
	09/07/2000 04:54 AM
		
		 To: Mark Taylor/HOU/ECT@ECT
		 cc: [email-masked], Kevin Cordesman/HOU/ECT@ECT, Steven 
Kleege/HOU/ECT@ECT, Tom Bruce-Jones/LON/ECT@ECT
		 Subject: Re: Fw: IBJ ISDA MASTER AGREEMENT

Mark-

Thanks for your input.  I agree with all of the comments you have raised.  As 
to Part 5 (n), the use of the English language is not uncommon in Japan with 
regard to these types of arrangements and should be insisted upon for 
transactions under the ISDA documentation.

I think that it will be useful to better understand Japanese market practice 
relating to the use of the Credit Support Annex. Therefore, I have asked 
Baker & McKenzie to provide a clear picture as to the situation in Japan and 
will provide this information upon receipt.

Following receipt of John Suttle's comments, I will prepare the response to 
IBJ based on the points that have been raised by both you and John.

Thanks,

John

	Mark Taylor@ECT
	09/06/2000 09:00 PM
		
		 To: John Viverito/Corp/Enron@ENRON
		 cc: [email-masked], Kevin Cordesman/HOU/ECT@ECT, Steven 
Kleege/HOU/ECT@ECT, Tom Bruce-Jones/LON/ECT@ECT
		 Subject: Re: Fw: IBJ ISDA MASTER AGREEMENT

 I had a brief conversation this morning with John Suttle (Credit) and it 
looks like he's going to insist on the CSA.  We are going to talk tomorrow 
and go through the whole agreement to get the rest of his comments.  While we 
have documentation for transactions entered into prior to execution of a 
master agreement, the extent of their revisions makes me very uneasy.  Many 
of these points are very serious and if they can not agree we will have 
trouble coming to agreement even on the short form documents.  It would be 
helpful if they could explain the changes rather than just sending us a 
mark-up.

Following are my points responsive to their revisions:

Part 1 (a)  The addition of our affiliates has the affect of expanding the 
possible defaults too broadly and we cannot agree to these changes (for 
example, this would mean that if any Enron affiliate went into bankruptcy 
this agreement would be in default).

(g)  This provision provides additional flexibility without any credit risk 
to the other party.  It should remain in place unless IBJ can articulate a 
reason to remove it.

Part 3 The language inserted is much to vague.  Our original version spells 
out exactly what is expected of the parties.  If the documents we listed are 
not acceptable, IBJ should tell us now what would be acceptable and if we 
agree we will put it in the agreement.

Part 4 (f)  By deleting the word "not" in this provision, IBJ is saying that 
payments due to each other with respect to the same transaction will not net 
(i.e. if we are paying fixed and they are paying floating, we each have to 
make the full payment to the other rather than netting the two amounts to one 
payment).  This is not acceptable.

(h) If IBJ will use their NY branch as agent, we should use Enron Corp or ENA.

Part 5 (a) Our suggested language allows the purchaser of an option to 
receive payments due even though technically in default under another 
provision of the agreement.  Our position is that if there are no other 
possible payment requirements due from the purchaser, the option should be 
honored.

(c)  The section we delete requires that the market makers be in the same 
city.  For many markets in which we participate, it is very difficult, if not 
impossible, to find multiple market makers in the same city. 

(e)  The change to 10 business days is much too long.  This means we can not 
have certainty as to the terms of the transaction for two weeks!  We can go 
as high as three days if necessary but even that is beyond common market 
practice.

(g)  Their changes remove the ability to set off against obligations owed to 
multiple Enron companies if they default and only allows set-off with each 
IBJ branch as a separate entity.  This may not be an issue if we will never 
trade or otherwise transact with them in any other Enron company and if we 
will never do business with any other branch of IBJ.  We usually don't like 
to restrict ourselves that way.

(i)  We absolutely insist on the confidentiality of our transactions.  If 
there is some revision to this section they would like we can discuss it but 
wholesale deletion is out of the question.

(j)  As with Part 1 (g) this section adds flexibility to both parties while 
maintaining flexibility within the corporate family.  Given the frequency 
with which Enron moves businesses around within the family, this section is 
important to us.

(k)  This section results from an experience we had with a counterparty that 
went into bankruptcy (and therefore default) while they were in the money.  
We disputed the amount owed and under the terms of the agreement (without our 
revision) we would have owed them interest at their cost of funds - a rather 
high rate given their status as a bankrupt.  We feel the non-default rate is 
more appropriate.

(m)  I can't imagine why they wouldn't want this section included - it 
protects us both.

(n)  You know more about this than I.

Part 6  These are all important issues for us and we can discuss them 
individually if they object for some articulated reason.  If these provisions 
are not included here they will need to be included in each confirmation (a 
significant burden for our back office systems which are not set up for it) 
and we need to know now if they object to any of them.

Other revisions that they have made are acceptable unless Credit objects.  I 
hope this is helpful and sorry to have run on so long.  I'm happy to discuss 
any of these issues at greater length if you want.  It sounds to me like 
IBJ's expectations regarding execution of documents are a bit high given the 
volume and nature of their comments.

	John Viverito@ENRON
	09/05/2000 09:06 PM
		
		 To: Tom Bruce-Jones/LON/ECT@ECT
		 cc: [email-masked]@ECT, Kevin Cordesman/HOU/ECT@ECT, Steven 
Kleege/HOU/ECT@ECT, Mark Taylor/HOU/ECT@ECT
		 Subject: Re: Fw: IBJ ISDA MASTER AGREEMENT

Tom-

As far as the progress on the ISDA documentation, I am awaiting feedback from 
both legal and credit in Houston.  

Could you provide me with the details of the proposed transaction(s).  I note 
that I have copied Mark Taylor on this correspondence, as I will need to get 
his input regarding our most efficient going forward strategy.

Thanks,

John

	Tom Bruce-Jones@ECT
	09/05/2000 09:36 AM
		
		 To: John Viverito/Corp/Enron@ENRON
		 cc: [email-masked], Steven Kleege/HOU/ECT@ECT, Kevin 
Cordesman/HOU/ECT@ECT
		 Subject: Re: Fw: IBJ ISDA MASTER AGREEMENT

John
I have just had IBJ on the phone again asking for a progress report on the 
ISDA docs.  Have we managed to move this forward, bearing in mind Labour Day, 
since he is very keen to commence trading on Monday next.  He suggested that 
he would be comfortable in trading prior to the implementation of the docs 
for these initial trades as per Jonathon's previous comments in past mails.  
Are we comfortable doing this if we cannot resolve the issues on the docs?

They are also very keen to see the draft confirms for the proposed trade 
(Steve, I have just heard from Rob in the vid conf that the proposed volumes 
may prove difficult to take on the books??).  Please advise as to our 
capability so that I can convey this to him in the morning.

Best regards
Tom

From: John Viverito@ENRON on 01/09/2000 02:48 CDT
To: "Yamato Konishi" <[email-masked]>
cc: [email-masked], [email-masked], 
[email-masked], [email-masked], 
[email-masked] 

Subject: Re: Fw: IBJ ISDA MASTER AGREEMENT  

Dear Mr. Konishi-

Thank you for your comments.  We will attempt to respond to you prior to the 
holiday in the US, but if we are unable to do so, we will respond shortly 
thereafter.

Best regards,

John Viverito

	"Yamato Konishi" <[email-masked]>
	09/01/2000 02:31 AM
		 
		 To: <[email-masked]>
		 cc: <[email-masked]>, "Tom Bruce-Jones" 
<[email-masked]>, "teruyo.suzuki" <[email-masked]>, 
"Maeda san" <[email-masked]>, "hirohide.yabuki" 
<[email-masked]>
		 Subject: Fw: IBJ ISDA MASTER AGREEMENT

Dear Mr.Viverito

Attached Word file is ISDA draft amended by our legal desk.
(please take the amended points as our comment on your draft)
Please check it all and kindly reply ASAP.
(CSA is not acceptable as I mentioned you before, and we'll check your
LETTER OF CREDIT after
the schedule is almost agreed)

In your draft, we cannot understand the meaning of "EDGAR" on page4,
so please show us what it is.

We are very hoping to conclude this process rapidly.
So, I very much appreciate it if you could send back your comment before
Holiday in U.S.(4th Sep)
(it's ok if only the rough prospects of concluding ISDA)

Best regards,
Konishi IBJ Tokyo
81-3-3214-1008
----- Original Message -----
From: "Teruyo Suzuki" <[email-masked]>
To: "Yamato Konishi" <[email-masked]>
Sent: Friday, September 01, 2000 3:58 PM
Subject: Re: IBJ ISDA MASTER AGREEMENT

> ISDA DraftI_X"?,d`-t,?,?,?,?,?_B-?-O
> ----- Original Message -----
> From: "Yamato Konishi" <[email-masked]>
> To: <[email-masked]>
> Cc: <[email-masked]>; "Tom Bruce-Jones"
> <[email-masked]>; "teruyo.suzuki"
<[email-masked]>;
> "Maeda san" <[email-masked]>
> Sent: Wednesday, August 30, 2000 9:59 PM
> Subject: Re: IBJ ISDA MASTER AGREEMENT
>
>
> > Dear Mr.Viverito
> >
> > Thank you very much.
> > Now we start checking your draft and maybe we can return comment on this
> > Friday.
> >
> > Please be advised following points at this time.
> > 1)Part 6 on the schedule is needed to be deleted.
> >   We think that it's enough if the terms in Part 6 are referred in the
> > individual confirmation.
> > 2)ISDA Credit support annex is not acceptable
> >   Unfortunately, we don't have internal system for concluding CSA with
> > non-financial entity.
> >
> > Please keep support us for concluding ISDA ASAP for our business in near
> > future.
> > If any question, please feel free to contact me.
> >
> > Best regards,
> > Konishi /IBJ Tokyo 81-3-3214-1008
> > ----- Original Message -----
> > From: <[email-masked]>
> > To: <[email-masked]>
> > Cc: <[email-masked]>
> > Sent: Wednesday, August 30, 2000 5:31 PM
> > Subject: IBJ ISDA MASTER AGREEMENT
> >
> >
> > > Dear Mr. Konishi,
> > >
> > > Attached hereto, is the draft ISDA documentation, for your review.
> > > Included are the Schedule, the Credit Support Annex and the Enron
Corp.
> > > Guaranty.
> > >
> > > I apologize for the delay in the preparation and distribution of these
> > > documents.
> > >
> > > We look forward to receiving your comments.
> > >
> > > Best regards,
> > >
> > > John Viverito
> > >
> > >
> > > (See attached file: IBJ Schedule 30.08.00.doc)(See attached file: IBJ
> CSA
> > > 30.08.00.doc)(See attached file: IBJ EC guarantee 30.08.00.doc)
> >
> >
>

 - IBJ Schedule 31.08.00.doc